In June 2018, the U.S. Supreme Court handed down a decision in South Dakota v. Wayfair that changed the way remote sellers (like internet companies) do business in states where they don’t have a physical presence, like a brick and mortar store or a headquarters. Essentially it means these companies will start collecting sales tax in certain states with economic nexus laws already on the books to enforce collection against said remote retailers. Iowa is one such state.
What does this mean for you and your nonprofit? Most nonprofits may start seeing sales tax tacked on to certain receipts for digital accounts/services. (The rate of sales tax is based on your Iowa primary contact address.) But, some nonprofits are exempt from sales tax and therefore will need to remit an exemption certificate to the remote seller.
Taxes and Nonprofits
The interplay between taxes and nonprofits can be confusing. Even if a nonprofit is exempt from state and federal income taxes, it does not mean that entity is auto exempt from paying sales tax for goods and (taxable) services. Generally, sales taxes must be paid unless the nonprofit falls under the umbrella of some other applicable general sales tax exemption. (Local option sales taxes must also be paid on purchases made in existing areas.)
However, the Iowa Code does exempt certain nonprofits from paying sales tax on purchases. The Iowa Department of Revenue’s guide to “Iowa Tax Issues for Nonprofits” provides a (non-exclusive) list of entities that are specifically exempt from sales/use taxes under Iowa law. I’ve included the pretty lengthy list here for your convenience!
American Red Cross
Navy Relief Society
U.S.O. (United Service Organizations)
Community health centers (as defined in 42 U.S.C.A. subsection 254c)
Migrant health centers (as defined in 42 U.S.C.A. subsection 254b)
Residential care facilities and intermediate care facilities for the intellectually disabled and residential care facilities for the mentally ill (licensed by the Department of Inspections and Appeals under Iowa Code chapter 135C)
Residential facilities for intellectually disabled children (licensed by the Department of Human Services under Iowa Code chapter 237)
Residential facilities for child foster care [licensed by the Department of Human Services under Iowa Code chapter 237, except those maintained by “individuals” as defined in Iowa Code subsection 237.1(7)]
Rehabilitation facilities which provide accredited rehabilitation services to persons with disabilities and which are accredited by the Commission on Accreditation of Rehabilitation Facilities or the Accreditation Council for Services for intellectually disabled and other developmentally disabled persons and adult day care services approved for reimbursement by the Iowa Department of Human Services
Community mental health centers (accredited by the Department of Human Services under Iowa Code chapter 225C)
Home and community-based services providers certified to offer Medicaid waiver services by the Department of Human Services that are any of the following:
Health and disability waiver service providers, described in 441 IAC 77.30.
Hospice providers, described in 441 IAC 77.32.
Elderly waiver service providers, described in 441 IAC 77.33.
AIDS/HIV waiver service providers, described in 441 IAC 77.34.
Federally qualified health centers, described in 441 IAC 77.35.
Intellectual disabilities waiver service providers, described in 441 IAC 77.37.
Brain injury waiver service providers, described in 441 IAC 77.39.
Sales of tangible personal property and services made to nonprofit hospitals and nonprofit hospices (licensed under Iowa Code chapter 135B)
Statewide nonprofit organ procurement organizations
Nonprofit legal aid organizations
Nonprofit organizations organized solely for the purpose of lending property to the general public for nonprofit purposes
Nonprofit private museums*
Governmental units, subdivisions, or instrumentalities of the federal government or of the state of Iowa (This includes state, county, and local subdivisions of the government of the State of Iowa and those of any other state which provide a similar sales tax exemption to Iowa and its political subdivisions.) *
Recreational lake and water quality districts*
Federal corporations created by the federal government which are exempt under federal law *
Private nonprofit educational institutions located in Iowa *
Private nonprofit art centers located in Iowa
Habitat for Humanity in Iowa when purchasing building materials *
Toys for Tots when purchasing toys
Community action agencies as defined in Iowa Code section 216A.93
Substance abuse treatment or prevention facilities that receive block grant funding from the Iowa Department of Public Health
Sales Tax Exemption in Action
So, let’s say you’re an Iowa private nonprofit grade school that subscribes to an online newsletter service (which is based in California) so that administrators can design, write, and send a weekly email update to parents of students. Your organization would likely be exempt from the new sales tax charges imposed by the remote seller on your subscription rate.
Exempt nonprofits must pay for their purchases from the entity’s account and should complete and submit an Iowa Sales Tax Exemption Certificate 31-014 to the remote seller.
Questions? Not sure if your nonprofit qualifies for this exemption? Don’t hesitate to contact me at any time to speak about your situation.
Estate planning, nonprofit formation, and charitable giving are extremely important, but guess what else is something worth writing about? Voting! Casting a ballot may seem like a small action, but collectively our votes can make a big impact.
Tomorrow, September 24, is National Voter Registration Day. The unofficial national “holiday” was first recognized in 2012. It’s a non-partisan event and all about rallying people to register as voters and encourage Americans to make their voices heard. It’s a great day to set aside politics and ideological differences in the name of democracy through fostering civic unity.
Indeed, every year lots of people find out they are unable to cast a vote in an election because they missed the registration deadline, failed to update their registration, or weren’t sure how to register in the first place.
Voting laws and regulations vary from state to state, so I recommend checking in on this website (Vote 411) for your particular state regarding the details for where you live.
General Voting Registration Information for Iowa
Here is some specific information regarding voter registration in Iowa:
You may register in person at the polls on Election Day, but you have to make certain to bring the correct voter ID. (But, if you register in advance it will expedite your Voting Day experience.)
You can opt to mail in the form, but if you go with this option, the form must be received by election officials at least 10 days before primary and general elections, and 11 days before all other elections. If you mail your registration application, it must be postmarked 15 days before the election or received by either 10 or 11 days before the election, depending on the type of election.
Good news: registration is permanent. After you register, you do not have to register again unless you move!
ID Needed for Voter Registration (in Advance of Election Day) in Iowa
To register to vote in Iowa, you must provide an Iowa driver’s license number or a social security number. That said, there is a box to check on the voter registration form if you have neither of those numbers.
ID Needed for Voter Registration (on Election Day) in Iowa
If you choose to register for the first time on Election Day at the polls, or after a recent move to Iowa, you must prove both who you are and where you live. You can use any of these forms of ID as long as they are current, valid, and contain an expiration date:
Iowa drivers license
Iowa non-driver ID card
Out-of-state driver’s license or non-driver ID card
US passport
US military ID
ID card issued by employer
Student ID issued by Iowa high school or college
Tribal ID
If your photo ID does not contain your current address, you can use another document to prove where you live. The following options are deemed acceptable proof of residence as long as they contain your name, current address, and are current within 45 days:
Residential lease
Utility bill (including a cell phone bill)
Bank statement
Paycheck
Government check or other government documents
If you don’t have any of the documents at the polling place and are asked for ID, if you have another voter who knows you and is registered in the same precinct they can vouch for your ID and residence.
The final option when registering at a polling place and you don’t have the necessary ID or someone to vouch for you, you can cast a provisional ballot.
It’s not just the presidential election you should vote it! Voter registration enables you to vote in local and state elections that can have a much more direct effect on your specific community. It also enables you to participate in the always exciting Iowa Caucuses. Check out this page for upcoming elections in your state. (Select your state and election date and hit apply.)
As you probably know all too well, you can also make gifts to other people during your lifetime. These are called inter vivos gifts if you want to be lawyerly with it. This one’s easier to think about because you’ve been giving gifts for holidays, birthdays, weddings, and anniversaries regularly. You can also make gifts while living of cash, real estate, land, stocks/bonds, and other non-cash assets to charitable organizations.
One specific type of inter vivos gift doubles down on the Latin–it’s called a gift causa mortis. This type of gift is made by the donor while they’re alive in the event of impending death. Causa mortis in Latin translates to “because of death.” Sometimes this type of gift is referred to as a deathbed gift. The most common kind of gifts causa mortis tend to be small, valuable and/or meaningful gifts like a wedding ring.
To make this more salient, consider the scenario where Abe was in a severe accident and is aware that he is going to pass soon. Abe turns to his son Bob, who rushed him to the ER, and tells him that he wants him to have his watch. He takes it and gives it to his son Bob and then gets rushed into surgery. This is a simple example of a gift causa mortis.
Now, with out amateur Latin lesson complete, let’s dive into the elements of the rules related to gifts causa mortis.
Elements of Gifts Causa Mortis
A valid inter vivos gift involves:
intent by the donor facing imminent to donate;
delivery of the gift; and
acceptance by the donor.
Delivery of the Gift
The gift must be delivered to the recipient. That’s easy if it’s something handheld like jewelry that you’re wearing, but what about anything that the donor doesn’t have on them personally? So long as the “delivery” is sufficiently symbolic, that will suffice if physical delivery at the time of the gifts is impractical.
Another Hypothetical
Let’s say a donor wanted to make a gift causa mortis of an antique piece of furniture to their niece. At the time the donor was residing in a hospice facility and very clearly toward the very end of her terminal illness. It would be impractical for the law to expect the dying donor to physical deliver the furniture to her niece. As long as the donor gave the niece a symbolic representation of the gift, such as writing out the details of the furniture’s location and details in the presence of a witness, it would likely be found valid upon the donor’s passing.
Another example that applies arose out of a case where a donor’s delivery was found to be valid where she signed the back of her car’s certificate of title to gift the automobile to her brother.
Can I Get a Witness?
To avoid post-mortem litigation by other heirs-at-law or the decedent’s estate’s executor, it’s preferable if the delivery of the gift is witnessed by a third party who can attest to the validity of the gift. Additionally, if there is an option for a piece of writing to be made out detailing the gifts and signed in the presence of a third party, that’s even better.
Revocable & Conditional
Gifts causa mortis are revocable, which means that the donor (the gift giver) can revoke the gift at any time (while still alive). This revocation can be completed unilaterally, with only the donor. This is different than an inter-vivos gift, which when completed, is completely irrevocable.
Gifts causa mortis are also conditional on the donor’s death, meaning the gift giver actually has to perish before the donee’s ownership is valid.
Taking it back to our story with Abe and his son Bob: if Abe gave his watch to Bob before surgery with the imminent expectation of dying soon, but ended up living through the surgery, the gift is no longer valid and automatically revoked. Of course, Abe could choose to make an inter-vivos gift to Bob if he decided to do so.
Additionally, if the recipient dies before the donor, then the gift is revoked and the beneficiary’s estate has no claim to the property.
Imminent Death
For a valid gift causa mortis, the donor has to die imminently…what constitutes “imminent death?” This has been debated in different cases. What’s clear is the gift giver doesn’t have to die immediately, like seconds after the gift is given. But, the donor must pass away from the danger or condition that was present at the giving of the gift. Plus, it doesn’t “count” if the donor has a fear that they might die at some vague point in the future.
Intervening Recovery
Additionally, there must be no intervening recovery between the gift and death.
Back to our hypothetical: let’s say Abe goes into surgery and survives from the injuries relating to his accident. At this point the gift of the watch is invalid. Abe may unfortunately go on and pass away from a different condition a few months later, but the previous gift causa mortis of the watch is not suddenly valid just because Abe eventually died.
What’s the Difference Between Gifts Causa Mortis and Testamentary Gifts?
Typically gifts causa mortis are informally made in the moment, are not planned to the same extent or formally written out like testamentary gifts. In the majority of states, gifts causa mortis are immediately transferred to the recipient’s ownership after death, whereas gifts made through a will or testamentary trust transfer ownership after the probate process is complete. Additionally, gifts causa mortis can only be made of personal property, not real property like your house or farmland.
How do Gifts Causa Mortis Fit into Taxes?
Similar to testamentary gifts, gifts causa mortis are taxed under federal estate tax law. The policy behind this is because the gifts aren’t complete until the donor’s passing. (Note well that the federal estate tax also applies to general inter vivos gifts made within three years of death. This means the value of such gifts is included in the estate in order to calculate the estate taxes.) It’s also worth noting that the federal estate tax applies to so few people now after the passage of the Tax Cuts and Jobs Act, so you don’t really to be concerned about this!
Final Words on Gifts Causa Mortis
Gifts Causa Mortis or not, there is no substitute for an airtight, updated estate plan. If you have such a plan in place, there’s no need to try and meet all the elements and intricacies of gifts causa mortis.
None of us know when our time will come, and we may not have the opportunity to give away our prized possessions via causa mortis right before death. But, we can know that estate plans never expire and can give you peace of mind that your property will be pass to the people you intend without legal contest (which can arise from gifts of causa mortis).
No questions are dumb questions when it comes to the complex world of property and estates. Don’t hesitate to contact GFLF or schedule a free consult to get your estate planning needs and goals in order.
https://www.gordonfischerlawfirm.com/wp-content/uploads/2018/09/Screen-Shot-2018-09-22-at-2.07.40-PM.png5691033Gordon Fischerhttps://www.gordonfischerlawfirm.com/wp-content/uploads/2017/05/GFLF-logo-300x141.pngGordon Fischer2019-09-21 00:30:062020-05-18 11:28:44Back to School: Latin Lesson on Gifts Causa Mortis
Iowa Nonprofit Sales Tax Exemptions & Remote Sellers
Nonprofits, Taxes & FinanceIn June 2018, the U.S. Supreme Court handed down a decision in South Dakota v. Wayfair that changed the way remote sellers (like internet companies) do business in states where they don’t have a physical presence, like a brick and mortar store or a headquarters. Essentially it means these companies will start collecting sales tax in certain states with economic nexus laws already on the books to enforce collection against said remote retailers. Iowa is one such state.
What does this mean for you and your nonprofit? Most nonprofits may start seeing sales tax tacked on to certain receipts for digital accounts/services. (The rate of sales tax is based on your Iowa primary contact address.) But, some nonprofits are exempt from sales tax and therefore will need to remit an exemption certificate to the remote seller.
Taxes and Nonprofits
The interplay between taxes and nonprofits can be confusing. Even if a nonprofit is exempt from state and federal income taxes, it does not mean that entity is auto exempt from paying sales tax for goods and (taxable) services. Generally, sales taxes must be paid unless the nonprofit falls under the umbrella of some other applicable general sales tax exemption. (Local option sales taxes must also be paid on purchases made in existing areas.)
However, the Iowa Code does exempt certain nonprofits from paying sales tax on purchases. The Iowa Department of Revenue’s guide to “Iowa Tax Issues for Nonprofits” provides a (non-exclusive) list of entities that are specifically exempt from sales/use taxes under Iowa law. I’ve included the pretty lengthy list here for your convenience!
Sales Tax Exemption in Action
So, let’s say you’re an Iowa private nonprofit grade school that subscribes to an online newsletter service (which is based in California) so that administrators can design, write, and send a weekly email update to parents of students. Your organization would likely be exempt from the new sales tax charges imposed by the remote seller on your subscription rate.
Down to the Details
Exempt nonprofits must pay for their purchases from the entity’s account and should complete and submit an Iowa Sales Tax Exemption Certificate 31-014 to the remote seller.
Questions? Not sure if your nonprofit qualifies for this exemption? Don’t hesitate to contact me at any time to speak about your situation.
Make Your Voice Heard: Voter Registration Day
EventsEstate planning, nonprofit formation, and charitable giving are extremely important, but guess what else is something worth writing about? Voting! Casting a ballot may seem like a small action, but collectively our votes can make a big impact.
Tomorrow, September 24, is National Voter Registration Day. The unofficial national “holiday” was first recognized in 2012. It’s a non-partisan event and all about rallying people to register as voters and encourage Americans to make their voices heard. It’s a great day to set aside politics and ideological differences in the name of democracy through fostering civic unity.
Indeed, every year lots of people find out they are unable to cast a vote in an election because they missed the registration deadline, failed to update their registration, or weren’t sure how to register in the first place.
Voting laws and regulations vary from state to state, so I recommend checking in on this website (Vote 411) for your particular state regarding the details for where you live.
General Voting Registration Information for Iowa
Here is some specific information regarding voter registration in Iowa:
ID Needed for Voter Registration (in Advance of Election Day) in Iowa
To register to vote in Iowa, you must provide an Iowa driver’s license number or a social security number. That said, there is a box to check on the voter registration form if you have neither of those numbers.
ID Needed for Voter Registration (on Election Day) in Iowa
If you choose to register for the first time on Election Day at the polls, or after a recent move to Iowa, you must prove both who you are and where you live. You can use any of these forms of ID as long as they are current, valid, and contain an expiration date:
If your photo ID does not contain your current address, you can use another document to prove where you live. The following options are deemed acceptable proof of residence as long as they contain your name, current address, and are current within 45 days:
If you don’t have any of the documents at the polling place and are asked for ID, if you have another voter who knows you and is registered in the same precinct they can vouch for your ID and residence.
The final option when registering at a polling place and you don’t have the necessary ID or someone to vouch for you, you can cast a provisional ballot.
Think you may be Registered to Vote Already?
Not sure if you’re already registered to vote? This online tool from Vote 411 can be a useful starting point. If you live in Iowa, use the Iowa Secretary of State’s website to search the database.
When are Upcoming Elections in Iowa?
It’s not just the presidential election you should vote it! Voter registration enables you to vote in local and state elections that can have a much more direct effect on your specific community. It also enables you to participate in the always exciting Iowa Caucuses. Check out this page for upcoming elections in your state. (Select your state and election date and hit apply.)
Let me know if you have any questions and I’m happy to connect you with resources and information! My email is gordon@gordonfischerlawfirm.com and my phone number is 515-371-6077.
Back to School: Latin Lesson on Gifts Causa Mortis
Wills, Trusts & EstatesElements of Gifts Causa Mortis
A valid inter vivos gift involves:
Delivery of the Gift
The gift must be delivered to the recipient. That’s easy if it’s something handheld like jewelry that you’re wearing, but what about anything that the donor doesn’t have on them personally? So long as the “delivery” is sufficiently symbolic, that will suffice if physical delivery at the time of the gifts is impractical.
Another Hypothetical
Let’s say a donor wanted to make a gift causa mortis of an antique piece of furniture to their niece. At the time the donor was residing in a hospice facility and very clearly toward the very end of her terminal illness. It would be impractical for the law to expect the dying donor to physical deliver the furniture to her niece. As long as the donor gave the niece a symbolic representation of the gift, such as writing out the details of the furniture’s location and details in the presence of a witness, it would likely be found valid upon the donor’s passing.
Another example that applies arose out of a case where a donor’s delivery was found to be valid where she signed the back of her car’s certificate of title to gift the automobile to her brother.
Can I Get a Witness?
To avoid post-mortem litigation by other heirs-at-law or the decedent’s estate’s executor, it’s preferable if the delivery of the gift is witnessed by a third party who can attest to the validity of the gift. Additionally, if there is an option for a piece of writing to be made out detailing the gifts and signed in the presence of a third party, that’s even better.
Revocable & Conditional
Imminent Death
Intervening Recovery
What’s the Difference Between Gifts Causa Mortis and Testamentary Gifts?
How do Gifts Causa Mortis Fit into Taxes?
Final Words on Gifts Causa Mortis
Gifts Causa Mortis or not, there is no substitute for an airtight, updated estate plan. If you have such a plan in place, there’s no need to try and meet all the elements and intricacies of gifts causa mortis.
None of us know when our time will come, and we may not have the opportunity to give away our prized possessions via causa mortis right before death. But, we can know that estate plans never expire and can give you peace of mind that your property will be pass to the people you intend without legal contest (which can arise from gifts of causa mortis).
No questions are dumb questions when it comes to the complex world of property and estates. Don’t hesitate to contact GFLF or schedule a free consult to get your estate planning needs and goals in order.