A private foundation is a charitable organization that receives the majority of its funding not from the public, but from a sole individual, a group of individuals, a family, or other limited number of benefactors. Private foundations may enjoy many of the same tax benefits as other charitable organizations. Many families have established private foundations to serve a charitable purpose while providing for a family legacy as well as economic support for their family for generations to come. When formed correctly, a private foundation can accomplish all of these goals and more.
Proper formation and operation is essential to establishing a private foundation. Private foundations are subject to their own set of strict statutes under the Internal Revenue Code. Failure to follow these statutes can be detrimental to both the foundation and the family that operates it by leading to harsh consequences such as the disallowance of foundation status and exorbitant excise taxes on both the foundation and the family member.
Oftentimes, the parties charged with violating these provisions have no idea what they have done until the receive a collection notice from the IRS. Sadly, when a problem like this arises, lack of intent may not serve as a defense.
Many law firms do not possess the experience or knowledge necessary to handle the establishment of a private foundation. Thankfully, Ourednik Law Offices is prepared to assist you with all of your private foundation’s legal needs. Contact us before you decide to establish a private foundation so we can help to guide you through the pitfalls of the Internal Revenue Code.
Contact Ourednik Law Offices after establishing you private foundation so that we can assist you in maintaining your organization or dealing with the IRS.