IRS and Treasury issue myriad guidance.

The Internal Revenue Service and the Treasury Department have issued more guidance on how organizations must allocate funds. The reach of these two agencies extends to everything from the administration of 401(k) plans to copying fees charged in the fulfillment of Freedom of Information Act requests. Here's a summary of recent action:

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Association virtual trade shows. The Internal Revenue Service has issued guidance to trade and professional associations, stipulating that revenue from Internet-based trade shows conducted in conjunction with an in-person convention, annual meeting, or trade show would not be subject to unrelated business income tax. For example, a trade association that augments its live trade show by hosting a virtual show at the same time would not be subject to UBIT on revenue from the virtual booth sales. Stand-alone virtual shows, however, would not be eligible for the exception.

Jeffrey Tenenbaum and George Constantine, attorneys with the law firm Venable LLP, Washington, D.C., have studied the IRS guidance in detail. Tenenbaum explains, "The key factor in the IRS's analysis of whether revenues generated by virtual trade show activity will be taxable is whether or not the virtual show is ancillary to a live show." However, gray areas in the ruling remain. For further details, go to the "Issues and Advocacy" area of ASAE's Web site at www.asaenet.org for the full text of "IRS Issues Virtual Trade Show Guidance," an article by Tenenbaum and Constantine.

Copying fees. The IRS published final regulations on January 5, 2005, regarding the fees that can be charged for making copies of exempt organizations' materials available for public inspection. The final regulations state that any fee assessed by the IRS for furnishing copies of exempt organization disclosures shall be no more than the fee established under the IRS Freedom of Information Act (FOIA) fee schedule. Currently that schedule establishes fees of $.20 per photocopied page. There is a conforming amendment in the final regulations stating that exempt organizations may charge a copying fee established under the IRS FOIA fee schedule as well, when complying with FOIA requests.

Deferred compensation. The Treasury Department and the Internal Revenue Service issued guidance regarding new rules for nonqualified compensation plans under Section 409(a) of the Internal Revenue Code, as well as final regulations governing 401(k) retirement plans. The 409(a) rules address the termination and amendment of certain nonqualified deferred compensation arrangements and outline the new reporting and employment tax obligations of employers in connection with Section 409(a). To view this guidance, visit the Treasury Department Web site at www.ustreas.gov/press/releases/reports/notice2005_1.pdf.

The 401(k) regulations are intended to update and simplify many of the current rules for 401(k) plans, as well as strengthen the nondiscrimination rules that ensure benefits for rank-and-file employees. The new regulations will be fully effective for plan years that begin on or after January 1, 2006. The full text of these regulations is available at www.ustreas.gov/press/releases/reports/401k122804td9169.pdf.