Alabama Senate Bill 24 and its Implications on United Appeal Funds and Their Beneficiaries

On August 19, 2015, Governor Bentley signed Senate Bill 24 (Act No. 2015-534) into law, which will directly affect united appeal funds (UAFs) and their beneficiaries.

Starting January 1, 2016, the new law will require all UAFs, and the entities that benefit from them, to annually apply with the Alabama Department of Revenue (ADOR) for certificates of exemption, which will be valid for one year. Under the current law, UAFs and their beneficiaries must submit applications every three years. For the in-between years, they can simply ask that the certificates be renewed by submitting the request in writing to the Sales Tax Division of the ADOR. Also, certificates are presently being issued for either one year or three years.

Finally, starting in 2017, UAFs and their beneficiaries “may” be required to annually file an informational return with the ADOR, regardless of whether they apply for a new certificate of exemption. Further, if an entity fails to file its return, it “may” not be entitled to a new certificate of exemption. This annual report requirement appears to be similar to that of the Internal Revenue Service (IRS). The IRS presently requires UAFs to file a version of Form 990 on an annual basis. If it fails to make this filing for three consecutive years, its tax-exempt status will be revoked. At this point, it is unclear what the ADOR’s informational return will encompass or how extensive it will be. Further, the law uses the word “may” instead of “shall,” so the ADOR’s enforcement of this requirement is discretionary and will be governed by regulations to be adopted.

If you have any questions about how SB24 will affect you, please call Hannah Lansdon at (205) 633 0279 or email her at hannah.lansdon@campbellguin.com.