July/August 2015
Taxation of Exempts

Form 5578 is a half-page form simply certifying that a private school has complied with the racial nondiscrimination guidelines set forth by the Internal Revenue Service. The failure of a private school to annually file this form may jeopardize the school's tax-exempt status under Section 501(c)(3). To complicate the issue, there is no official procedure set out for a private school to cure this failure to file, though the private school may resolve the issue through a closing agreement with the IRS. 

"Resolving a Small Mistake That Has Big Potential Consequences," Brent Feller and Christie Galinski, Taxation of Exempts, Volume 27 / Issue 1, Copyright © 2015, Thomson Reuters.

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