Generally, an individual must be a lawful permanent resident (LPR or “green card” holder) prior to applying for citizenship.  However, if the individual honorably served in time of war or declared hostilities during a period designated by the President through Executive Order, that individual does not need to be a LPR and, in fact, the individual may be in undocumented status when applying for citizenship.  [However, the individual would need to be physically present in the United States or qualifying area at the time of enlistment, reenlistment, or induction.]  LPR status is also not required for posthumous citizenship due to military service.

 As of the posting of this blog, the periods of war or declared hostilities designated by the President are as follows:

• April 6, 1917 – November 11, 1918
• September 1, 1939 – December 31, 1946
• June 25, 1950 – July 1, 1955
• February 28, 1961 – October 15, 1978
• September 11, 2001 – present

Normally an individual must also be at least 18 years of age or older in order to apply for citizenship.  However, this age requirement is waived when an individual has served in the U.S. military.

 A general requirement for an individual who is seeking citizenship is that the individual must be physically present in the U.S. for at least one-half of the last five years prior to application.  However, this can be waived for individuals who have served in the U.S. military.  Instead, that individual may file if the individual is an LPR who served in the U.S. military for an aggregate period of one year (and if separated from service, the separation was honorable) and the application is filed during service or within 6 months of separation.  For those individuals who are serving or have served during hostilities (as described above), physical presence and residency requirements do not apply.

 There are also additional exceptions that can apply to spouses and children of U.S. military personnel who are applying for U.S. citizenship. 

 The requirements and exceptions described above are not comprehensive but provide a beginning step for those individuals who have served in the U.S. military to evaluate whether they may apply to become a U.S. citizen based upon that service.

 If you believe that you or someone you know may be eligible to become a U.S. Citizen based upon service in the U.S. military, feel free to contact our office for more information and for a complete evaluation on eligibility requirements for that specific individual.

Posted 4/6/11 – Approved by Lea Ann Sterling

The information presented in this article is for general information only and should not be construed as legal advice.

             The state of child custody law is becoming unsettled in northern Michigan due to newly-created uncertainty as to exactly what a parent has to show in order to modify a prior custody order. 

            The Child Custody Act authorizes a trial court to modify child custody orders “for proper cause shown or because of change of circumstances,” and if in the child’s best interests.  MCL  722.27(1)(c). 

            However, in 2004 the Court of Appeals removed the “change of circumstances” requirement in a case involving a parent’s attempt to change a prior custody order that was arrived at by stipulation, rather than by a judicial ruling applying the statutory child custody factors (i.e., “best interest factors”) to evidence given at a hearing.  See Thompson v Thompson, 261 Mich App 353.  The attempted change occurred at trial, and the order sought to be changed was a temporary pre-judgment custody order.  Until just recently, it had always been thought that the rule of Thompson only applied to temporary, pre-judgment custody orders, and that where the parties’ stipulation was the sole basis for a temporary order, no change of circumstances needed to be shown for such an order to be modified in a pre-trial evidentiary hearing, or at trial itself.

            This thinking has been altered in Charlevoix County and Manistee County by the successful application of Thompson to stipulated custody orders contained in consent judgments–that is, custody orders arrived at by consent, contained in court decrees that are not contemplated to be temporary at all, such as consent judgments of divorce.  The significance of extending Thompson from stipulated temporary orders to consent judgments is substantial.  The “change of circumstances” requirement is often an impossible burden to overcome for a parent seeking to modify custody.  The removal of this requirement makes it far more likely that a custody motion will be given serious consideration by a court.  If a change of circumstances is no longer required for a custody order contained in a consent judgment, then a majority of the divorce judgments in this state (a conservative estimate is that 75% of divorce judgments are consent judgments) immediately become more vulnerable to a successful custody challenge. 

             Parents in the counties above successfully argued that the reasoning in Thompson, and another Court of Appeals case–Greenlee v Davis (Docket No.285036)–compelled the extension of Thompson to consent judgments.  Greenlee, decided in 2008, held that the change of circumstances requirement “only applies to cases in which a party is attempting to alter or modify a previous custody order, such that the trial court would be required to reconsider a previous determination of the best interest factors.”  Greenlee regarded a party’s attempt to modify a stipulated temporary order memorialized in a consent judgment–in that case, a consent judgment of filiation.  Greenlee affirmed the trial court’s holding that a “consent judgment of filiation was not a valid custody order for purposes of MCL 722.27, such that it was not required to find proper cause or change of circumstances before modifying or amending the order.”  Greenlee observed that because “nothing in the record indicates that the trial court, before signing the judgment of filiation, considered the best interest factors,” in the subsequent action to modify the custody order therein “the trial court did not reconsider a previous determination of the best interest factors.”

            Greenlee relied upon the published opinion of Thompson, above. Thompson held that a stipulated temporary custody order did not constitute an original custody award pursuant to MCL 722.27(1)(c), and that therefore neither a showing of proper cause nor changed circumstances was required in order to modify such an order.  Thompson emphasized that as to the temporary order “there was no evidentiary hearing regarding the interest factors.”  The parents in Charlevoix and Manistee argued that it was this lack of a consideration of the best interests factors in the first instance which distinguished Thompson from a case where the prior order was the product of an evidentiary hearing–Vodvarka v Grasmeyer, 259 Mich App 499 (2003).  The Thompson court itself observed the same: “We note that in Vodvarka…the underlying circumstances were different, as the defendant was requesting a reevaluation of the trial court’s prior award of custody and was not seeking an initial evidentiary hearing on custody.  In the present case, there was no evaluation.  Defendant was waiting for the trial court to make its first evaluation.”

            It was successfully argued above that the extension of Thompson to stipulated custody orders contained in final judgments was appropriate, on the grounds that a stipulated custody order contained in a final judgment is not intrinsically more likely to reflect a child’s best interests than one obtained pre-judgment.  In both instances, the custodial arrangement is based solely on the evaluation of the parties rather than the court.  In either context, it remains true that parties cannot conclusively agree regarding child custody.  It was this concern, that a trial court not behave unquestioningly with respect to a child’s best interests, that drove the reasoning in Thompson: “If we were to agree with plaintiff, in essence, a party who stipulates a temporary custody agreement would not be able to have an evidentiary hearing unless a change of circumstances or proper cause was shown.  This is improper because defendant is entitled to have the trial court make findings on the best interests factors.”  This argument was decisive in Charlevoix and Manistee counties, where the respective circuit court Judges held that, because there was no substantive difference between stipulated temporary custody orders and stipulated custody orders contained in consent judgments, the same analysis should be applied to both, the result being that a change of circumstances would no longer be required to change the custody provisions of a final judgment where the judgment was a product of settlement rather than trial.

            As noted above, the repercussions of this change could be immense.  The current state of affairs is untenable, as previously well-settled child custody law is being thrown into disarray, with splits developing amongst the various circuits of the state.  In the meantime, custody orders that might have previously been considered to be “untouchable” are vulnerable to modification by parents who no longer need to show a change of circumstances in order to move forward with their motion.  Moreover, it may be some time before the Court of Appeals is presented with a proper case to resolve this ambiguity.  As an affected parent, the most prudent course of action at this time may be to seek a legal “check up” of any controlling custody order, and obtain counsel from an attorney experienced with these new developments in the law.

Posted 12/14/10 – Approved by Lea Ann Sterling

The information presented in this article is for general information only and should not be construed as legal advice.

     Sterling Law Office is pleased to announce that since that time, it has fulfilled its commitment and Attorney Wendy K. Bailey has completed the Collaborative Divorce Practice training through the Collaborative Practice Institute of Michigan (CPIM) and is currently accepting collaborative divorce and family law cases. 

     Wendy Bailey is a member of two multi-disciplinary teams of professionals who have been trained specifically in the collaborative style of settlement and conflict resolution in Northern Michigan.  She is a member of the Up North Collaborative Divorce Professionals, which primarily serves Leelanau, Grand Traverse, Antrim, and Benzie Counties.  She is also a member of the Cadillac Area Collaborative Divorce Professionals, which primarily serves Wexford, Missaukee, and Osceola Counties.  If your case is not in one of the above-mentioned counties, please contact our office to determine if we can assist you in the collaborative process or direct you to someone who can.

     For more information on collaborative divorce, visit the International Academy of Collaborative Professionals’ website: www.collaborativepractice.com and visit Collaborative Practice Institute of Michigan’s website: www.collaborativepracticemi.org.  The Up North Collaborative Divorce Professionals team is currently developing a website, which should be functional in the near future at: www.upnorthcollaborativedivorce.com.  Please feel free to read the original collaborative divorce blog entry, posted on 11/2/07.

 Posted 10/1/10

Approved by Lea Ann Sterling

 The information presented in this article is for general information only and should not be construed to be legal advice.

We have also recently welcomed Marcia Metzen as our new office manager.  She was the office manager of a Chicago, Illinois firm, Schain, Burney, Ross & Citron, Ltd., where she was employed for over 22 years.  Marcia is very happy to have relocated to beautiful Leelanau county!

If you think these forms of communication are private and safe, think again. Think, for example, of former Detroit Mayor Kwame Kilpatrick, charged with numerous felonies on the basis of text-message evidence. Skytel, the service provider for Detroit city-owned cell phones, effortlessly retrieved 14,000 cell phone text messages that were sent four-to-six years ago, and these now form the foundation for the charges against Kilpatrick. If you e-mail, text message or otherwise communicate electronically on a government or employer-owned medium, every word you utter may be stored and retrievable.

Messages sent on individual or public (library, internet café) cell phones, computers or e-mail are no safer from discovery. Although Verizon, AT&T and Sprint state that they store text messages only for about two weeks or “not a long period” (whatever that means), hackers, police and private investigators frequently have retrieved old messages archived on carrier servers. Several software products are now sold which allow private individuals to secretly access and spy on others’ (such as a spouse’s) e-mail accounts. A Google survey reported that 27% of men and 21% of women had secretly prowled through someone else’s e-mail. Simple radio kits can also be purchased which let anyone intercept text messages, such as the Wal-Mart employee caught spying on a New York Times reporter. And of course, every bit of information put on blogs or social network sites is no more than a few clicks away from access by anyone.

What can be done to protect one’s electronic privacy? Primarily, never put anything on any electronic medium which you would not want published on the front page of the newspaper – not your PIN number, password, bank and asset information, those feelings of murder in your heart toward your ex, nor photos of the fun and tipsy night out at the local honky-tonk. Put passwords on your phone, wireless network and computer accounts to keep unwanted snoopers out. Erase all personal data from cell phones before recycling or discarding, using the phone manufacturers’ master reset instructions, which can be found on company websites. Just removing a SIM card does not remove a cell phone’s data history.

Remember, also, that whatever measures you take to safeguard your electronic utterances, none of it matters if the person to whom the text message or e-mail is sent has been less careful. Once information is posted or sent electronically, the sender has lost all control over where the information may wind up.

The only surefire guarantee your privacy won’t be invaded electronically is to keep private matters off electronic systems. If divorce, paternity, custody or other family law problems arise, the family law attorneys at Sterling Law Office are equipped to help resolve those problems, and to protect clients from electronic prying which could torpedo them in court.
Posted by Mary Wreford; Approved by Lea Ann Sterling, Esq., August 29, 2008

The information presented in this article is for general information only and should not be construed to be legal advice.

Sterling Law Office family law attorneys pursue client legal goals with the most efficient, minimal cost because we recognize that our clients also have budget limits and financial goals, especially in the current difficult economic times. On the client’s part, there are a number of things that can be done to control and reduce legal fees, and other potential costs of a family law case.

For starters, clients can cut down significantly on background research time on their case by fully completing all information that is requested at the initial consult, usually in the form of an intake questionnaire. Every kernel of information, such as account numbers, pension plans, family member birthdays and Social Security numbers, etc., which the client supplies saves time-and-money consuming phone calls and correspondence by the law office. When you prepare for the first consultation with a family law attorney, compose a file to bring along that includes copies of all family financial, educational, property, demographic and other information which is relevant to your case. Leaving copies of such documents with your attorney will give a serious boost to the “paper chase” for your matter, as well as saving time, paper and postage costs of the law office having to make the copies and return the originals to you.

A letter or e-mail offers an economical means of communicating information and questions to your attorney. Receiving information or questions in writing gives the attorney a chance to digest the information, research any questions, and devise advice before communicating with the client. A written document also can help the client organize thoughts and can be kept in the client file for future reference. This is a much more efficient use of the attorney’s and the client’s time than long, explanatory phone calls. Treat your attorney as your legal advisor, not as a therapist or a friend, and if it is a matter of venting emotion, dealing with psychological problems or getting moral support, turn to family, friends or professional counselors.

Because clients are billed for time the attorney spends on the matter, whenever the client can do his or her own negotiating it saves money. In a divorce or custody matter, for example, if the parties can discuss and come to agreement between themselves on any issues, each item worked out by the parties saves attorney time spent preparing for and dealing with the opposing attorney, the Friend of the Court, and other family court departments. Any item which would make up part of a divorce agreement (such as who keeps specific personal property, who pays insurance costs, division of parenting time and holidays, who pays credit card bills, etc.), will quickly build cost savings if worked out by the partners themselves. Thus, use of the professional negotiating skills of the attorney can be saved for issues on which agreement cannot be reached.

Trying to hold on to the family home, while tempting for many people, may not be a good financial choice in a divorce. Spousal support can help cover mortgage payments, but clients need to look at the total cost of maintaining the property, repairs and upkeep, taxes, and mortgage payments to determine if it really is feasible for one person to afford. Whoever keeps the house will also have to buy out the other spouse’s financial interest in the property.

If spouses make a clean and complete separation of their finances when they part, it protects each from having their credit hurt by payment defaults of the other. For example, if the couple continue to hold credit cards in common, one partner can drive up the debt and seriously hurt the other’s credit score. If one spouse promises in the divorce agreement to pay off certain creditors or a mortgage, then defaults on that promise, the creditor or bank can sue both partners if their names are both still on that asset.

It is very important to understand the different tax treatment of alimony versus child support. Alimony generally is taxed as income to the person receiving it, while child support generally is not taxable. Each type of payment has different rules for how long it will continue, as well, and the circumstances which can increase or decrease payments. The experienced family law attorney, like those at Sterling Law Office, will make certain you thoroughly understand the rules governing these two types of payment.

Finally, to save yourself and your heirs substantial costs in probate, taxes and the distress of conflict over inheritance, every client who completes a divorce must review and revise their estate plan, or create one if they haven’t yet done so. Wills, trusts and beneficiaries can all be impacted by a divorce. To ensure that assets are protected for the intended heirs, and that a client’s final wishes are carried out regarding health care, financial control, and other matters, an up-to-date estate plan is necessary.

By implementing the above cost-savings and planning, Sterling Law Office family law clients can remain on stable, solvent financial ground through the course of a marital dissolution. We help our clients disprove the infamous bumper sticker of a Chicago divorce attorney, which reads “Love is grand, divorce is $40 grand!”
Posted by Mary Wreford; Approved by Lea Ann Sterling, Esq., April 18, 2008

The information presented in this article is for general information only and should not be construed to be legal advice.

The petition drive and the bus trip grew out of an event last fall organized by a coalition of citizens, myself among them, concerned about the integrity of the Michigan Supreme Court. “Judicial elections are becoming political prize fights where partisans and special interests seek to install judges who will answer to them instead of the law and the Constitution,” read the banner quoting retired U. S. Supreme Court Justice Sandra Day O’Conner at an October 25, 2007 forum, “Courting Trouble, Threats to a Fair and Independent Michigan Supreme Court.” Guest speakers Detroit Free Press columnist Brian Dickerson, Rich Robinson of the Michigan Campaign Finance Network, and Michigan Supreme Court Justice Elizabeth Weaver addressed the overflow crowd of mostly non-lawyers.

“How many of you have been a party to a case before the Michigan Supreme Court?” Mr. Dickerson asked. No one raised a hand. However, after hearing about court decisions affecting a range of subjects from no fault auto insurance to the environment, attendees concluded that each of them had indeed been involved in one form or another and that there exists the appearance that justices deciding these cases may have been answering to their campaign contributors instead of to the law.

$23 million has been spent since 2000 to elect Michigan Supreme Court justices. Nearly half of that sum has gone into unidentified, unreported candidate-focused issue ads disparaging the other candidate. After what some call “justice for sale,” 86% of cases before the MSC involve a campaign contributor as a party. Public financing, full disclosure of campaign funding, and an improved system for conflict of interest recusals are required to avoid the appearance of impropriety. Supreme Court Justice Weaver is also calling for Senate confirmation of Supreme Court appointments and one eight-year term.

To take action on our concerns and to build on the energy created by the forum, the forum organizing coalition established the Michigan Independent Supreme Court Campaign (MISCC). Volunteers from MISCC coordinated the petition drive and arranged the bus trip to deliver the results. From the efforts begun in Traverse City, grass roots groups in other areas of Michigan are planning similar educational events. Senator McManus pledged to move forward on the issue, but the results remain to be seen. While the delegation was at the Capitol, House Democrats did introduce a new judicial candidate public financing bill to join a Senate version already on the table. The efforts may eventually restore public confidence in the Court but it is too late to stop the ugly process for 2008.

While the public is distracted by the upcoming presidential election, special interests will be as focused on this year’s most expensive judicial race in Michigan history. Incumbent Republican Clifford Taylor is expected to wage a high stakes battle against a candidate chosen by the Democratic Party. While the ballot will not indicate their parties’ sponsorship, it will designate Justice Taylor as the incumbent. Always an advantage in the past, in this election year, the incumbency designation could remain an unfair advantage or become a liability, depending on the perception of the electorate and its disgust for the secretly-sponsored offensive campaign that is expected. Visit www.miscc.org for more information.
Posted by Mary Wreford; Approved by Lea Ann Sterling, Esq., April 1, 2008

Lea Ann Sterling received her J.D. from The Ohio State University College of Law in 1980 and got to Michigan as soon as she could where she established Sterling Law Office in Empire. Her practice with associate attorney Wendy K. Bailey includes Family Law, Social Security Disability, and Personal Injury. Sterling Law Office appears to be the only firm north of Grand Rapids specializing in Immigration Law where they counsel businesses on worksite compliance and assist families with this complex area. Lea Ann is married to Lanny Sterling and has three children. Among other activities leading some to call her a “renaissance woman,” Lea Ann enjoys writing about history and is the author of Historic Homes of Olde Towne and Historic Cottages of Mackinac Island. She appeared as an expert on the 1788 settlement of Marietta, Ohio in the 2003 documentary “Opening the Door West.” Googling “Lea Ann Sterling” would lead you to believe the name applies to at least five different people, but it’s all her. In addition to GTLA Bar, she is also a member of the Michigan Association for Justice and the American Immigration Lawyers Association.

The information presented in this article is for general information only and should not be construed to be legal advice.

2007 Institute for Continuing Legal Education Family Law and Child Custody Seminar. On video. December 2007 and ongoing, attended by Lea Ann Sterling, Wendy Bailey, and Kenneth Watson.

2007 American Immigration Lawyers Association, Worksite Enforcement and Immigrant Employment Law Conference. Scottsdale, Arizona, November 30-December 1, 2007, attended by Lea Ann Sterling.

2007 Michigan Bar Association Annual Meeting and Institute for Continuing Legal Education Solo and Small Firm Institute. Grand Rapids, Michigan, September 27-28, 2007, attended by Lea Ann Sterling, Lanny Sterling, M. Wreford.
Posted by Mary Wreford; Approved by Lea Ann Sterling, Esq., December 15, 2007

The information presented in this article is for general information only and should not be construed to be legal advice.

FRIENDS OF THE LIBRARY – PART I: INCORPORATION
There are a number of legal issues that a group of hard-working, helpful volunteers must consider prior to establishing themselves as the official Friends of the Library. Two articles (below) focus on the legal requirements of establishing and operating Friends of the Library groups to help them work effectively and efficiently with public libraries across Michigan. The first article focuses on the establishment options of the group. The second article focuses on legal requirements tied to fundraising and gaining 501(c)(3) status.

One of the most important goals a Friends of the Library group must achieve is to establish a proper relationship with the public library with which it is associated. Each party should understand the legal status of the other, as well as respect each other’s powers and duties. This relationship can either make or break the Friends of the Library. Care should be taken to establish a reporting structure, a policy on gifts to the library and authorization for any activities undertaken in the name of or on behalf of the library.

In Michigan, as in most other states, there are two basic organizational structures to be considered when establishing a Friends of the Library group: unincorporated association or corporation. The choice of one or the other depends on an analysis of factors such as cost, liability and certainty.

A) Unincorporated Associations. Many associations made up of volunteers, especially those organized for short-term projects, are unincorporated associations. Generally, the personal liability of members of unincorporated associations on contracts made by, for and on behalf of the association is “joint and several.” This means that all the members, collectively, or any one member may be liable for the entire value of the contracts of the association. The remaining members, for instance, may be liable for payment on a contract for printing costs if the association itself fails or is unable to pay off the debt of the group. Members of unincorporated associations may also be liable for any civil wrongs in which they participate, authorize or even to which they simply assent by vote or otherwise. These acts may include, but are not limited to, undertakings that amount to discrimination, wrongful hiring or termination, negligence, and lack of supervision.
Even unincorporated associations should be carefully organized with appropriate articles and bylaws. Since the potential for liability for members is omnipresent, the unincorporated group should always seek the advice of legal counsel to ensure that the documentation is complete and proper.

B) Michigan Nonprofit Corporations. In general, the officers, directors and members of nonprofit corporations are not personally liable for the acts of the corporation or each other. Any liability is generally limited to the assets of the corporation. The Michigan Nonprofit Corporation Act, MCL §450.2101 – §450.3192, allows nonprofit corporations to assume much of the liability of their directors and to indemnify their officers and directors for certain acts.

This is accomplished through the proper drafting of the corporation’s articles of incorporation and bylaws. The costs associated with drafting these documents are comparable to those for the unincorporated association. There is a nominal cost for filing the articles of incorporation with the Corporation, Securities and Land Development Bureau of the Michigan Department of Consumer and Industry Services.

In comparison with an unincorporated association, however, the legal results of establishing a Friends of the Library group as a Michigan Nonprofit Corporation are very certain. The Michigan Nonprofit Corporation Act is quite extensive and very specific in its regulation of the operation of covered entities. Additionally, there is a great deal of case law. Legal counsel will be able to predict with more certitude the outcome of different situations and the implications of different options in establishment and operation. Most Friends of the Library groups in Michigan have chosen to become incorporated under the Michigan Nonprofit Corporations Act.

C) Filing to Become a Michigan Nonprofit Corporation. Becoming a Michigan nonprofit corporation is neither difficult nor expensive. The questions asked on the application will prompt the organizers of a Friends of the Library group to ask all the important questions about the purpose and structure of the organization. The statement of purpose is extremely important and should be drafted with the advice of legal counsel in order to avoid unwanted results or implications.

It is at this stage in the process that a decision must be made between a membership corporation or a directorship corporation. A membership corporation is one in which each member generally has the right of one vote on all matters brought before the corporation. While this may seem to embody the democratic ideal, it often becomes cumbersome as nonprofit corporations grow and decisions need to be made in a more efficient manner. Most nonprofit corporations that expect to involve numerous members in their activities choose the directorship form of organization. Legal counsel for the Friends of the Library will be able to explain the fine points of the options as well as draft the appropriate articles of incorporation and bylaws.

FRIENDS OF THE LIBRARY PART II: FUNDRAISING
A) Fundraising. Friends of the Library should also become knowledgeable about the state laws governing all the activities of the group. Most Friends of the Library are engaged in fundraising for the library. With few exceptions, all organizations must apply for and obtain a license to solicit charitable contributions. This license is obtained from the Michigan Department of Attorney General, Charitable Trust Section. Friends of the Library who do not receive contributions in excess of $8,000 during a 12-month period of any year and who use all volunteers and make a financial statement available to the public may be exempt from the requirement. However, as soon as the organization exceeds the $8,000 threshold, an application for a license must be filed within 30 days with the Attorney General’s Charitable Trust Section. They are also a helpful source of information if the Friends are thinking of hiring a professional fundraiser.

Many other laws govern the typical fundraising activities of Friends of the Library. For example, if a group holds a raffle or conducts bingo or similar games of chance, it must obtain a license from the Michigan Bureau of Lottery, Charitable Gaming Division. If the Friends are engaged in the sale of goods, even used books, at retail, a sales tax license and the collection and remittance of sales tax is generally required.

B) 501(c)(3) Status. There are two basic reasons why a Friends of the Library might seek tax-exempt status under Section 501(c)(3) of the Internal Revenue Code: a recognized organization is not subject to federal income tax and donations to the organization are tax deductible as provided by the code. Other advantages of acquiring federal tax-exempt status may occur on the state level. Although recognition as a tax-exempt organization by the IRS does not automatically mean exemption from Michigan taxes, there are various exemptions from income, property or sales and use taxes. For instance, 501(c)(3) organizations whose retail sales do not exceed $5,000 in a calendar year may be exempt from sales tax. Legal counsel will be able to advise Friends of the Library in regard to other advantageous provisions.

501(c)(3) status does not come free of restrictions and requirements. An annual report is required under most circumstances. Tax-exempt organizations are somewhat restricted in their ability to lobby and influence legislation. Income taxes may be imposed on “unrelated business activities.” Friends of the Library should be especially careful about participating in any election campaigns, including ballot questions, without first consulting legal counsel. All of these matters should be discussed on a regular basis with legal and financial professionals.

Although the process of applying for 501(c)(3) status requires care and attention to detail, the advantages far outweigh any difficulties associated with the process. The first step is to obtain the proper forms. Publication 557, “Tax-Exempt Status for Your Organization,” published by the Internal Revenue Service, is a good place to start. This booklet describes the application and approval process, which forms must be used and the types of information required. There is an extremely helpful discussion of which organizations must apply for recognition and which are not required to file.

The application itself must be submitted by Form 1023 and Form 872-C. There is a one-time filing fee. The form may be long, but it is not mysterious. The Friends of the Library, in anticipation of an appointment, can gather much of the information requested through legal counsel. The forms are available free of charge from the Internal Revenue Service.
One of the most important reasons for incorporating a Friends of the Library as a Michigan nonprofit corporation, as well as obtaining 501(c)(3) status, is the assurance provided to library donors that the organization is being operated in accordance with law and with a certain measure of accountability to the public. This assurance can assist in immeasurable ways with any fundraising activities the Friends of the Library may choose.
(Originally published on the Library of Michigan website, www.michigan.gov/libraryofmichigan. Reproduced with permission by the Library of Michigan.)
Posted by Mary Wreford; Approved by Lea Ann Sterling, Esq., November 15, 2007.

The information presented in this article is for general information only and should not be construed to be legal advice.