Nonprofit update

The huge increase in 501(c)(4) applications is the cited reason for targeting some applications for additional review.

Two problems with that explanation.

First, the increase of (c)(4) applications in 2011 and 2012 is a very small portion of Determination Unit caseload.

Second, the ideological targeting started well before the volume of applications increased.

Increase in (c)(4) applications was cause for targeted review

Appendix I (page 22) of the TIGTA report identifies objective I of the investigation as: Read the rest of this entry »

Using ideological criteria to select organizations for a drawn out review of their exemption application is a serious disaster for everyone.

I want to develop three ideas in more detail but don’t have the time to do so now. Still would like to lay down a marker for the ideas.

First, this disaster is getting worse with every day that passes. Not sure whether the progression is arithmetic, geometric, or exponential. If you need a sinking feeling in your gut, trace the pieces of information as they have emerged. Somebody needs to start giving answers that are accurate past the next sunrise.

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If you are researching a tax question for a church or other faith-based ministry, you really should add the MinistryCPA blog to your list of resources.

Professor Corey Pfaffe has lots of great questions with short, clear answers.

Here are a just a few posts from the last few months you might find helpful: Read the rest of this entry »

Look at the cascading dangers from giving gift cards to your volunteers discussed in a post “Can Gift Cards Jeopardize Your Volunteer Force?” from Katie Thomas, CPA at Nonprofit GPS

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Check out the post:  Church Official Statements of Annual Giving at MinistryCPA.

Corey Pfaffe has a good reminder about the wording you must put on year-end statements you send to church donors. Without the correct wording, there is a high risk the members of your congregation could lose their deduction in the event of an audit.

Colette Kamps, CPA of Nonprofit GPS has some background on how long it is taking the IRS to process applications for exempt status.

In her post, How Long Does it Take to Get IRS Approval for Tax Exemption?, she says:

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Sometimes a large donor will want to avoid being listed on the schedule B attachment to Form 990.  Even though schedule B is not disclosable to the public, some donors worry there is a risk of becoming known. Can you accommodate that request from donors?

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Gamman & Grange reminds us that 12-31-12 is the deadline to request reinstatement of exempt status. This is a concern for NPOs that had their exempt status revoked because they went three years without filing a 990-N, which is the on-line ‘postcard’ notice to the IRS.

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Here are two questions for administrators of NPO retirement plans from Emma Kong at the Mission: Accountable blog.

Check out her post, Hidden Rules of the 401(d) and 403(b), for the answers to these questions:

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The IRS has a major push underway to identify people who have hidden cash overseas to avoid paying taxes. That enforcement effort is  obviously not a big deal to the nonprofit community.

However, the reporting requirement still applies to ministries that have cash located in their overseas programs.

Here’s the issue:  If an individual or organization has ownership or signature authority in an overseas bank account that goes over a mere $10,000 at any point during the year, there is a report that has to be filed by June 30 of the following year.

Even though the severe penalties are intended to encourage people to report all their taxable income, those filing requirements and heavy penalties could create serious problems for an NPO.

If your ministry has cash located overseas, you really need to pay attention to this reporting requirement.

Here is some background that the IRS sent out today in an e-mail update to NPOs:

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