California A.G. files cease & desist order against 3 large charities alleging donated medicine was overvalued

March 20, 2018, 5:00 am

As mentioned previously, the conflict over donated pharmaceuticals has heated up again. It seemed to have faded away over the last couple of years but has now gained renewed visibility.

The California Attorney General has filed cease and desist orders against three large, high-profile charities who received between 70% and 98% of their revenue from medical GIK.

A complaint was filed against another charity for overvaluation of GIK. That charity essentially conceded the accusations in a stipulated settlement, agreeing to terminate the charity’s existence. That action is discussed here.

The three large charities are Food for the Poor, Inc., MAP International, and Catholic Medical Mission Board, Inc.

The cease and desist orders can be found at the AG’s web site:

This is a long post, approaching 2,200 words. Might be worthwhile to get a fresh cup of coffee before diving in.



This post will walk through a number of key comments in the cease and desist orders, which I’ll referred to as C&DO. Because the C&DO are roughly parallel to each other, I’ll walk through the MAP order and add comments on the CMMB and FftP order where it is helpful. The CMMB C&DO does not have the comments regarding state charitable filing requirements.

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Reduced staffing and funding for the Exempt Organization division of the IRS

December 20, 2017, 8:22 am

Staffing and funding for the IRS division that oversees tax exempt organizations has fallen dramatically in the last six years or so.

According to a behind-the-paywall article at the Washington Post, the budget for the Exempt Organization division has dropped from $102M to $82M between 2011 and FY 2017. That is a $20M decline, or 19.6%.

For the same years, staffing has declined from 889 to 642, according to the article. That is a decline of 247 positions, or 27.8%.

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Standard mileage rates for 2018

December 18, 2017, 9:47 am

Mileage” by Anthony Albright is licensed under CC BY-SA 2.0

The IRS has posted the standard mileage rates for 2018. New rate for transportation and reimbursements is 54.5 cents. That is up a penny from 53.5 cents in 2017.

According to IRS comments in Notice 2018-03:

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Helpful comments from 2017 CalCPA Not-for-profit conference, part 1

May 30, 2017, 7:45 am

Image courtesy of Adobe Stock.

Here are a few of the comments from the May 24, 2017 Not-for-profit conference presented by California Society of CPAs that I thought would be of interest to others in the nonprofit community. Since all comments are the opinion of the speaker, neither their names nor organizations will be mentioned. The ideas mentioned can stand or fall on their own.

This is the first of two posts. The next discussion will address changes in financial statement presentation outlined in ASU 2016-14. In this post: tax, revenue recognition, and single audit.

Tax update:

  • It might just be possible that filing a form 1023 or 1023-EZ is so easy that people can get exempt status for an organization without knowing the requirements to properly operate a charity and maintain exempt status. In examinations to follow-up after exempt status is approved, the IRS is finding a lot of charities are out of compliance.
  • One of several focuses of the IRS is filing of FBARs, those forms used to report overseas bank accounts. One ripple effect of chasing money laundering is the impact on charities who have overseas accounts. Even though there is minimal risk of those accounts being used for tax evasion the FBAR filing requirement still apply. As a reminder, the deadline for filing FBARs is now April 15 with a six-month extension available.

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Do some research on the Executive Order addressing religious freedom

May 5, 2017, 8:07 am

Image courtesy of Adobe Stock

I don’t do politics on my blogs.

I do pay attention to issues affecting non-profits.

So when the president issues an Executive Order addressing religious freedom, it is worth discussing even though it is a politically loaded EO.

On May 4, the president issued an EO which reportedly pulls back on the ban against churches getting involved in political campaigns.

In a one sentence overstatement, under current law 501(c)(3) exempt organizations may not involve themselves in political campaigns and may only get involved in very limited ways in legislative efforts. Ok, I’ll add a second sentence – That means churches and other exempt organizations may not endorse or favor a political candidate but may exert some effort addressing matters before a legislative body.

Based only on initial reports, the EO appears to contain several major items. First, telling the IRS to use maximum discretion in applying the rules on the political ban. Second, telling the Attorney General to develop guidelines for federal agencies on how they apply their rules in terms of religious freedom. Third, asking federal agencies to make certain changes in health care requirements regarding contraceptive coverage.

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Tips for churches on how not to mess up your payroll taxes

February 14, 2017, 8:30 am
Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

Church Law & Tax, site for Richard Hammar’s writing on issues affecting churches, recently tweeted about their presentation of Five Common Payroll Issues Ministries Face Slideshow.

If you are in a church, or any parachurch ministry for that matter, it would be worth your time to read through the slide deck.

I’ll guess this is old news for most people. However, if you see something that you don’t understand or seems contrary to how you are doing things, you might want to take that as a warning you ought to do some research. I’ll mention just a few highlights.

Remember to report the following as income (see slides 8 and 9): Read the rest of this entry »

Another scam to beware: phishing for W-2 info

February 7, 2017, 7:26 am
Image courtesy of Adobe Stock.

Image courtesy of Adobe Stock.

Ok, so you know it is a scam if you get a call from “the IRS” saying you have to pay your tax bill right this instant because the local cops are on the way to arrest you.

If you get one of those calls, hang up. Don’t even talk.

Here’s the newest phishing scam now starting to hit charities.

Kelly Phillips Erb explains the new scheme: IRS Issues Urgent Alert as W-2 Phishing Scam Spreads During Tax Season.

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