Nonprofit finance, accounting, and tax news. Other tidbits of interest to the charity community.
Congressional law says that any NPO not filing required 990 returns with the IRS for three consecutive years will automatically lose tax-exempt status. This is called automatic revocation. The first time the three-year rolling requirement came into play was for years ending December 31, 2009 with the filing deadline of May 15, 2010.
On June 8, 2011, the IRS published the first list of organizations subject to automatic revocation.
Verne Hargrave has a great, short explanation at Faith Based Accounting on how to handle expense reimbursements.
Question #1 – What is the best way to handle expense reimbursements?
Extremely short summary: (more…)
Previously mentioned the expanded 1099 reporting that would have gone into effect in 2012. This would have required all businesses and ministries to report on 1099s the payments to any vendor over $600. The major change in the rules is the exception for incorporated businesses would have gone away.
On 3-14-11 the President signed legislation that repeals the expanded reporting requirement.
ECFA has announced the membership of the Commission on Accountability and Policy for Religious Organizations. This is the task force ECFA has assembled to provide feedback requested by U.S. Sen. Grassley.
Click here for my previous comments on the commission, which provides general background.
Today filed a 199-N for a California NPO with income under $25,000. With that income level, an electronic filing is needed. This is my first time with that form.
A few thoughts on the filing.
If the allowances you provide to your staff aren’t handled correctly, the amount they receive can become taxable income. There are lots of things to say on this issue, but I will mention just a few.
Bryan Baughman has cautions at 2 Tips Related to Employee Allowances, posted at Faith-Based Accounting.
Standard question on just about every audit is whether the organization is breaking any laws or regulations. Most perceptive response I ever received was “none that I know of, and that’s what worries me.”
Question: What do you call a situation when an independent organization that is not tax-exempt wants a church to process gifts so donors get a tax-deductible receipt?
Corey Pfaffe writes at the MinistryCPA blog. He has a lot of good comments. Suggest you visit his site once in a while. Two posts I wanted to mention specifically:
For concise news on the changed social security tax rates for 2011, see New Changes in Payroll Taxes, a post by Autum Awalt at the Faith-Based Accounting blog.
The cut off for organizations being able to file a 199N with the California Franchise Tax Board instead of the longer 199 is gross revenue normally $25,000 or less. The cut off to file a 990-N instead of the longer 990-EZ with the IRS is $50,000.
What to do if your income is between 25,000 and 50,000?
Starting January 1, 2011, very small tax-exempt organizations in California must file an e postcard with the state Franchise Tax Board. This is very similar to the federal e-postcard. Form FTB 199N is used for the FTB while Form 990-N is used with the IRS.
Key things you need to know:
Previous posts here and here for background.
There are a few comments worth repeating from the the ECFA’s webinar on the formation of their Commission on Accountability and Policy for Religious Organizations. The Commission will provide input to the Senate Finance Committee. A few of my thoughts as well.