Non-profit Tax

I retract my previous comments on the rate that may be used by a charity to reimburse its volunteers for personal use of vehicles.

By Congressional action, individuals may deduct $0.14 per mile for the personal use of vehicles while performing volunteer services to a tax-exempt charity. Reimbursements by the charity to the volunteer should be limited to the same amount, $0.14 per mile. Any reimbursement over that rate should be reported as personal income to the volunteer.

I’ve previously asked Do you use an overseas bank account in your ministry? Then you may have a filing requirement for that account.

Here’s the issue: The federal government has a requirement to file a specific report if you have financial accounts outside the U.S. that have more than $10,000 in the account at any point during the year.

This filing requirement applies to the organization and any individual with signature authority on the account. That means your ministry must file reports (if your accounts clear the threshold on any day of the year) and every check signer must as well.

For just a little more detail, you can read the other posts on this blog at this tag.

If you want some deep detail, check out an article by Karen Nakamura, at Corporate Taxation Insider: Foreign bank account reporting.

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Corey Pfaffe answers lots of nonprofit tax questions at his blog, MinistryCPA. If you work in the accounting part of the nonprofit world, might be a good idea to check out his site regularly. Here’s a few of the recent posts of interest:

• No Deduction for Donated Services
• Minister Employed by Church in Non-ministerial Position
• Monthly Support as Benevolence
• Housing Allowance for Independent Contractor

Check out the links for answers. 

That first item on donated services is a question I receive often.

An example of how that can be phrased:

Can our charity issue a tax-deductible receipt for the value of work done by contractor at no charge?

Here’s a very unaccountant-like answer in terms of brevity:

No. You can’t.

Prof. Pfaffe has lots more info at his blog. Check it out. If you use an RSS reader, add his blog to your feed.

MinistryCPA blog summarizes Form 1099-MISC Failure to File Penalties. There are per-return penalties that increase over time. Ouch.

Check out the post for more details. Then check that you are ready to file all your 1099-MISCs.

Need more details? Corey Pfaffe, CPA has more info at another of his post’s: Form 1099-MISC Rental Payment Reminders.

The Wall Street Journal cites unidentified “law-enforcement officials” who say Criminal Charges Not Expected in IRS Probe.

Why am I discussing an issue that tip-toes into the political realm?

Because I’m always talking to my NPO clients about tax law. I’m often encouraging them to correct behavior that, ah, may not be completely correct under the tax law. I often answer questions on how to handle particular types of transactions.

The last half of this post will explain why the WSJ report worries me.

No charges expected

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If your ministry uses an overseas bank account to further your mission, you may have a requirement to file a report called an FBAR if the balance is over a certain amount at any point in the year.

Even worse, if individuals in your organization, like you Ms. CFO or Mr. Treasurer or Mrs. Program Manager, have signature authority over that account, the individuals have a requirement to disclose that authority on their personal 1040. The individuals may also need to file an FBAR individually.

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There is a narrow option for excluding the value of ministry provided housing from an employee’s taxable income. I’m not going to go into details because there are enough twists and turns that anything said could be misinterpreted as giving specific advice.

Fortunately, I don’t have to explain this. Corey Pfaffe, CPA, has already done so.

If this is of interest to you, check out his post:

• Employer Paying Housing Expenses Directly

The end of his article gives a path for research if you need to pursue this further.

Several readers of this blog have asked questions about taking deductions for travel while helping a charity. Volunteers at your NPO are probably asking the same questions.  Some tips from IRS Summertime Tax Tip 2013-05 might help.

You might want to make this available to volunteers of your organization. The quoted text is from the IRS, so it is in the public domain: (more…)

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: (more…)

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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