“Can I Get a Receipt for That?” is a great introduction to the issue of giving contribution receipts in a local church. Also applies to other NPOs.
Non-profit Tax
What the average clergy housing allowance looks like
Previous post discussed the increasing visibility of the Driscoll tax case allowing a pastor to use $400,000 to buy a second house and not pay income tax on the $400,000. The Tax Court ruled that the clergy housing allowance concept applies to more than one home.
My concern is that extreme case is perceived as a typical example of the financial life of a pastor.
The average size of a church in the US is about 100 members. Therefore, the life of a typical pastor in America looks more like this:
Visiblity of housing allowance issue is increasing, or bad cases make bad law
A tax case way out in the outer limits, one that makes regulators irritated, is getting more attention.
Article in the Money & Investing section of the Wall Street Journal discussed the Phil Driscoll tax case: Tax Break for Clergy Questioned
Some background: Christian artist Phil Driscoll won a battle with the IRS. On one hand, the details don’t seem too outlandish.
Short introduction to charitable solicitation requirements
Most states have some sort of registration requirement when an NPO outside that state get money from people inside that state. For a one-paragraph intro to the charitable solicitation issue, visit State Registration for Charities & Religious Organizations at TheMinistryBlog.
Contact any CPA who works with NPOs for more details.
You can get an Employer Identification Number (EIN) for free, direct from the IRS
A colleague of mine needed an employer identification number for a new entity. Did a Google search and went to the first source listed. Wasn’t until the process was almost done that the website asked for a credit card. At that point my colleague realized there was something wrong and did not pay $150. My colleague backed out of that place, went to the IRS website and got an EIN for free.
There are websites out there that will charge you for what you can do for free.
Retroactive reinstatement for NPOs with automatic revocation
Quick summary of the retroactive reinstatement available for small NPOs whose exempt status was revoked. Post is Exempt Status Retroactive Reinstatement by Katie Thomas, CPA on the Nonprofit GPS blog.
The retroactive reinstatement is only available to smaller organizations, those with income under $50,000. Larger organizations who wish to get their exempt status back will be nonexempt from May 2010 through the date of the new application for exemption.
In California there were 33,733 organizations whose exempt status was revoked.
I previously discussed this issue here.
Is there any paperwork burden from ministry outside the U.S.?
The headline of a great article, Foreign Payees, Activities, and Financial Accounts Increase Your Compliance Burden, points towards an answer of yes.
CPAs Daniel Skerbitz and Laurie Gnad, of Stanfield & O’Dell, provide a great introduction to the extra reporting paperwork that arises for overseas missions or even dealing with foreign missionaries when they are in the U.S.
3 places to avoid trouble with employment law
Common problems to avoid in employment law – post by Katie Morell at AmEx Open Forum:
3 Legal Landmines You Must Avoid
Extremely short version:
Deadline extended for filing report on cash held overseas – opportunity to get all reports filed – conclusion
I have several posts about the mandatory report of overseas bank accounts. This issue can easily involve NPOs that have overseas operations. The form used to report and the whole process is referred to as FBAR. Actual name is Report of Foreign Bank and Financial Accounts.
Extension of deadline
The IRS has extended a deadline for filing the FBAR reports for 2009 and earlier. The new deadline is November 1, 2011.
This means “persons” could catch up on the filing of all those reports that had never been filed. Persons include NPOs with bank accounts used in overseas projects.
By the way, the extension does not apply to the 12-31-10 reports which must be filed by 6-30-11.
Should church childcare workers be treated as employees or independent contractors?
Verne Hargrave, at Faith-Based Accounting, has a one word answer. See his post: Question #4 – “should our childcare workers be treated as employees or independent contractors.” Straight to the point.
Deadline extended for filing report on cash held overseas – penalties for not filing – part 3
Previously discussed the FBAR report and additional background on how easy it is for an NPO with overseas activity to generate a requirement to file the report. Will get back to the extended deadline, but need to look at the downside of not filing.
Penalties
This is where things get ugly. The FBAR report says the penalty for a person who fails to properly file is a civil penalty up to $10,000. This applies to organizations also. If there is reasonable cause, then no penalty will be imposed.
It gets worse.
New optional mileage rate for last half of 2011
The IRS announced an increased mileage rate for the last half of 2011 due to high fuel costs.
Starting 7-1-11, the optional rate for business use of vehicles is 55.5 cents per mile. For medical and moving the optional rate is 23.5 cents per mile.
Deadline extended for filing report on cash held overseas –more background on implications of FBAR reporting – part 2
This series of posts is discussion the FBAR in general and an extension of the deadline to file the reports from 2009 and earlier. It is important to note the deadline for filing the 2010 reports is still June 30, 2011. Not much time left for those reports.
Previously discussed the filing requirements for the FBAR report and how that would fit into the operations of an NPO with overseas activities.
How does this get messy for a mission organization?
How else could the usual functioning of a foreign mission organization create filing requirements? Let’s say you have missionaries located in the field who have a local bank account. While they likely are drawing a very modest salary, the situation could easily develop where staff could cross that $10,000 cutoff in their account and have to file a report. Merely send someone funds to buy a vehicle, for example. Your program manager and assistant manager sign on the account used for the office expenses, so they each have a personal filing requirement.
Deadline extended for filing report on cash held overseas – that FBAR report applies to NPO’s – part 1
Federal law requires filing a report with the Treasury Department when you have foreign bank accounts with balances over a certain amount. This law applies to NPOs.
Deadline for filing all of the past reports has been extended by the IRS.
How can this be an issue in the nonprofit community? If you have field programs and a local bank account to pay bills then this requirement could kick in. It is my personal perception there may be some mission organizations that have a filing requirement but are not doing what they need to do.
I will give a little background, explain why this is an issue for the nonprofit community, and then describe the extended deadline.
Slim relief for getting exemption back after automatic revocation for very small organizations
As discussed here, not filing any returns with the IRS for three years now results in automatic revocation of exempt status. This is a very bad place to be. Without exempt status an organization cannot accept deductible contributions, would have to file an 1120 income tax form, and would not be able to do other things that only exempt organizations can do.
If you get in this situation there is no appeal or reversal. Your organization will have to apply for exempt status from scratch. The whole 1023 thing.
The IRS announced some special rules, called transition relief, for very small organizations.