New Online Training for Tax Exempt Organizations

Obtaining and maintaining 501(c)(3) tax exempt status is crucial to the success of many organizations. This online training from the IRS provides the tools and knowledge to help you keep your organization’s exempt status intact. It consists of five interactive courses, which you can take individually and in any order. Click here.

See also the one hour program by Amy Hereford that explores legal issues involved in establishing or reestablishing a nonprofit organization. The program goes beyond the IRS tax issues to examine the range of requirements for keeping your organization in good legal health. The program is recommended to entrepreneurs, boardmembers and directors of both new and established nonprofits. Click here.

Accountability Guidelines for Higher Education

The Association of Governing Boards of Universities and Colleges (AGB) drafted a set of guidelines to keep university trustees on the right track. Despite recent scandals at some academic institutions, AGB wants to remind everyone that the overall performance of university trustees remains commendable. Documenting good policies and practices simply strengthens the public's trust in these institutions. Click here.

TY 2006 EO Returns - Significant Changes

The instructions to the 2006 Forms 990 and 990-EZ and Schedule A incorporate significant changes to address legislation enacted in 2006 and comments received from the public. The following are highlights of the significant changes.
Family and Business Relationships of Officers, Directors, Trustees and Key Employees: The definitions of family and business relationships used for purposes of completing Form 990, Line 51 must now also be used for purposes of completing Form 990, line 75b. See pages 32 and 35 of the Form 990 Instructions.
Compensation of Officers, Directors, Trustees and Key Employees from Related Organizations
* The definition of related organization (used for purposes of completing Form 990 line 75c) is clarified by listing eight specific relationships. See page 35 of the Form 990 Instructions.
* The definition of related organization excludes certain bank or financial institution trustees and certain common independent contractors.
* Organizations no longer have to report the amount of compensation where (1) the organization conducts joint programs or shares facilities or employees, (2) one or more persons exercise substantial influence over two organizations, and (3) volunteers control two organizations.
* The definition of substantial influence is clarified by referencing Internal Revenue Code section 4958(f)(1) and Regulations section 53.4958-3.
Supporting Organizations
* A supporting organization must now generally file Form 990 (or Form 990-EZ, if applicable), even if its gross receipts are normally less than $25,000. See page 2 of the 990 Instructions, and
* A supporting organization must provide additional information on Schedule A, page 3. See page 7 of Schedule A instructions.
Organizations Maintaining Donor Advised Funds
* Organizations maintaining donor advised funds must complete new lines 1a and 22a on Form 990. See pages 23 and 28 of Form 990 Instructions.
* Organizations maintaining donor advised funds must complete new lines 4a through 4g on the Schedule A. See pages 3 and 4 of the Schedule A Instructions.
Organizations with Controlled Entities
* Organizations with controlled entities must file Form 990 even if their gross receipts are normally less than $25,000. See page 2 of the Form 990 Instructions.
* Organizations with controlled entities must file Form 990 even if their gross receipts are normally less than $25,000. See pages 2 and 41-42 of the Form 990 Instructions and Code section 512(b)(13).
Organizations Paying Travel and Entertainment Expenses for Government Officials Organizations paying travel and entertainment expenses for federal, state and local government officials and their family members must separately report certain payments on Form 990, Line 43 as described on page 30 of Form 990 Instructions.
Organizations with Conservation Easements An organizations receiving or holding conservation easements must complete Schedule A, line 3c and attach a schedule with the information described on page 3 of the Schedule A Instructions.
For more information, see the What’s New section of the form instructions for 2006 Forms 990 and 990-EZ.

IRS Launches On-Line Workshop for Exempt Organizations

The Internal Revenue Service has launched a new Web-based version of its popular Exempt Organizations Workshop covering tax compliance issues confronted by small and mid-sized tax exempt organizations.
The free online workshop – Stay Exempt – Tax Basics for 501(c)(3)s – consists of five interactive modules on tax compliance topics for exempt organizations:
* Tax-Exempt Status – How can you keep your 501(c)(3) exempt?
* Unrelated Business Income – Does your organization generate taxable income?
* Employment Issues – How should you treat your workers for tax purposes?
* Form 990 – Would you like to file an error-free return?
* Required Disclosures – To whom do you have to show your records?
Users can access this new training program at www.stayexempt.org. Users can complete the modules in any order and repeat them as many times as they like. The online training website does not require registration and its visitors will remain anonymous.

See also the one hour program by Amy Hereford that explores legal issues involved in establishing or reestablishing a nonprofit organization. The program goes beyond the IRS tax issues to examine the range of requirements for keeping your organization in good legal health. The program is recommended to entrepreneurs, boardmembers and directors of both new and established nonprofits. Click here.

Nonprofit Statistics

Once again, we have access to an enlightening snapshot of our sector. The Urban Institute has compiled facts and figures that define the enormity and diversity of the nonprofit world. An estimated 1.4 million nonprofit organizations are registered with the IRS. Collectively, we generate $1.4 trillion in revenue and account for $3 trillion in assets. And, the numbers are rising on all fronts. These statistics help us understand the size and scope of the nonprofit sector as a whole. Report

Nonprofit Board Report

How are nonprofit organizations governed? Since 2003, Grant Thornton has surveyed nonprofit leaders about how our boards are structured, what policies we have in place, and how independent our governing bodies are. Over half of this year’s respondents indicate that they changed their governance practices during the past three years. The results shed light on board size, committee structures, audit practices, and key policies. Once again, nonprofit boards demonstrate that they take accountability seriously and update their practices accordingly. Report

Canon Law for Religious: Alienation Limit for 2007

For the year 2007, the amount which requires approval of the Congregation for Institutes of Consecrated Life and Societies of Apostolic life in cases of alienation of stable patrimony or business transactions which could have an adverse effect on the patrimonial condition of an institute or society is raised to $5,475,000 [the amount in 2005 was $5,165,000, and the amount in 2006 was $5,341,000]. This amount applies only to alienation or business transaction within the United States. Alienation and business transactions in other counties must follow the amount set for institutes and societies in each particular country. [See canons 638.3 and 1292]
Alienation and business transactions in other countries must follow the amount set for institutes and societies in each particular country or region. [See canons 638.3 and 1292].
Alienation Tax: The present tax usually charged for approval of an alienation is .1% of the actual selling price. Payment must be made in euros and presented to the Congregation prior to receiving the document of approval. Up to now, wire transfers have not been acceptable.
Adverse Business Transaction Tax: The tax now charged seems to be 50 euro.

Philanthropy Report Available

As rewarding as it would be to see foundations and grantees agree on funding priorities, simply raising the issue is a valuable conversation starter. According to a study by the Center for Effective Philanthropy, most grants made by foundations they surveyed are program-restricted, small, and short-term. This approach makes it easier for foundations to measure impact. Not surprisingly, grantees prefer general operating support for its flexibility and long-term organizational capacity-building potential. While these givers and takers may not reach complete consensus, they can benefit from a better understanding of the other’s objectives. Report

New Recordkeeping Required for Charitable Contributions by Payroll Deduction

The IRS released new recordkeeping requirements for Charitable Contributions by Payroll Deduction.
Notice 2006-110 provides guidance on how charitable contributions made by payroll deduction may meet the new recordkeeping requirements of section 170(f)(17), added by the Pension Protection Act of 2006. This new provision requires a taxpayer to maintain a bank record or written communication from the donee showing the name of the donee organization and date and amount of the contribution.
See http://www.irs.gov/pub/irs-drop/n-06-110.pdf

Telephone Tax Refund - for Nonprofits Too.

The IRS has released procedures for exempt organizations to estimate their federal telephone excise tax refunds. To request a refund, an EO must file Form 990-T, even if it does not have taxable income to report, and attach Form 8913.

What is the telephone tax refund?
The telephone tax refund is a one-time payment available on your 2006 federal income tax return, designed to refund previously collected long-distance federal excise taxes. It is available to anyone who paid long-distance taxes on landline, cell phone or Voice over Internet Protocol (VoIP) service.

Why is the government refunding these taxes?
Several recent federal court decisions have held that the tax does not apply to long-distance service as it is billed today. The IRS is following these decisions and refunding the portion of the tax charged on long-distance calls. The IRS is also refunding taxes collected on telephone service under plans that do not differentiate between long distance and local calls.
The telephone tax continues to apply to local-only service, and the IRS is not refunding taxes charged on local-only service.
The IRS will refund to you the taxes on long-distance service billed to you for the period after Feb 28, 2003 and before Aug 1, 2006. Taxpayers should request this refund next year when they file their 2006 tax returns.

See the following for more information:
* Telephone Tax Refunds: Questions and Answers for Businesses and Tax-Exempt Organizations
* IR-2006-137, IRS Announces Standard Amounts for Telphone Tax Refunds
* Telephone Tax Refund: Questions and Answers for Individuals
* IR-2006-82, Government to Stop Collecting Long-Distance Telephone Tax
* Notice, Communications Excise Tax; Toll Telephone Service