With unemployment nearing the double digits, there is a large population of professionals in the marketplace. You might have seen the news cast that played on NBC this Wednesday the 23rd (click here).

One thing to know is if you have any professionals donate services that you would normally have to pay for you should be recording that time as an “in-kind” contribution. FASB states that if the services donated (a) create or enhance nonfinancial assets or (b) require specialized skills, are provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation.

Examples to watch for are …. Read the rest of this entry »

As treasurer of a non-profit here in Ft. Worth I reviewed the Form 990 with our board. We have a 15+ member board and the process took an hour. Significant discussion regarding governance policies, program descriptions/achievements, mission, etc, occurred.

Was this a valuable process for each new member. YES.

Was it time-consuming to review each section? YES.

Was the board educated in financial transparency? YES!

Therefore based on this experience and others that I have had the privilege to review with our clients, treasurers please take this opportunity to understand and review this return with your governing board. Valuable input and perspectives come from continuity and longevity.

The American Society of Association Executives (ASAE) published the following information in a recent alert to members. This should be of high interest to all tax-exempt organizations.

Sen. Chuck Grassley (R-IA), ranking member of the Senate Finance Committee, has filed two amendments to the health care reform bill introduced by Senate Finance Chairman Max Baucus (D-MT) that directly impact tax-exempt organizations. These amendments were filed along with more than 500 others before the end of last week, and are being considered in the markup of the Baucus bill that got underway Sept. 22.

Read the rest of this entry »

One of our clients was inadvertently late in filing their Form 990. They legitimately thought that they had properly filed the extension, however this was not the case. So how do you communicate with the IRS regarding late filings? The following are suggestions and considerations in communicating relevant information:

1. Communicate that your organization is a non-profit organization (tax-exempt) and a little bit about your exempt purpose. I had an agent tell me one time to explain in my letter that the organization is non-profit, give some statistics about what you do, and what would be given up if the penalties had to be paid. For example “if this penalty is imposed then exempt funds would have to be spent that could otherwise pay for 3 months worth of food for the endangered cockatoo – of which there is only one held in captivity”.
2. Tell them why the return wasn’t filed timely. If there was confusion in your understanding of the rules, you can say that. You will want to say that there was not “willful neglect” involved. The IRS’s position is that ignorance is no excuse, but I have seen them allow it as an excuse. Tell them what your procedures were to prepare and timely file the tax return/extension, what went wrong, and how you have changed your procedures to ensure that this won’t happen again. Be sure and say that it won’t happen again.
3. If the organization has never been late in timely filing their extensions/returns, you’ll want to say that. I recommend something like “Your records should indicate that the organization has a history of timely filing the Form 990 and/or extension requests and we request that you consider this and the circumstances described above in your review of this situation.”
4. Mention that as soon as you became aware that the extension had not been timely filed that you prepared and filed the return by the extended due date that would have been in place had a proper extension been granted.  “Please note that the error was located and the tax return was still filed with the IRS prior to the automatic extended filing deadline” (if that is the case).
5. In your closing, ask them specifically to abate the penalties and interest due to reasonable cause. Our experience is that they will often abate the penalties but not interest. “We hope this letter has shown that the failure to file the timely extension request (or filing of the tax return) was inadvertent and not due to willful neglect. Accordingly, we respectfully request abatement of the penalty in the amount of $_______.”
6. The last paragraph should include a sentence that says basically “under penalties of perjury, I declare that the statements made above are true, correct and complete to the best of my knowledge and belief.” This is similar to the declaration in the signature block of various tax forms.
7. Never embellish the truth (or lie) to the IRS.

Remember, state the facts and circumstances in a concise, complete and accurate manner.  There are no guarantees that the IRS will accept your explanation and abate the penalties, but it is certainly worth a try!

If you have questions, call me.

IRS Circular 230 Disclosure:  to ensure compliance with requirements recently imposed by the IRS, we must inform you that any U.S. tax advice contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Did you know that your organization could be affected by a new nonprofit corporation statute? Beginning January 1, 2010, every Texas nonprofit corporation will be subject to the Texas Business Organizations Code. Will the new statute bring greater flexibility to governance? What is required in order for your organization to comply with this statute?

Speaker: 
Frank Sommerville, CPA/JD Frank is a shareholder in the law firm of Weycer, Kaplan, Pulaski, & Zuber, P.C. in Houston and Dallas, Texas. He holds a license as a CPA and he is also Board Certified in tax law by the Texas Board of Legal Specialization. He is a member of the American Bar Association, The State Bar of Texas, Dallas Bar Association, Christian Legal Society, and the TSCPA.

When: Tuesday, September 22nd (8:30 a.m. -10:30 a.m.) @ the Fort Worth Botanic Gardens
Fee: $20 for FIC members; $40 for non-members (No-shows will be billed)

Light Breakfast will be provided

*Cash/Check payments for all workshops may be made at the door or mailed in. 

Held at the Fort Worth Botanic Gardens – Oak Hall
3220 Botanic Garden Blvd.
Fort Worth, TX 76107
(817) 871-7686

For more information, click here.

Our next Executive Exchange will be on Wednesday, September 16th at the Funding Information Center. Tax-exempt accounting managers and executive directors are invited, as this particular session will present the pros and cons of different accounting software packages. Issues such as integration with donor software, fundraising accounting to meet new 990 requirements, report writing, and donor acknowledgement will be discussed.

Discussion Leader:  Charles O. Paul, CPA

Fee: $15 (no shows will be billed) Lunch is provided.

Held at the FIC Office
329 S. Henderson
Fort Worth, TX 76104
(817) 334-0228

To register, click here.

Executive Exchange is sponsored by RCO.  For more information, go to our website.

Does your organization lease property, plant & equipment? Odds would have it that many of you utilize leasing equipment. And Why not? Leases allow you to obtain assets while minimizing the affect on your cash flow, since most leases require a minimal, if any, initial investment. Also, we all know that everytime you blink technology advances, and leasing helps you keep up with that pace by allowing your assets to change as quickly as your business needs do.

But, one of the biggest advantages to leasing is about to have a major renovation.

Currently the U.S. accounting standards define two types of leases, operating and capital. The difference? Capital leases are included in the organization’s balances sheet, whereas operating leases only touch your income statements. See the advantage? You can keep major assets off your books and their long-term payment obligations as well.

Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB), are teaming up and discussing the elimination of the operating lease. Under their proposed guidelines, essentially all leases, for all companies, will be treated as capital leases starting as early as 2011. To see reactions to this change you can read this article.

How does this affect your organization? Read the rest of this entry »