Under the Pension Protection Act of 2006, most non-profit organizations are required to file certain information with the IRS. Certain organizations (like churches) are exempt from filing informational returns with the IRS. However most organizations are required to file, and depending on the organization’s gross receipts and total assets, determines which form (Form 990, Form 990-EZ or Form 990-N) to file.

If an organization fails to file the required form for 3 consecutive years, the organization automatically loses their federal tax-exempt status. Revocation occurs on the filing due date of the 3rd year. Form 990s are due on the 15th day, following the fourth month after the organization’s calendar year-end. (Four 1/2 months after year end. If the organization’s year-end is December 31, then the return is due May 15th).

What does this mean to the organization?

1. Must reapply (Form 1023/1024) with the IRS to regain exempt status.

2. Must file income tax return.

3. Pay income tax.

4. Contributors cannot deduct donations to the organization.

How does an organization know if they are required to file a return with the IRS? Review the letter the IRS mailed to you, after they approved or denied Form 1023/1024. This letter, often referred as an IRS Determination Letter, documents whether the organization is exempt from federal income tax and what types of returns are required to be filed.

Questions about exempt status or which form to file? Contact me.

I recently completed a ‘self-test’ in the Journal of Accountancy, March 2010 edition, titled “Internal Control:  Test Your Knowledge” and it reminded me of several questions that I have received from my clients. Many individuals within organizations believe that internal controls are only really necessary for large companies. This is a fallacy. Internal controls are VERY important for all types of organizations. Even if a company is very small, with only a few people working in the accounting department, processes can be developed to ensure that a sound control environment is consistently maintained.

It can be a daunting task to get individuals to engage in making changes to the processes and controls already in place at their organization but when they are educated on how important the controls really are they may be more willing to with stain from their resistance to change. Read the rest of this entry »

Employee relations create most of the operating headaches for a nonprofit organization. In fact, when a nonprofit finds itself in court, it usually is due to employee issues. Some nonprofits even incorrectly believe they are exempt from employment laws. In the next Funding Information Session on Tuesday, April 13th, (9 a.m. to 11 a.m.) Frank Sommerville will address:

• Applicability of employment laws to nonprofit organizations
• Employee vs. Independent Contractor
• Preventive measures to avoid employee issues
• Application of overtime pay
• Nondiscrimination laws
• Employee handbooks

Speaker:
Frank Sommerville 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.

Fee: $30 for FIC members; $45 for nonmembers

Held at the Funding Information Center
329 South Henderson
Fort Worth, TX 76107

To register, click here.