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If your new nonprofit corporation is considering filing an application with the IRS to become a tax-exempt organization, here’s a must read warning from the IRS:
Number 10. Is there enough financial data? See the instructions to Form 1023 or Form 1024 to determine how much information you need to provide, based on how long your organization has existed.
Number 9. In what month does the annual accounting period end? Applications should indicate the end of their fiscal year. It is a good idea to check for consistency. Does the fiscal year ending date stated on the application agree with the fiscal year ending date stated in the by-laws, on the financial statements, and on any prior returns filed? Continue reading Top Ten Reasons for Delays in Processing Exempt Organization Applications
Nonprofit Law Blog: “Today, more than ever, the public and government agencies are demanding nonprofits to be transparent. . . . When Guidestar released its report ‘The State of Nonprofit Transparency, 2008: Voluntary Disclosure Practices’ in 2009, it suggested five simple steps for increasing transparency:”
One of the reasons I have formed over 2,600 Arizona companies since 2001 is my information “how to” articles on my website. I am happy to announce that I just revised my popular article called “How to Form an Arizona Nonprofit Corporation.” I updated the article to include the current fees to [...]
Wall St. Journal: “As the leading breast-cancer charity, Susan G. Komen For the Cure helped make “for the cure” a staple of the fund-raising vernacular. The slogan is so popular that dozens of groups have sought to trademark names incorporating the phrase . . . . Komen . . . launching a [...]
Federal tax law provides that a tax-exempt organization that does not file appropriate tax returns for three consecutive years automatically loses its tax-exempt status. The IRS announced that it is giving one-time relief for small exempt organizations that failed to file for three years to reinstate compliance and retain tax-exempt status. Tax-exempt [...]
Tax exempt organizations that earned less than $25,000 of annual income where not previously required to file a tax return with the IRS. The tax law changed and all tax exempt organizations, including those with incomes less than $25,000 were required to file an IRS form 990 by May 17, 2010, or [...]
May 17, 2010, is the deadline for nonprofit corporations that are tax exempt organizations (other than churches) with less than $25,000 in income to file IRS form 990-N. A change in the law three years ago become effective on May 17th. See “Thousands of nonprofits may lose tax-exempt status” and “Thousands of non-profits could [...]
CNN Money: “beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year.” This means that every business will have to have a record keeping [...]
I form a lot of Arizona nonprofit corporations. Some are tax exempt charities and some are not. A nonprofit corporation formed under Arizona law does not automatically qualify as a charity that is exempt from federal income tax. Nonprofit corporations that want to be tax exempt organizations must file an IRS form [...]
New York Times: “At midnight on May 15, an estimated one-fifth to one-quarter of some 1.6 million charities . . . will lose their tax exemptions . . . . federal legislation passed in 2006 required all nonprofits to file tax forms the following year. Previously, only organizations with revenues of $25,000 [...]
The Ballard Spahr law firm reports that the Internal Revenue Service will begin random audits of employers to determine if they have underpaid employment taxes by paying independent contractors who should have been classified as employees. Treasury regulations require disregarded entities to withhold, report, and pay employment taxes. See “Final Regulations Treat [...]
Question: What is your opinion on reserving a name for my new company with the Arizona Corporation Commission?
Answer: I never reserve a name for a new LLC or corporation unless it would be a big problem if the company did not get the name. Big problem to me means that the [...]
Arizona Republic: “Six out of 10 non-profits in Arizona reported steep reductions in revenue in 2009, and officials expect the declines to continue in 2010. Revenue decreased more than 22 percent while demand for services increased by 85 percent, according to new survey results from the Arizona Alliance of Nonprofits.”
The Foundation Center has a great library of information about forming and operating nonprofit corporations, including tax exempt charitable organizations. Here are some of the topics relating to establishing a nonprofit corporation:
How do I start a nonprofit organization? ¿Cómo creo una organización sin fines de lucro en los Estados Unidos? What [...]
Charity Lawyer: , Lindsey Harris, attorney with the Make a Wish Foundation, writes about the importance of charities using good contracts. “From protecting your brand to purchasing the goods needed to deliver your mission, contracts are an essential part any nonprofit business. Without solid contracts–the kind you can understand and actually use [...]
Form 990, Return of Organization Exempt From Income Tax, is the IRS’s primary tool for gathering information about tax-exempt organizations, for educating organizations about tax law requirements, and for promoting compliance with tax law. The 2009 Form 990, schedules, and instructions have been revised to modify and clarify certain reporting requirements. The [...]
Nonprofit Law Blog: “All too often, the issue of legal compliance receives attention from a nonprofit corporation only after a conflict arises. Instead, a nonprofit corporation can better prevent conflicts and protect itself through regular legal audits. Financial audits alone, while important, will not sufficiently account for the bigger issue of overall [...]
Companies with employees should never fail to pay payroll taxes not just because its required by the law, but also because people who control a company’s finances can be personally liable to the IRS for the unpaid trust fund portion of payroll taxes. Employers such as corporations (for profit and nonprofit), limited [...]
Nonprofit Law Blog: 10 New Year’s Resolutions for Your Board
Th IRS announced that user fees will increase for all applications for exemption (Forms 1023, 1024, and 1028) postmarked after January 3, 2010:
$400 for organizations whose gross receipts are $10,000 or less annually over a 4-year period $850 for organizations whose gross receipts exceed $10,000 annually over a 4-year period $3,000 for group [...]
The Nonprofit Law Blog has semi-famous quotes from the Jerry Sienfeld show and ties them into important nonprofit organization governance issues. The article covers a lot of important nonprofit governance ground.
CharityLawyer: “In the last decade or so, directors and officers have faced an increased exposure to personal liability. While the bulk of legal actions have been against directors and officers of for profit corporations, judgments against and settlements by directors and officers of nonprofit corporations are increasing. I am often [...]
Public charities should review the December 2009 version of the IRS governance check sheet used by IRS agent when examining 501(c)(3) public charities. See the IRS’ guide sheet for Completing the check sheet.
CharityLawyer: “We love getting calls from potential clients with exciting ideas. However, surprisingly often, we are in a position which we do not enjoy of letting the caller know that as exciting as their idea is, it does not qualify for tax-exemption. Some common examples of ideas that will not qualify include [...]
Executive MBA Programs: “Charities and scholarships are usually created solely on one’s passion to help others or a life experience that has inspired them to provide aid to others in the same situation. With an outpouring of individuals wanting to start charitable organizations that can make the world a better place, it [...]
Charity Lawyer: “In my practice representing nonprofit and tax-exempt organizations, there are often themes that emerge. Over the last few weeks I have had a spate of calls from would be nonprofits that paid either a nonprofit start-up ‘consultant’ or a document preparation company to form their nonprofit and handle their IRS [...]
The Nonprofit Law Blog has a two part article that members of boards of directors of nonprofit organizations should read in these tough economic times.
Board members must understand their roles during challenging periods and how they may be in a better position in some ways than their executives in [...]
Before forming a nonprofit corporation that will become a tax exempt organization or charity, watch the IRS video called “Applying for Tax Exemption – an Overview.” See also the IRS website called “Tax Basics for Exempt Organizations,’ which has several tax-exempt entity educational videos.
The IRS offers the following resources [...]
CharityLawyer: “I recently contacted Gene Takagi, a noted California nonprofit lawyer, to confirm or deny an assertion regarding California nonprofit law that was made to one of our clients. He was kind enough to clarify the matter. We discussed that there are many such ‘nonprofit law urban legends’ and he suggested that [...]
CharityLawyer.com: “This list was started as the inaugural post to CharityLawyer Blog. The post struck a nerve, was mentioned by the Chronicle of Philanthropy, the Nonprofit Quarterly, and numerous bloggers and twitter users. San Francisco tax-exempt organizations lawyer and publisher of the Nonprofit Law Blog, Gene Takagi, reviewed the list and added [...]
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