Tax exempt organizations

Democrats Keep Exemption

In the waning days of the Bush administration, the government ended its long-running effort to retroactively revoke the tax-exempt status of a Democratic Party-affiliated organization that it claimed had improperly promoted the party’s candidates. In 1985, prominent members of the Democratic Party including then-Gov. Bill Clinton formed the Democratic Leadership

The Redesigned Form 990

Most nonprofit organizations are now reviewing their first redesigned IRS Form 990 and its many new information requirements designed to enhance transparency and accountability. CPAs with nonprofit clients now are seeing the pieces fit together with satisfaction or, if drawing together the information has been difficult, perhaps with some concern.

New Single-Member LLC Reporting Reqiurements

Many tax-exempt organizations have formed single-member limited liability companies (SMLLCs) as integral parts of their entity structure. SMLLCs enjoy flexible treatment for tax purposes, limitation of liability, easy transferability of ownership interest by sale or exchange, and separate governance and management. As a result, they are widely used to conduct

Comments on Selected Parts of the New Form 990 and Schedules

Editor's note: This is a sidebar to "The Redesigned Form 990: Advising Nonprofit Organizations," March 09. Part I provides a snapshot of the entire organization because it summarizes the income statement and balance sheet on the first page. It also asks for a description of the organization’s mission. Since this

Reporting Unrelated Business Income

With the United States officially in a recession, state and federal funding sources on which charitable organizations rely are drying up. In addition to funding cuts, charities are struggling with across-the-board expense increases while trying to serve a broader charitable population. Colleges and universities are seeing a marked increase in

No Good Deed Goes Unpunished

A volunteer president of the board of directors of a nonprofit day care center was held personally liable for the day care’s payroll taxes and therefore was not entitled to a refund of the taxes he paid on behalf of the organization. The Seventh Circuit Court of Appeals rejected the

Line Items

CONGRESS TRUMPS SUPREME COURT In Announcement 2008-103, the IRS provided procedures and guidelines for claiming refunds of excise tax paid by domestic coal producers and exporters on exported coal. The guidance was in response to an extension by Congress of the tax years for which refunds may be claimed, to

IRS Offers Online Course on New 990

Training and information resources on the Service’s “Stay Exempt” Web site for exempt organizations ( now include a four-part “mini-course” on filing the revised Form 990, Return of Organization Exempt From Income Tax. The audio and slide-show presentation is more than two hours long, broken up into five sessions.

A Showcase of Tax Research

In this third installment of “In Practice,” we distill research published in tax and accounting journals that should be of interest to busy tax practitioners. The pervasiveness of tax considerations in the affairs of everyone from students to CEOs makes the field a particularly fertile one for studying financial behavior.

Capital With a Conscience

EXECUTIVE SUMMARY Private foundations must distinguish between what are sometimes called mission–related investments and program–related investments (PRIs). PRIs enable private foundations to make venture capital–type investments that might otherwise be penalized under the IRC as “jeopardizing,” that is, risky. Mission–related investments, although not technically defined, nonetheless have their distinct purposes,

Supporting Org Guidelines Available

The IRS has produced guide sheets and explanations to help applicants for supporting organization status to determine which of the three types of supporting organizations outlined in IRC § 509(a)(3) they fall under. The guides, which include checklists for the organizational test, operational test, control test, relationship requirement and other

New Split-Interest Return Form

The IRS recently issued a revised Form 5227, Split-Interest Trust Information Return, for use in preparing returns for tax years beginning on or after Jan. 1, 2007. Among its numerous changes, the most significant are: Charitable split-interest trusts are no longer required to file Form 1041-A, Trust Accumulation of Charitable

Split-Interest Prohibition Upheld

The Third Circuit Court of Appeals joined other jurisdictions in affirming IRC § 2055(e)’s prohibition of charitable deductions from an estate for transfers of interests in trust property that are not definitely divided between charitable and noncharitable beneficiaries, even where the arrangement shows little likelihood of being abusive in the

New Form 990 Phased in for Smaller EOs

Smaller exempt organizations received transition relief as the IRS released its revamped Form 990, Return of Organization Exempt From Income Tax, for tax years 2008 and following. Organizations with gross receipts under $1 million or total assets under $2.5 million will be allowed to use Form 990-EZ for tax year

IRS Reminds EOs of Political Restrictions

Churches and other exempt organizations (EOs) must abide by laws prohibiting them from direct or indirect involvement in political candidates’ campaigns, the IRS reminded in a news release. Revenue Ruling 2007-41, issued last summer, provides scenarios of how the ban may be observed. Generally, tax-exempt organizations are forbidden to promote

AICPA Assesses Form 990 Redesign

The AICPA proposed a list of suggestions for the IRS to mitigate what the Institute considers increased burdens that will result from the new draft of Form 990, Return of Organization Exempt From Income Tax. The AICPA’s 990 Task Force said the changes improve transparency of reporting, aiding in performance

NPO Compensation in the Spotlight

EXECUTIVE SUMMARY Intermediate sanctions impose a penalty tax on key employees of certain tax-exempt organizations who receive unreasonable compensation, and on managers who approve it knowingly. Intermediate sanction regulations provide a framework of appropriate policies and procedures regarding compensation for tax-exempt organizations. Intermediate sanction rules require organizations to publicly disclose

Proposed New Form 990 Released

Form 990, Return of Organization Exempt From Income Tax, will have a new format the IRS hopes to roll out for the 2008 tax year, in the form’s first overhaul since 1979. The changes are designed to aid transparency, with the first page of the 10-page form (one more than


Tackling TCJA changes this tax season

Return preparers must be ready for how the Tax Cuts and Jobs Act has modified many common features of individual and business returns.


Why CPAs can’t wait on automation tools

What do accounting firms waiting on others to develop AI, automation, and data analytics tools have in common with a baseball fan sitting in a stadium filling with water at an exponential rate? The answer could determine your firm’s fate.