The New England Not-For-Profit Accounting Advisor

If you are the sponsor of a 403(b) retirement plan, you may be asking if it is possible for your organization to be sued over your retirement plan fees. Historically, lawsuits have primarily been filed against for-profit companies sponsoring 401(k) plans. But litigation from 2016 suggests not-for-profit organizations are being scrutinized for their retirement plan fees as well. The law firm Schlichter, Bogard, & Denton targeted numerous high-profile universities, including Yale University, the University of Pennsylvania, New York University, and the Massachusetts Institute of Technology on behalf of retirement plan participants who alleged their recordkeeping and investment costs were too high. Plaintiffs also alleged that there were too many investment options offered in the 403(b) plans, which created confusion, with many underperforming peer benchmarks.

Topics: retirement plans, Non-profits, NFP, Retirement Plan Fees, Retirement Plan Lawsuit, 403(b) programs

With the May 15^th due date for calendar year not-for-profits just around the corner and provisions inthe Tax Cuts and Jobs Act increasing scrutiny on not-for-profits’ executive compensation, employee benefits, and unrelated business income, it’s a good time to take a look at the message your organization’s tax return is sending. In years past, the IRS Form 990 was no more than a compliance task; an annual filing requirement to keep the IRS at bay. After all, there is no tax due, so what’s the big deal?

Topics: tax-exempt, not-for-profit, IRS, Form 990, Form 990-EZ, NFP, Charity Navigator, GuideStar, tax effect, Amazon Web Services, Lisa Burke

Over the past several months, regulators have released new guidance that will affect not-for-profit accounting and taxes. The following highlights some of the major developments from the end of 2017 and the beginning of 2018.

Topics: Brenda Booth, not-for-profit, NFP, Mark Winiarski, Form 1023-EZ, Excise Taxes, DAF, tax effect, Donor-Advised Funds

Executive compensation can be a consistent point of contention for many not-for-profit organizations. Many find themselves trying hard to strike a balance between:

• Paying compensation that can attract and retain the level of talent needed to help the organization fulfill its mission and purpose, and
• Complying with IRS rules related to paying compensation that is “reasonable”

Topics: not-for-profit, NFP, executive compensation, retain talent, recruitment, Hal Wallach, not-for-profit salaries

It seems like yesterday that employers sponsoring 403(b) plans went through the process of obtaining written plan documents.  Employers must now again face the process of rewriting their 403(b) documents.  The IRS recently announced that employers have until March 31, 2020 to restate their 403(b) plans into IRS pre-approved documents in order to have reasonable assurance that the plan document as written is in compliance with current law.

Topics: Bernard Kaplan, 403(b), Diane Caron, 403(b) Plan Document Restatement

Not-for-profit organizations will face some critical challenges as the new tax law begins to take effect.  The Tax Cuts and Jobs Act (TCJA) had to be paid for in order to be passed, and a result, new taxes were added to offset the costs of the 40 percent reduction in corporate tax rates and 20 percent deduction to owners of pass-through entities.

Topics: Amy O’Loughlin, executive compensation, Craig Klein, Taxes, Congress, estate tax, Tax Reform, House of Representatives, senate, Charitable contribution planning, not-for-profit tax

Massachusetts-based eligible charitable organizations are permitted exemptions for certain personal and real property. Organizations should be preparing now to file the Massachusetts "Return of Property Held for Charitable Purposes" (State Tax Form 3ABC).

The mandatory form provides a full or partial tax property tax exemption for an organization’s real or personal property so long as the organization files it no later than March 1, 2018. It is due at the Assessor's Office in each city or town in which your organization owns personal and/or real property on January 1 in order to receive a local tax exemption on that property for the fiscal year that begins the next July 1.

Topics: Massachusetts, non-for-profit, Form 3ABC, nonprofit

The FASB met Wednesday, Jan. 10, 2018, and discussed how companies should account for the effects of the new tax law, introduced as H.R. 1 (Tax Cuts and Jobs Act). The discussion addressed six different financial reporting issues related to the new tax law and has already resulted in the issuance of a FASB Staff Q&A.

Topics: FASB, Mark Winiarski, Tax Reform, Tax Reform Act, tax reform bill

Organizations evolve. Operating environments change, and not-for-profit organizations can expect to feel a financial impact from the new tax legislation. Looking at your budget and operating reserves now can help your organization be prepared for what comes next. There are plenty of factors that weigh in on your bottom line, but the need for adequate operating reserves is a significant factor in maintaining financial stability.

Topics: David Brown, not-for-profit, nonprofit, cash reserves, operating environment, tax legislation

Craig Klein, Tax Managing Director in the Not-For-Profit & Education practice, will lead a breakout session entitled, "Tax Reform and its Impact on not-for-profit Higher Education" at the Association of Independent Colleges & Universities in Massachusetts (AICUM) 2018 Spring Symposium. The symposium will be held on Wednesday, March 21, 2018 at Bentley University.

Topics: AICPA, NFP, NFP Conference