The New England Not-For-Profit Accounting Advisor

Many not-for-profit organizations were forced to completely shutter operations because of the COVID-19 pandemic, making them eligible candidates for the Employee Retention Credit (ERC) benefit in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The credit can be claimed quarterly to help offset the cost of retaining employees. It is important to note that the ERC is only available for organizations that did not receive a Paycheck Protection Program (PPP) loan. The ERC is provided by way of a payroll tax credit covering the period March 13, 2020 through Dec. 31, 2020.

Topics: tax-exempt, not-for-profit, IRS, COVID19, FMLA, COVID-19, CARES Act, COVID, ERC, program guidance, Employee Retention Credit

Alternative investments offer attractive features for employee benefit plan sponsors. Investments in real estate, businesses, and partnerships tend to yield higher rates of return when compared to traditional investment vehicles like stocks, bonds, and mutual funds. But those alternative investments could also come with tax consequences. Plan sponsors may not be aware that their plan investments are generating unrelated business taxable income (UBTI), which could lead to compliance issues.

Topics: tax-exempt, not-for-profit, IRS, UBTI, unrelated business taxable income, NFP, nonprofit, UBIT

Not-for-profit organizations have a long-standing debate with regulators about whether revenue generated by certain organizational activities should be taxable. In the 1940s and the 1950s, the IRS noticed that more and more not-for-profits were reporting non-charitable business income alongside their charitable revenues. These organizations were applying their tax exemption to revenues that would otherwise be taxable as corporate business income. There were growing concerns that this created a competitive disadvantage for their for-profit counterparts that were required to pay tax on identical revenue streams.

Topics: tax-exempt, not-for-profit, IRS, UBTI, unrelated business taxable income, NFP, nonprofit, UBIT

The effective date for the new leasing standard under ASC Topic 842 will be here before you know it. Not-for-profit organizations that issue or are conduit bond holders for securities that are traded, listed, or quoted on an exchange or over-the-counter market begin adoption for fiscal years beginning after Dec. 15, 2018 (and interim periods within those fiscal years), and all other organizations must adopt the standard for fiscal years beginning after Dec. 15, 2019 (Jun. 30, 2021 financial statements).

Topics: GAAP, tax-exempt, not-for-profit, IRS, NFP, nonprofit, Lease Standards, Leasing, asc topic 842

In the spring, we did a deep dive into the core Form 990 and provided compliance tips for Part I through Part XI. Keeping your supplementary schedules up-to-date is also critical to your compliance. Below are some tips for the Form 990 Schedule A, Schedule R and everything in between. If these schedules are applicable to your organization, the following information can help ensure that you are filing a complete and accurate Form 990 that presents your not-for-profit in the best light and helps avoid IRS scrutiny.

Topics: tax-exempt, not-for-profit, IRS, Form 990, NFP, nonprofit, Form 990 Roadmap, Form 990 Schedules

The IRS may be faced with a declining workforce and budget, but it’s still active in monitoring compliance for not-for-profit organizations. In its 2018 work plan, the IRS stressed its data-driven approach to selecting Form 990s to examine. Each filed return is scanned and analyzed on 200 data points. Those meeting certain criteria are flagged for potential exam. Some of those data points include:

Topics: tax-exempt, not-for-profit, IRS, Form 990, Form 990-EZ, NFP, tax effect

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

The IRS recently revealed a snapshot of its compliance strategy for the 2017 fiscal year. In late September 2016, the Tax-Exempt and Government Entities Division (TE/GE) released its 2017 fiscal year work plan summarizing results from its 2016 efforts and describing its plans for 2017.

Topics: tax-exempt, not-for-profit, Non-profits, NFP, nonprofit, TE/GE division

The tax-exempt bond area is closely overseen and regulated by the IRS tax-exempt bond (TEB) division. In 2016, TEB has been allocating half of its resources to examination casework. Included in the examination casework category are referrals and claims, TEB’s market segmentation program and the division’s compliance check/soft letter program.  Given the importance of tax-exempt bond financing to your organization, the complexity of maintaining post-issuance qualification of your bonds, and the IRS’s oversight of this area, your organization should understand the requirements for post-issuance compliance and monitor the use of bond-financed facilities to ensure continuing compliance. The penalties for noncompliance could be costly.

Topics: tax-exempt, compliance, tax compliance, 501(c)(3), tax exempt bonds, bonds, Post-issuance compliance

By guest contributor: Mark E. Perry, Managing Director, SJ Advisors LLC

In these increasingly challenging and changing financial markets, it is vital to have a “financial advisor you can trust” at your side as you steer your not-for-profit institution through the debt issuance process and other debt related initiatives. A municipal advisory firm (“MA”) provides this guidance and counsel.

Topics: tax-exempt, not-for-profit, Non-profits, financial advisor, financial markets