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Nonprofit Tax

Social Welfare Organization
Nonprofit Tax

Tax-exempt Status Reinstatement

This very helpful Procedure sets forth streamlined processes organizations whose tax-exempt status has been automatically revoked for failure to file required annual returns or notices for 3 consecutive years to regain their tax-exempt status retroactive to the date of of revocation.

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Reporting Diversions of Nonprofit Assets

The Washington Post has identified over 1,000 nonprofit organizations that have reported a significant diversion of assets. Its important to note that there are over 1,616,000 tax-exempt nonprofits in the U.S. today; thus, these filings represent less than 1% of tax-exempt nonprofits. It’s also interesting to note that a quick review of Arizona’s list includes only 21 organizations – most of which reported the diversions in a clear, transparent, and confidence inspiring manner.

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Expediting Applications for Exemption
Nonprofit Tax

Expediting Applications for Exemption – Hurry up and Wait

In general, 1023 exemption applications are processed in the order of receipt by the IRS, and expedited processing is available only if there is a compelling reason for it. There are reports that over 80% of requests for expedited processing are denied. If the organization needs its determination letter in a hurry because of circumstances that are within its control, the IRS is not likely to feel that the situation justifies expedited handling.

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IRS Audits of Tax-exempt Entities
Nonprofit Tax

IRS Audits of Tax-exempt Entities

Although there are many reasons a nonprofit organization may be selected for an audit, several things heighten the chance of being selected. Things like irregularities on Form 990s, failure to file a Form 990, citizen complaints, having a relationship with another taxpayer currently being audited or receiving negative media attention can all increase your chance of being audited beyond the random internal IRS computer process.

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IRS Launches Compliance Check of 1300 Self-declared 501(c)(4),(5) and (6) Organizations

As the IRS Exempt Organizations division indicated in its 2013 work plan, it is conducting a compliance check of self-declared tax-exempt organizations. The IRS recently mailed over 1,300 questionnaires to self-declared Section 501(c)(4), 501(c)(5), and 501(c)(6) organizations. The project is part of the IRS’ plan to gather information about self-declared exempt organizations, determine whether self-declared exempt organizations are complying with applicable tax-exempt law, and increase voluntary compliance.

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Transaction Privilege Tax
Nonprofit Tax

Arizona’s Transaction Privilege Tax – How it Applies to Nonprofits

Non-profit organizations that are tax-exempt from federal and state income tax are not necessarily exempt from state and local taxes. In lieu of a sales tax, Arizona imposes a Transaction Privilege Tax (TPT) on seventeen separate business classifications. Certain tangible personal property and retail sales transactions are exempt from Arizona’s TPT.

The general rule is that sales made to churches, schools, and other non-profit organizations are taxed. However, under the Arizona Revised Statutes (A.R.S.) the following types of transactions are not subject to the State of Arizona’s Transaction Privilege Tax:

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