CATEGORY

I.R.S.

compensation of nonprofit executives
Employment

How Should Your Nonprofit Set the Compensation of its Executives? 

A nonprofit’s board of directors is responsible for establishing the compensation (salary and benefits) for the chief executive (typically referred to as either the Executive Director, the CEO, or the President). Although the IRS does not provide specific dollar amounts or an acceptable range of compensation levels, they stipulate that compensation must be reasonable and not excessive; “reasonable” is defined as the value that would ordinarily be paid for like services by like enterprises under like circumstances.

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is it time for a legal audit?
Contracts, Waivers, and Releases

Is It Time for a Legal Audit?

A legal audit is an overview of an organization’s non-financial compliance, governance and risk management issues. Organizations typically consider a legal audit when new management takes over and wants to ensure they are starting with a clean slate or the in the wake of a costly mistake.

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Fiscal Sponsorship vs. Fiscal Agency
Starting a nonprofit

Nonprofit Jargon Buster Fiscal Sponsorship vs. Fiscal Agency

The term “Fiscal Sponsorship” describes an arrangement between a non-profit organization with 501(c)(3) tax exempt status and a project, often a new charitable effort, conducted by an organization, group, or an individual that does not have 501(c)(3) status. Fiscal sponsorship permits the exempt sponsor to accept funds restricted for the sponsored project on the project’s behalf. The sponsor, in turn, accepts the responsibility to ensure the funds are properly spent to achieve the project’s goals. This arrangement is useful for new charitable endeavors that want to test the waters before deciding whether to form an independent entity as well as temporary projects or coalitions that are looking for a neutral party to administer their funds.

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IRS Audits of Tax-exempt Entities
IRS

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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compliance check
IRS

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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Self-Declared Exempt Organizations
IRS

Self-Declared Exempt Organizations – A Guide to Ensure IRS Compliance

In its 2012 workplan, the IRS announced it will be paying closer attention to self-declared 501(c)(4), (c)(5) and (c)(6) organizations. These groups include social welfare organizations; labor, agricultural and horticultural groups; as well as business leagues and chambers of commerce. Such organizations consider themselves to be tax-exempt because of the nature of their activities, but they have not filed for nor received a formal determination letter from the IRS. These groups are allowed to operate without an official IRS determination because, unlike the 27 month filing deadline for 501(c)(3) charities, they are not subject to a deadline for filing an application for exemption.

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