This month's Not-for-Profit Update includes:
- Predicting the Impact of Changing Tax Treatment of Charitable Contributions
- Payroll Audit Updates
- The Age of Nonprofit Mergers is Upon Us
- The Case of Exempt Organizations in the Tax Reform Debate
- New District of Columbia Nonprofit Corporation Act
- Executive Compensation: Did We Do All The Right Things?
- The IRS Issues Guidance on Tax Treatment of Cell Phones and Provides Recordkeeping Belief
- More Changes and Debate Over the FASB's Proposed Leasing Standard
Predicting the Impact of Changing Tax Treatment of Charitable Contributions
Joyce M. Underwood, CPA
Economic and political pressures are threatening the long-held tradition of taxpayers receiving tax benefits in exchange for supporting charitable organizations. Under recent tax reform initiatives the government is weighing the cost/benefit of tax deductions for charitable contributions by attempting to measure the impact these deductions have on overall tax revenue, the worthiness of donors in certain income classes receiving incentives for giving gifts, and the charitable benefits provided by charitable organizations.
Click here to read more about the impact of changing tax treatment of charitable contributions.
Payroll Audit Update
By R. Michael Sorrells, CPA
We have previously written about the IRS Payroll Tax Examination program which began this year. (See the July 2011 Nonprofit Standard.) This program will select 2,000 entities for examination this year and the next two years as well. Of these 2,000, approximately 500 will be nonprofit organizations.
We have seen this program in action first hand at several organizations and have heard from other practitioners about how it is being manifested in many other instances. In addition to the special audit program, we have also seen payroll tax issues elevated to a new level of importance in all nonprofit examinations. This is an area where the IRS feels it can collect significant revenue, so it is being aggressive.
Click here to read more about the payroll audit update.
The Age of Nonprofit Mergers is Upon Us
By Adam B. Cole, CPA
Whether it is the result of declining public and private support, increased accountability or the need to expand the footprint of your mission in an era of funding changes; the age of nonprofit mergers seems to be upon us.
In the wake of significant changes with funding sources as a result of large deficits at the state and local government level, the funding mix for many nonprofits has been subject to severe reductions now, with more possible for the future.
Click here to read more about nonprofit mergers.
The Case of Exempt Organizations in the Tax Reform Debate
By Laura Kalick, JD, LLM
Is the purpose of the tax system to raise revenue or provide incentives for certain social and economic behavior? Or is it a combination of those two principles? Congress is now asking this question, and numerous others, in light of the difficult debate over the budget and the deficit.
There are many points to consider: Do we raise tax rates, reduce or eliminate tax deductions, come up with new taxes or reduce spending? If Congress reduces the tax incentives for charitable giving, how much more revenue will the Treasury see and how will this impact charitable organizations? Or should certain tax-exempt organizations be obligated to meet additional requirements to maintain their status?
Click here to learn more about exempt organizations in the tax reform debate.
New District of Columbia Nonprofit Corporation Act
By R. Michael Sorrells, CPA
Effective Jan. 1, 2012 the District of Columbia (D.C.) is enacting a new Nonprofit Corporation Act (Chapter 4 of DC Code Title 29).
Included in its many provisions are changes in the following areas:
• Restrictions and approvals for mergers and
sale of assets
• Religious corporation governance
• Provisions for member-governed corporations
• Emergency powers
Click here to read more about the Nonprofit Corporation Act.
Executive Compensation: Did We Do All the Right Things?
By Mike Conover
We have included articles in the past three issues of the Nonprofit Standard (see the September 2011, July 2011 and December 2010 issues) that deal with the issue of executive compensation from various angles. Each article begins with an introduction of surprise, lamentation or resignation to the ongoing stories of sensational executive pay practices being exposed among various nonprofit organizations. As 2011 draws toward a close, the “bad examples” and investigations by outside authorities continue. Interestingly, the issues continue despite extensive information about IRS intermediate sanctions being spread far and wide by BDO and numerous other professional service firms serving nonprofit organizations, embarrassing public disclosures and expanded reporting requirements.
Click here to read more about executive compensation.
Disaster Planning: Is Your Organization Adequately Insured?
By Tammy Ricciardella, CPA
Many organizations have disaster plans in effect that address many different scenarios. One very critical component of any disaster plan is insurance coverage. This component can be easy to overlook and too many organizations assume that their coverage is adequate since it is the same as it has been for years. However, with the recent hurricanes and earthquakes occurring on the East Coast, where this is traditionally not a major issue, some organizations may have been taken by surprise. These and other large disasters that have occurred throughout our country and the world should show that they can happen anywhere.
Click here to read more about disaster planning.
IRS Issues Guidance on Tax Treatment of Cell Phones and Providers Recordkeeping Relief
By Paul E. Hammerschmidt, CPA, MS (Taxation) and Christina K. Patten
It may be hard to believe but the IRS has provided us with an early holiday gift!
The IRS recently issued Notice 2011-72 (the Notice) that provides guidance on the treatment of employer-provided cell phones and grants relief from the burdensome recordkeeping requirements that the IRS had previously imposed. The Notice provides that when an employer provides an employee with a cell phone primarily for noncompensatory business reasons, the business and personal use of the cell phone is generally nontaxable to the employee. The IRS will not require recordkeeping of business use in order to receive this tax-free treatment.
Click here to read more about guidance on tax treatment of cell phones and providers recordkeeping.
More Changes and Debate Over the FASB'S Proposed Leasing Standard
By Tammy Ricciardella, CPA
The saga continues around the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board’s (IASB) proposed changes to the current leasing standards contained in Accounting Standards Codification (ASC) Topic 840. See the March 2011 and December 2010 issues of the Nonprofit Standard for previous articles discussing the proposed standards.
Click here to read more about FASB's proposed leasing standard.
For more information about accounting for nonprofit organizations, leave a message below or contact Ken Haffey by calling 440-449-6800.