This month's Not-for-Profit Update includes:
- Cost Allocations For Non-Profits
- IRS (Finally) Issues 2012 Exempt Organizations Work Plan
- Update on 2011 Form 990: Some Changes and Clarifications
- Bonuses and Incentives for Tax-Exempt Organizations?
- Corporate Sponsorship
- 2011 Final Revision of Government Auditing Standards Issued
- Words!…Words!…(With apologies to Eliza in My Fair Lady)
- Best Practices for Travel and Expense Reimbursement Policies
Other Items to Note…
Cost Allocations for Non-Profits
By Adam B. Cole
There has been a lot of publicity recently about the propriety of the functional allocations of expenses reported on the financial statements, tax returns and cost reports for nonprofit organizations.
Some state and local agencies have been modifying their audit protocols to focus on the cost allocations reported to them each year.
IRS (Finally) Issues 2012 Exempt Organizations Work Plan
By Paul E. Hammerschmidt, CPA, MS and Christina K Patten
Better late than never – On Feb. 8, 2012, the IRS released its Exempt Organizations (EO) work plan, a blueprint as to where it will be focusing its efforts towards exempt organizations! The work plan is available for download at the IRS website. The IRS usually issues its EO work plan each year at around this time. The IRS issued its 2011 EO Work Plan nearly two months earlier, in contrast to 2010, when without explanation it never publicly released a 2010 EO work plan, for the first time in over 25 years.
Update on 2011 Form 990: Some Changes and Clarifications
By Joyce Underwood, CPA
The Internal Revenue Service (IRS) released its 2011 Form 990 and instructions on Jan. 21, 2012. One looking just at the forms and instructions themselves would see few revisions; however, the IRS has provided a number of clarifications and made some significant changes in the instructions to the form and the schedules.
Bonuses and Incentives for Tax-Exempt Organizations?
By Michael Conover
Some people are surprised to discover bonuses or incentive payments being used by tax-exempt organizations. It seems these individuals operate under the assumption that these forms of “extra” compensation are somehow not compatible with their expectations for a charitable or tax-exempt organization.
By Laura Kalick, JD, LLM
A controversy over corporate sponsorship developed in the early 1990s when the IRS took the audit position that Mobil Oil’s sponsorship payment to the Cotton Bowl constituted taxable unrelated advertising income to the nonprofit that organized the Cotton Bowl. In subsequent years the IRS took varying positions on the matter until 1997 when Congress weighed in with Internal Revenue Code (IRC) section 513(i). Section 513(i) provides a safe harbor for certain payments that are deemed to be “qualified sponsorship payments” and, therefore, not subject to the unrelated business income tax (UBIT). A safe harbor is just that, i.e., if you are in the safe harbor you are automatically safe. However, just because you fall outside of the safe harbor does not necessarily mean that a payment is subject to UBIT, it just means that the organization may have to look to another IRC section to determine if the payment is subject to UBIT.
Click here to read more about corporate sponsorship.
2011 Final Revision of Government Auditing Standards Issued
By Lee Klumpp, CPA
The U.S. Government Accountability Office (GAO) has issued the final 2011 Revision to Government Auditing Standards (a.k.a. the Yellow Book). This update replaces the “Internet Version” that the GAO issued in August 2011. As expected, the changes from the Internet version were limited in nature and mainly relate to refining the standards due to the American Institute of Certified Public Accountants (AICPA) Auditing Standards Board’s Clarity Standards (i.e., Statement of Auditing Standards (SAS) No. 122 through 124) issued in October of 2011.
Words!…Words!…(With apologies to Eliza in My Fair Lady)
By Dick Lark, CPA
One reason many non-accountants have trouble using financial information is there frequent confusing over some of the words we accountants regularly use – and misuse.
This challenge is especially acute in the nonprofit sector, where many users of financial information are less likely to have had as much in the way of formal training or experience with financial terminology as have their counterparts in the business world, and where some of the words are unique to the sector.
Best Practices for Travel and Expense Reimbursement Policies
By Lee Klumpp, CPA
All around the country we are starting to see hints of spring and as we start thinking about spring it is natural to start thinking about spring cleaning. This year for your organization I am going to suggest that you think about doing a little spring cleaning on your organization’s travel and expense reimbursement policy.
Other Items to Note…
The IRS now provides the online search tool, Exempt Organization Select Check, that consolidates three former search sites into one. The tool allows users to select an exempt organization and check information about its federal tax status and filings.
For more information about Skoda Minotti's Not-for-Profit accounting services, leave a message below or call 440-449-6800.