Tax Planning and Compliance for Tax-Exempt Organizations

Rules, Checklists, Procedures, 2022 Cumulative Supplement

Jody Blazek

• Editorial: Wiley
• Año: 2022
• ISBN:
  9781119873648
• Edición: 6
• Categoría: Business
• Categoría: Accounting

An essential, timesaving guide for accountants, lawyers, nonprofit executives and directors, consultants, and volunteers – Completely updated for 2022

This book is an indispensable guide to navigating the complex maze of nonprofit tax rules and regulations. A clear and fully cited description of the requirements for the various categories of tax-exempt entities from public charities, private foundations, civic associations, business leagues, and social clubs to title-holding companies and governmental entities can be found. Practical guidance on potential for income tax on revenue-producing enterprises along with explanations of many exceptions to taxability is provided. Issues raised by Internet activity, advertising, publishing, providing services, and much more are explained.

This useful annual supplement for 2022 will cover any and all changes and updates to the law within the previous 12 month period and will keep accountants, attorneys, and others up-to-date for the year ahead.

• Features a variety of sample documents for private foundations, including penalty abatement requests and sharing space agreements
• Provides helpful practice aids, such as a comparison of the differences between public and private charities, charts reflecting lobbying limits for different types of entities, and listings of rulings and cases that illustrate permissible activity for each type of organizations compared to impermissible activity

PART I
Qualifications of Tax-Exempt Organizations

• Chapter 1:
  Distinguishing Characteristics of Tax-Exempt Organizations
• Chapter 2:
  Qualifying Under IRC § 501(c)(3)
• Chapter 3:
  Religious Organizations
• Chapter 4:
  Charitable Organizations
• Chapter 5:
  Educational, Scientific, and Literary Purposes and Prevention of Cruelty to Children and Animals
• Chapter 6:
  Civic Leagues and Local Associations of Employees: § 501(c)(4)
• Chapter 9:
  Social Clubs: § 501(c)(7)
• Chapter 10:
  Instrumentalities of Government and Title-Holding Corporations
• Chapter 11:
  Public Charities

CHAPTER 1
Distinguishing Characteristics of Tax-Exempt Organizations

• § 1.4 Role of the Internal Revenue Service
• § 1.8 Developments Responding to COVID-19
  • (a) CARES and SECURE Acts
  • (b) IRS Delays in Tax Payment and Return Due Dates

§ 1.4 Role of the Internal Revenue Service

p. 15. Add at end of paragraph at top of page:

In preparing this supplement, I found that rereading the instructions gave me facts and IRS directions I was unaware of or had forgotten. Accordingly, the following is a listing of the items I needed to carefully consider as I review returns prepared by others in my office.

The instructions for 990-PF for 2020 begin with the following “What’s New” section:

• Reduced tax on net investment income. The Taxpayer Certainty and Disaster Tax Relief Act reduced the 2 percent Internal Revenue Code section 4940(a) excise tax on net investment income of private foundations to 1.39 percent effective for tax years beginning after December 20, 2019. This legislation also repealed Internal Revenue Code section 4940(e), which from January 1, 1985, through December 20, 2019, provided a reduced 1 percent tax when its qualifying distributions for that year exceeded the fair market value of its investment assets multiplied by the private foundation's average percentage payout for the prior five years. The 2020 990-PF form still contained Part V, Reduced Tax on Net Investment Income, which was no longer used and which the instructions said was not necessary to complete.
  Other various sections are also included in the instructions:

• Electronic filing reminder. For tax years beginning on or after July 2, 2019, the Taxpayer First Act, section 3101 of P.L. 116-25, requires that returns by exempt organizations be filed electronically. Accordingly, you must file the return electronically for tax years beginning in 2020.
• Reporting standard for net assets updated. Part II of Form 990-PF was updated to reflect the Financial Accounting Standard Board's (FASB's) reclassification of net assets into two classes, net assets without donor restrictions and net assets with donor restrictions. For more information, see Part II. Balance Sheets, Lines 24 Through 30, Net Assets or Fund Balances.
• Pub. 15-T. Pub. 15-T, Federal Income Tax Withholding Methods, contains the federal income tax withholding tables that were previously provided in Pubs. 15 and 15-A and explains how to use the tables.
• Exception from the excise tax on excess business holdings. Section 4943(g) provides an exception from the excise tax on excess business holdings for certain independently operated enterprises whose voting stock is wholly owned by a private foundation. For more details, see Part VII-B, Line 3a.
• Initial Form 990-PF by former public charity. If you are filing Form 990-PF because you no longer meet a public support test under section 509(a)(1) and you haven't previously filed Form 990-PF, check Initial return of a former public charity in Item G of the heading section on page 1 of your return. Before filing Form 990-PF for the first time, you may want to go to IRS.gov/EO for the latest information and filing tips to confirm you are no longer a publicly supported organization.
• Automatic revocation. Most tax-exempt organizations, other than churches, are required to file an annual Form 990, 990-EZ, or 990-PF with the IRS, or to submit a Form 990-N e-Postcard to the IRS. If a tax-exempt private foundation fails to file an annual return as required for three consecutive years, it will automatically lose its tax-exempt status and will become a taxable private foundation. See M. Penalty for Failure to File Timely, Completely, or Correctly.
• IRS e-Services make taxes easier. Now more than ever before, businesses can enjoy the benefits of filing and paying their federal taxes electronically. Whether you rely on a tax professional or handle your own taxes, the IRS offers you convenient programs to make taxes easier.
  • You can e-file your Form 990-PF, Form 940, and 941 employment tax returns, and Forms 1099 and other information returns. Visit IRS.gov/Charities-Non-Profits/Annual-Reporting-and-Filing for details.
  • You can pay taxes online or by phone using the free Electronic Federal Tax Payment System (EFTPS). Visit EFTPS.gov or call 800-555-4477 for details. Electronic Funds Withdrawal (EFW) from a checking or savings account is also available to those who file electronically.
    • Don't include social security numbers on publicly disclosed forms. Because the IRS is required to publicly disclose the organization's annual information returns, social security numbers shouldn't be included on this form. Documents subject to disclosure include schedules and attachments filed with the form
    • Form 990-PF is an annual information return that must be filed by the following:
  • Exempt private foundations (section 6033(a), (b), and (c)).
  • Taxable private foundations (section 6033(d)).
  • Organizations that agree to private foundation status and whose applications for exempt status are pending on the due date for filing Form 990-PF.
  • Organizations that claim private foundation status, haven't yet applied for exempt status, and whose application isn't yet untimely under section 508(a) for retroactive recognition of exemption.
  • Organizations that made an election under section 41(e)(6)(D)(iv).
  • Private foundations that are making a section 507(b) termination.
  • Include on the foundation's return the financial and other information of any disregarded entity owned by the foundation. See Regulations sections 301.7701-1 through 3 for information on the classification of certain business organizations, including an eligible entity that is disregarded as an entity separate from its owner (disregarded entity).
    • How to avoid filing an incomplete return. Complete all applicable line items. Answer “Yes,” “No,” or “N/A” (not applicable) to each question on the return. Make an entry (including a zero when appropriate) on all total lines. Enter “None” or “N/A” if an entire part doesn't apply.
    • Accounting Period. File the 2020 return for the calendar year 2020 or fiscal year beginning in 2020. If the return is for a fiscal year, fill in the beginning and ending dates of the tax year in the spaces at the top of the return.
      The return must be filed on the basis of the established annual accounting period of the organization. If the organization has no established accounting period, the return should be on the calendar-year basis.
      For an initial or fina...