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Nonprofit Tax Issues:
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Our firm regularly Monitors income tax legislation and court cases affecting nonprofit association. As part of our procedures, we evaluate the types of income earned by each organization and tax issues which may affect each of our clients. We inform our clients of any recent legislation court cases that may affect their income tax liability. We also evaluate the allocation of expenses for unrelated business income to insure that each organization pays the lowest possible tax.
Because there are many court cases affecting nonprofit association, we assist our clients in evaluating their options with regard to tax positions and will identify the risks and potential tax savings associated with each position.
Throughout the year, we keep out clients informed of significant changes which may affect their organization. We are also available to answer client tax questions throughout the year.
Filing with State Agencies:
Every non-profit organization is required to file the following documents with various state agencies.
Initial filings
Central registration form with the state.
501(c)(3) organizations religious, scientific, educational, and research organizations must file for exemption from sales and use tax, personal property tax, and exemption from state income tax.
Quarterly filings
Sales tax - An organization is required to collect sales tax in any state where it has nexus. Nexus exists when tangible personal property is sold and delivered into a state on a regular basis. Each Organization should monitor sales volumes to each state for nexus requirements, when applicable. The Organization does not need to have a physical presence in a state to have nexus. The types of goods most likely subject to sales tax for most organizations are publications, novelty and insignia items.
Annual filings
Personal property taxes - Certain states (including Maryland and Virginia) require that this form be filled out by all organizations, including those exempt from personal property tax. Failure to file this return, even if no tax is due, will result in the organization losing its corporate charter and exempt status.
Annual filings - Certain states (and the District of Columbia) require that an organization submit a copy of its Federal Form 990 each year. Filing a copy of this return maintains the corporate charter and exempt status.
Annual licensing - A master business license from the DC Office of Consumer and Regulatory Affairs. The license is a new requirement pending implementation by the District of Columbia for all nonprofits which, when effective, will require a nominal fee for each renewal period. This requirement is in addition to the two-year annual report requirement.
Charitable registration - Almost every state requires that 501(c)(3) organizations file an annual charitable report with their state if they are either incorporated in that state or “do business” in that state. “Doing business” can include maintaining an office or merely soliciting contributions in that state. A Uniformed Registration Statement for charitable registration can be utilized in as many as 33 difference jurisdictions. See www.nonprofits.org/library/gov/urs for a Uniformed Registration Statement kit.
Two-year annual report for nonprofits - The District of Columbia Office of Consumer Affairs requires that nonprofits incorporated or doing business in the city to file a registration statement every two years. Filing this form keeps the organization nonprofit corporate charter in active in the District of Columbia. There is a nominal fee required with this filing.
