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.
Starting a non-profit organization
- Each newly formed organization is required to file for
tax-exempt status with the Internal Revenue Service.
501(c)(3) Organizations:
Organizations seeking 501(c)(3)
tax-exempt status complete Form 1023. Instructions, annual
filing requirements, payroll taxes and other useful information
is available through the Internal Revenue Service online
http://www.irs.gov/charities/charitable/index.html
Publication
4220, (PDF)
Applying for 501(c)(3)
Tax-Exempt Status, is designed
to help prospective charities apply for tax exemption under
the tax law.
Publication
4221, (PDF) Compliance
Guide for 501(c)(3) Tax-Exempt Organizations, explains
the record keeping, report filing, and disclosure rules
that apply to organizations that have tax-exempt status
under section 501(c)(3).
Advanced Ruling Period –
A newly formed 501(c)(3) organization initially receives
an advance ruling determination from the IRS. Once an organization
has completed the fifth tax year, it is required to submit
form 8734 http://www.irs.gov/pub/irs-pdf/f8734.pdf
for a final determination as a 501(c)(3) organization. More
information regarding the advanced ruling period is available
on the IRS web site http://www.irs.gov/charities/charitable/article/0,,id=123155,00.html
All other organizations
– Organizations seeking tax-exempt status other than
501(C)(3) complete Form 1024. Instructions, annual filing
requirements, payroll taxes and other useful information
is available through the Internal Revenue Service online:
http://www.irs.gov/charities/nonprofits/index.html
Contributions:
Organizations are required to provide contributors with
certain written disclosures regarding contributions made
to the respective charity. Information regarding charitable
contributions is available through the Internal Revenue
Service online http://www.irs.gov/charities/contributors/index.html
501(c)(3) organizations
administering a retirement plan under IRC Section 403(b),
a form
5500 must be filed by the last day of the seventh month after
the plan fiscal year end. Information related to IRC Section
403(b) plans is available on the Internal Revenue service
web site http://www.irs.gov/publications/p571/index.html
Information for plan participants
is available through the Internal Revenue Service
Publication
4482 (10-2005) 403(b)
Tax Sheltered Annuity for Participant.
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.
Maryland
https://interactive.marylandtaxes.com/webapps/comptrollercra/entrance.asp
District of
Columbia
http://brc.dc.gov/planning/establishbiz/corpreg/corpreg.asp
Virginia
http://www.tax.virginia.gov/site.cfm?alias=RegBus
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. http://www.salestaxinstitute.com/sales-tax-faq.jsp#b
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.
Maryland:
http://www.dat.state.md.us/
District of Columbia: http://brc.dc.gov/calendar/CalendarForm.asp
Virginia: https://www.npo.tax.virginia.gov/
NPOLogin.jhtml; $sessionid$ZNJ52CCP15KV5LAUFNNRCYQ
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. http://brc.dc.gov/calendar/CalendarForm.asp
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 http://www.multistatefiling.org/
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. Search organization registration http://mblr.dc.gov/corp/lookup/index.asp.
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