Tough Requirements for Non-profits
The IRS has imposed more stringent requirements on non-profit organizations' filing of tax returns. In August 2008, the IRS revised its requirements for non-profit filings in a 57 page 'Background Paper' put up in the National Council of Nonprofits Website. The requirements include greater responsibility for fiscal management by the board, a disclosure of what their mission statements are and how they support it, the identity of board members and a statement of whether there is any conflict of interest with any board member. These regulations will affect all non-profits that file Form 990 and could cause many smaller organizations to either merge with larger ones or cease operations altogether because they cannot afford to deal with the more demanding operational requirements.
In Washington County there are about 200 non-profit organizations, out of which about half are actively operational. One such organization is the Washington County Community Foundation (WCCF), a philanthropic organization that promotes charitable projects and various scholarships. The revised IRS requirements meant it had to re-write its mission statement, reword its method of handling donor funds and increase the minimum amount of donation it can accept from donors. As a result, last year the WCCF also incurred an extra 44% in auditing expenses largely because its 990 filing went up from 10 pages to 40 pages long.
In another highly publicized case, the chairman of a non-profit hospital had to take responsibility for the chief executive officer's failure to pay the payroll taxes of the hospital. It cost the chairman $408,918 in unpaid taxes including interest charges.
The new requirements are aimed at inculcating greater transparency and professionalism in the boards of non-profits. For instance, with these regulations, a board cannot merely approve an audit without understanding its contents and implications. Non-profits are now expected to conduct their activities as professionally as a business is run. But the problem for many non-profits is that their personnel are commonly volunteers who are honest people, passionate about their mission but not necessarily equipped to take on the administrative tasks that need to be done.
Furthermore, the new regulations could not have come at a worse time when the economy is stuttering and non-profits are seeing fewer donations of smaller amounts and have to face loss of funding from the government and staff cuts.
In light of these changes, the WCCF and a few other non-profit organizations, namely the Washington County Bar Association, United Way of Washington County and WesBanco will be organizing a full day "Law School for Non-Profit Organizations" on October 21st at the Holiday Inn, Meadow Lands. For more information contact the United Way of Washington County at 724-225-3310.
Darrin T. Mish is a veteran, nationally recognized tax attorney who has focused on providing IRS help to taxpayers for over a decade. He regularly travels the country training other attorneys, CPAs and enrolled agents on how to handle their toughest cases with the IRS. He is highly ranked among the top attorneys in the country, with an AV rating from Martindale-Hubbell and a perfect 10 on Avvo.com. Martindale-Hubbell has also honored him with a listing in their Bar Register of Preeminent Lawyers. He is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. With clients on every continent but Antarctica, he has what it takes to solve your IRS problems no matter where you live in the world. If you would like more information about his practice and how he can help you, please call his office at (813) 229-7100 or toll free at 1-888-GET-MISH.
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