Tips Non-Profits Can Profit From!
The IRS uses Form 990 to select tax returns for further examination, so a complete and accurate return is in your best interest. So what can your organization do to respond to the IRS’s plans to further identify patterns of noncompliance by means of the Form 990?
Daszkal Bolton wants to share four steps your organization should take to assure compliance:
1. File the correct form (990, 990-EZ, 990-N) and file timely.
Generally you are only required to file Form 990 when gross receipts exceed $200,000 or assets exceed $500,000. Otherwise you may file Form 990-EZ and if normal gross receipts do not exceed $50,000, then 990-N should be filed. Penalties arise when an organization does not timely file its tax return or revocation of tax exempt status may occur
2. File an accurate and complete tax return.
Have a competent professional who understands the complexities of the Form 990 assist you. Changes in recent years have affected how the form is completed.
Common errors include: • Failure to properly identify executive director as a top management official who is treated as an officer for Part VII purposes. • Some report no conflict of interest policy or state the organization has one but it’s not enforced. • Failure to properly identify key employees. • Failure to adequately describe the organization’s activities per the instructions.
3. Use the governance section of the Form 990 to make governance changes and manage legal and audit risk.
Daszkal Bolton suggests an organization implement changes to its governance policies as part of preparing the organization’s tax return. Consider a conflict of interest policy. This is a chance to improve your organization and show potential donors and other stakeholders that proper governance is a priority.
4. Know your audience.
The public disclosure of the Form 990 creates a significant audience for your non-profit. Utilize every part of the Form 990 to include information relevant to your audience. Devise a plan to use the Form 990 to communicate your objective and mission. Your audience may include: • Charity regulators • Press/Media • Foundations and other donors • Researchers and watchdog groups • Board of directors, audit committee • Congress, and constituents
Come Grow With Us! Daszkal Bolton is committed to the mission and success of each non-profit organization we serve. For more information on our services and value proposition for non-profits, click here.
Contact Andrew Gray, CPA, Senior Associate, for information regarding tax compliance and planning for your tax exempt organization at 561-367-1040 or firstname.lastname@example.org.