Article Archives: 2016

Posted by: Julie Eisenhauer

By Julie Eisenhauer, CPA

The Final Rule on overtime, which the Department of Labor (DOL) announced in May, enables employees to qualify for overtime pay more easily. Though the overtime rule has been a source of great confusion amongst employers for some time, the July proposal incited a great deal of speculation as to how it might affect their businesses. The recent DOL announcement brought that speculation to an end. If your company hasn’t already started planning for this change, it would be wise to begin now; the effective date is December 1, 2016.

The DOL’s Final Rule defines the exemptions for executive,

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Posted by: Pete Miller

By Pete Miller, CPA, CFE

April 21, 2020 update: To provide accounting relief and clarity during the COVID-19 crisis, the FASB published an exposure draft with proposals to delay the effective dates for Leases (Topic 842). Find more information here.

Many companies worldwide will soon take a different view of their balance sheets. Entities that pay to lease real estate, airplanes, office equipment, fleet vehicles and other items will be required to recognize significant debt-like obligations and add billions onto their balance sheets.

After more than a decade of drafts, surveys and redrafts of the Lease Accounting Standards,

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Posted by: Karen Dunn

By Karen L. Dunn, JD, LLM

September 6th is the due date for filing the notification of intent to operate as a 501(c)(4) organization, if the organization existed on July 8, 2016 and is otherwise not excepted from this requirement. Newly created organizations must file the notification and pay a small user fee, no later than 60 days after the organization is established. Failure to file this notice may result in penalties assessed.

A new law requiring organizations exempt under 501(c)(4) to notify the IRS that they are operating as such was enacted in December of 2015. However, it took time for the IRS to develop a process for this notification.

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One typically thinks of net assets in one of three categories: unrestricted, temporarily restricted, or permanently restricted. Organizations with endowments are very familiar with the concept of comparing the organization’s permanently restricted net asset balance to the related investment balance, and determining the amount that those net assets are over or under water. A similar concept exists with unrestricted net assets, which too few non-profits are looking at. Monitoring this equation, however, could prove be one of the best indicators of positive or negative financial trends in your organization.

The concept is simple: determine the amount of unrestricted net assets that you could spend on any purpose,

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Posted by: Sarah Huang

By Sarah Huang, CPA

On June 14, the House passed a bill prohibiting the requirement that Section 501(c) organizations must disclose their donors on Schedule B. Under current law, all organizations exempt under §501(c) must provide the IRS with a listing of any donor that gave $5,000 or more during the tax year. Some organizations qualify for the special 2% rule that increases this $5,000 threshold, thus further limiting the donor disclosure. Except in the case of private foundations, Schedule B is not open to public inspection.

The new bill, H.R. 5053: Preventing IRS Abuse and Protecting Free Speech Act,

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Posted by: Bob Heller

By Bob Heller, JD, LLM

For those in the nonprofit community with activities in Washington, it often bears repeating that there is no general nonprofit exemption from the State’s business and occupation (“B&O”) tax. The B&O tax is a tax imposed on gross revenue for the privilege of doing business. The State’s definition of “business” is very broad, such that it is hard to imagine any human endeavor that isn’t captured by the definition. Therefore, it is prudent for a nonprofit organization to consider all amounts it receives as taxable and then look for a specific exemption or deduction that may apply.

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Posted by: Troy Rector

By Troy Rector, CPA

The lack of indirect cost recovery from Federal grants is nothing new for Not-for Profits (NFPs). This has been especially true for those NFPs who do not have a federally negotiated indirect cost rate, as they receive all, or predominant amounts, of Federal grants from pass-through entities. The Office of Management and Budget’s (OMB) Uniform Guidance now recognizes that NFPs do indeed incur indirect costs and has made available use of the de minimis rate.

In accordance with 2 CFR 200.414(f), NFPs who have not received a negotiated indirect cost rate previously can now utilize the de minimis rate.

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Posted by: Karen Dunn

By Karen Dunn, JD, LLM

The Protecting Americans from Tax Hikes Act of 2015 (PATH) was signed into law December 18th and includes many provisions affecting charities. Last month, we focused on the permanent extensions in the bill. This month, we focus on the new notice requirements for self-declared 501(c)(4) social welfare organizations in Code Section 506, added by PATH.

This legislation requires Section 501(c)(4) organizations, established after December 18, 2015, to notify the IRS of its formation and intent to operate as a 501(c)(4) social welfare organization. The notice and user fee must be submitted within 60 days of the organization’s formation and must include:

  1. Name,

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Posted by: Sarah Wine

By Sarah Wine, CPA

Depending on your organization, in-kind donations may be a primary portion of your revenue and mission, or they may play a minor role in the totality of your revenue. Food banks or thrift stores rely heavily on donated food or goods, whereas performing arts organizations or museums may only receive in-kind donations of auction items or wine for fundraising events. Regardless of where your organization lies on this spectrum it is important that you know when and how to value and record in-kind donations.

Criteria for recording an in-kind donation under Generally Accepted Accounting Principles (GAAP):

Contributed services must be either:

  1. Provided by someone with specialized skill such as an attorney,

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I was recently at a not-for-profit (NFP) conference and asked audience members to stand up if they had received donations by cash on behalf of their organization. There was some murmuring, but only about 5% of the audience stood up. By check? About 40% of the room stood up. Credit card? More than half the room was now standing. Wire transfer? Some more stood, and when I finally got to grants via an Automated Clearing House (ACH) system, the entire room was standing.

I then asked the audience to sit down if they formally call out and test key systems that receive funding and donations as part of their IT general controls and application controls.

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