Article Archives: 2020

On July 1, 2019, the Taxpayer First Act (TFA) was signed into law. The significance of this law centers on administrative procedures the IRS must enact in order to become a more taxpayer-friendly agency. The TFA sets new mandates to enhance the taxpayer experience through modernization, more efficient tax administration, increased cybersecurity, and stronger identity protection. Focus has now shifted toward customer service priorities.

As part of the modernization efforts, the platforms available for filing returns have changed. Exempt organizations are now required to file forms electronically for tax years beginning after July 1, 2019. For those organizations that previously filed paper forms,

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Posted by: Frances A. Olson

Oftentimes, organizations that work across borders will come to Clark Nuber with their federal return, only to discover there are a lot more foreign operations reporting requirements than they anticipated. This article will cover the commonly overlooked areas, and we’ll note what questions you should be asking if you have international operations. A quick reference guide for navigating the Form 990 for foreign operations can be found at the end of the article.

Number of Employees

The first commonly misunderstood section concerns the number of people employed by your not-for-profit. On Page 1 of the Form 990, Line 5, the number of employees is highlighted for readers.

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Posted by: Sarah Huang

Issuing a donor receipt seems like a simple task, especially in today’s technological era. Many online giving platforms used by charities issue a receipt automatically, taking the burden off the development staff and reducing a charity’s overhead costs. Around the beginning of each calendar year, charities receive numerous requests from donors for receipts to support a tax deduction on their personal income tax returns. It is crucial that these receipts issued by the charity include all the required elements. Failure to include the proper elements may cause a disallowed tax deduction for the donor.

Am I Required to Issue a Donor Receipt?

Usually the burden of obtaining a donor receipt falls on the donor.

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Posted by: Sarah Wine

It’s no secret that financial statement audits tend to raise the anxiety levels among the people involved. To reduce your stress when preparing for your next annual financial statement audit, try this two-phase approach:

  1. prepare for the audit each month – don’t wait until year-end,
  2. start early – as soon as the year ends, begin working on the prepared-by-client (PBC) listing.

Phase 1:

Remember that audit prep is a year-round exercise. Here are three activities to perform on a monthly basis:

Ask Questions Throughout the Year

Do not wait until onsite work begins. If an unusual event occurs,

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On December 20, 2019, President Trump signed the Further Consolidated Appropriations Act, 2020. The bill will, in effect, create a flat net investment income (NII) excise tax rate of 1.39% for private foundations.

Context

Most private foundations are subject to an excise tax on NII, which includes interest, dividends, rents, royalties, payments pertaining to certain security loans, similar investment income items, and capital gains.

Previously, the NII excise tax rate depended on whether the private foundation could meet specific distribution requirements. If the foundation failed to meet the distribution amount, it would then be subject to a 2% excise tax rate.

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Posted by: Shareen Corlett

Strategy and planning play a critical role in ensuring your not-for-profit’s financial goals align with the organization’s mission statement. As your not-for-profit prepares for 2020, here are essential financial planning items to consider:

Annual Reporting Requirements:

  • Verify that your state registrations are up-to-date and current. Review annual filing deadlines for each state you must file in and check the status of your organization in each state.
  • Meet with your state and local tax accountant to ensure you are up-to-date on new state tax laws that may affect your organization.
  • Request that your revenues be reviewed for state tax implications,

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Posted by: Shelly Archuleta

In July 2019, the AICPA’s Audit Standards Board issued Statement on Auditing Standards (SAS) No. 136, Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA. The new standard will have a significant impact on the highly specialized area of ERISA plan audits.

Background

For context, the Employee Retirement Income Security Act of 1974 (ERISA) generally requires employee benefit plans with 100 or more participants to have an independent financial statement audit as part of the plan sponsor’s obligation to file a Form 5500. The primary objective of the audit is to provide assurance that the plan’s financial statements are free from material misstatements.

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