Articles

Posted by: Celia Davis

For tax-exempt organizations that are currently working on filing their annual Forms 990, new rules surrounding mandatory electronic filing (e-filing) are causing quite a headache for tax professionals.

Originally enacted on July 1, 2019, the Taxpayer First Act required all tax-exempt organizations to electronically file their annual returns. Though electronic filing for exempt organization returns was available before the passage of this Act, it was mandatory only for select organizations. And several forms and scenarios were unavailable for e-filing all together, such as the Form 990-T, Form 4720, initial filers, or organizations that had a name change or year-end change in any given year.

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Posted by: Grant Shaver

As detailed in the original article published by Clark Nuber, in July 2020, the Seattle City Council passed City Ordinance 126108 establishing a new Seattle payroll expense tax that takes effect January 1, 2021.

Updates to the Original Tax

Following the passage of that ordinance, the Department of Finance and Administrative Services (FAS) conducted a rulemaking process and then published a Director’s Rule for the payroll tax. As a part of that process, FAS staff received numerous questions from businesses about how to apply the payroll expense allocation methodology included in the ordinance, especially in situations where employees split their time between work in Seattle and work in other jurisdictions.

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Posted by: Victoria Kitts

If your organization receives federal funding subject to the rules and regulations in the Uniform Guidance, make note of changes made in 2020 to the procurement standards.

Though these changes were made and, for some awards, became effective in fall 2020, many not-for profit organizations are now receiving federal grants for the first time, highlighting the need to be aware of the procurement standards contained in the Uniform Guidance.

Overview

Procurement refers to the purchase of goods or services, typically for other-than-payroll and certain non-payroll expenses. Procurement standards require entities to establish policies and procedures before making purchases with federal funding and are often more prescriptive than how a typical not-for-profit would procure goods and services

The revisions made to the Uniform Guidance this last fall are effective for new federal awards (subawards) and amendments to existing awards issued on or after November 12,

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Posted by: Mitch Hansen

You might not realize it, but from an early age, you’ve been warned about impersonation schemes. Think of such classic examples as the Big Bad Wolf acting like Granny in Little Red Riding Hood or the Wicked Queen’s shapeshifting in Snow White. Unfortunately, we are seeing a rise in impersonation schemes in real life, and many of these stories don’t have a happy ending. Here are a few current examples, and how to protect yourself from them.

Examples of Vendor Impersonation Schemes

A local nonprofit received an email from a major vendor’s CFO stating that the vendor needed to update the payment account information and that all future payments should be made to this account.

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Posted by: Sarah Huang

With vaccination rates going up and COVID restrictions being lifted, many employers are now looking at the gross receipts test to remain eligible for the Employee Retention Credit (ERC) through the end of the year.

For employers with outstanding PPP loans, they may want to think twice before rushing to submit their PPP forgiveness application. PPP loan proceeds may be includible in gross receipts for ERC purposes and therefore affect an employer’s ability to meet the gross receipts decline threshold.

ERC Eligibility Refresher

As a reminder, an employer is eligible for the ERC through one of two ways during 2021:

  1. A full or partial suspension of operations due to a government order;

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Posted by: Kelly Rancourt

When your organization passes along federal funding to another organization (as a subrecipient), you also pass the compliance requirements on to them and become a pass-through entity. But is that where your responsibility ends? Unfortunately, the answer is no.

So, how do you ensure the compliance requirements are being followed by the organization you passed the funds through to?

The Office of Management and Budget (OMB) solved this question by the creation of the subrecipient monitoring compliance requirement in 2.CFR.200 Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards (Uniform Guidance).

In Uniform Guidance there are items that are considered a “must” and there are items considered a “should.” When Uniform Guidance suggests you “should” do something,

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Posted by: Kathryn Okimoto

Whether you are an established public charity or one in its infancy years, or you’re a private foundation making grants to public charities, understanding the public support test is key to ensuring that donors maintain a favorable tax deduction and that private foundations do not inadvertently make a taxable expenditure. This article will cover what the public support test is and how your organization can best understand and manage it.

The Public Support Test and Public Charities

There are many different types of public charities. But for this article, we will focus on the public support tests for IRC Sections 509(a)(1) and 509(a)(2) organizations,

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Posted by: Shareen Corlett

As the COVID-19 pandemic nears its end, businesses are reporting an increased demand for flexibility from their employees, including a desire to travel or to move closer to friends and family. With more out-of-state employees, organizations will need to learn how to navigate the additional payroll challenges of having a remote workforce.

Third-Party Payroll Providers

A critical recommendation for any organization facing out of state payroll is to use a third-party payroll provider. The importance of this grows with every new state added to its payroll. Leveraging an already existing Human Resources Information System (HRIS) that provides payroll services may be the best course to take,

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This article has been updated to reflect the latest guidance as of 5/26/2021. It was originally published on 6/1/2020. 

On December 2, 2020, the IRS published final regulations on the unrelated business taxable income (UBTI) siloing rules required under the Tax Act of 2017 and section 512(a)(6) of the Internal Revenue Code. Exempt organizations with multiple unrelated trades or businesses have been waiting for the final guidance as it helps define the extent to which organizations will need to silo UBTI activities.

While the guidance leaves several unanswered questions, it does give organizations a road map of how to define and bucket their various trade or business activities.

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Senate Bill 5096, “Concerning an excise tax on gains from the sale or exchange of certain capital assets,” was passed by the Washington Legislature on April 25, 2021 and signed into law by Governor Inslee on May 4, 2021. The law generally imposes a 7% tax on net long-term capital gains in excess of $250,000 recognized during each calendar year. Net long-term capital gain is defined by reference to U.S. federal income tax law. The tax is imposed on capital gains recognized on or after January 1, 2022. The first returns will be due in 2023 on capital gains recognized during calendar year 2022.

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