eaa airventure 2009 chapter leaders conference
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EAA AirVenture 2009 Chapter Leaders Conference. Tax-Exempt Chapters Some Notes on Advanced Topics Patti Arthur, J.D., LL.M (Tax) The Law Offices of Patricia J. Arthur. Advanced Tax-Exempt Topics. 1. Annual Filing Requirements-990 Series 2. Donations to Chapters - PowerPoint PPT PresentationTRANSCRIPT
Cpoyright 2009 Patricia J. Arthur
EAA AirVenture 2009Chapter Leaders Conference
Tax-Exempt Chapters
Some Notes on Advanced Topics
Patti Arthur, J.D., LL.M (Tax)
The Law Offices of Patricia J. Arthur
Cpoyright 2009 Patricia J. Arthur
Advanced Tax-Exempt Topics
1. Annual Filing Requirements-990 Series
2. Donations to Chapters
3. Unrelated Business Income Tax
4. Recordkeeping and Corporate Governance
5. State Issues and Traps
Cpoyright 2009 Patricia J. Arthur
Annual Filing Requirements-990's
● 990-Very Large TE's only. Gross receipts in excess of $500,000 or assets of $1,250,000 for 2010.
● In 2011 and beyond-Gross receipts in excess of $200,000 or assets of $500,000.
● 990EZ-Gross receipts of $50,000-199,999 and assets less than $499,000. 2011 and beyond.
● 990N-All other chapters no matter how small.● Filing due dates 15th day of 5th month. (May 15th).
Cpoyright 2009 Patricia J. Arthur
990N e-Postcard
● Vast majority of chapters will file this unless they elect to file the 990 or 990EZ.
● Final guidance published last week.● MUST file even if you never applied for formal tax-
exempt status on IRS Form 1023 or 1024.● If you haven't formally applied, call the IRS at 1-
877-829-5500, and tell the agent....
Cpoyright 2009 Patricia J. Arthur
990N e-Postcard
● You are officer of an organization, and wish to file your 990N,
● You are a chapter of a large TE who does not have a GROUP EXEMPTION LETTER (GEL), does not want a GEL and has no intention of filing for one.
● Your FEIN is:_______________● Your Articles of Organization contain 557 language,● Your annual gross receipts are under $5000/yr,● You consider yourself a (c)(3) [or 4 or 7]
Cpoyright 2009 Patricia J. Arthur
990n e-Postcard
● The agent will reset the system and
● You will be able to file electronically in 8 weeks.
Cpoyright 2009 Patricia J. Arthur
Donations to Chapters
● (c)(3) status (formal or assumed), donations are tax deductible by the donor.
● Dues are deductible only to the extent the member receives no benefit in return.
● Must provide donor a confirmation letter for donations over $250.00. Form 1098-C.
Cpoyright 2009 Patricia J. Arthur
Unrelated Business Income Tax
● UBIT or UBTI– Income from a trade or business regularly carried on that
is not substantially related to the organization's tax-exempt purpose.
– Hangar rent from members has become a hot issue with the IRS.
– Must prove the members use the hangar and pay rent to further the tax-exempt purpose.
– Hangar should be open to the public when supervised.
Cpoyright 2009 Patricia J. Arthur
Unrelated Business Income Tax
● If a hangar is financed and the rents pay the mortgage, that is a very specific type of UBTI.
● Again, must prove the hangar is used for tax-exempt purposes.
● Rent is specifically excluded from the definition if the hangar is the facility the organization uses.
Cpoyright 2009 Patricia J. Arthur
Unrelated Business Income Tax
● If you have UBTI, complete for 990-T and file with your return.
Cpoyright 2009 Patricia J. Arthur
Recordkeeping
● Excellent recordkeeping is the single most important thing a Chapter can do to earn and keep TE status.
Cpoyright 2009 Patricia J. Arthur
How long do we keep records?
● Generally, 3 years for return examination.
● Permanently for determination letter, bylaws, etc.
● 4 years for employment tax records.
Cpoyright 2009 Patricia J. Arthur
Corporate Governance
● This is the new IRS focus on TE's and charities.
● www.irs.gov In Charities Tab, search IRS Training Materials-Governance.
● Applying the SOX 404 regulations to TE's.
Cpoyright 2009 Patricia J. Arthur
State Issues
● Make sure you are registered as a non-profit with your respective secretary of state. Possibly a misdemeanor!!!
● This is a SEPARATE registration apart from the Articles of Incorporation.
● Determine if you need a gaming license for raffles. Also can be a misdemeanor.
● Don't forget to apply for a state sales tax exemption!
Cpoyright 2009 Patricia J. Arthur
Resources
● www.irs.gov Charities Tab.● IRS Training Materials on Governance.● Publications 557, 4221-PC, 1771 on contributions.● www.stayexempt.org● State departments of revenue websites.● Secretary of State websites for guidance on
registration and solicitations of donations.● Patti Arthur 719-539-7050