Transcript TAX EXEMPTION AND RELATED ISSUES FOR THE NOT FOR …

TAX EXEMPTION
AND RELATED ISSUES FOR
THE NOT FOR PROFIT
(NFP) CORPORATION
REUBEN S. SEGURITAN
7 Penn Plaza, Suite 222
New York, NY 10001
Tel. No. (212) 695-5281; Fax No. (212) 563-2664
Email: [email protected]
Website: www.seguritan.com
SETTING UP THE NFP
– Incorporation
• certificate of authority if NFP is foreign
corporation doing business in NYS
– 501(c)(3) tax exempt status (Form 1023)
• 5 year advance ruling period to maintain public
charity status
– NYS income tax exemption (CT-247)
– NYS sales tax exemption (ST-119.2)
– Registration with NYS Attorney General
(CHAR 410)
REGISTRATION WITH NYS
ATTORNEY GENERAL
– Types of Registration
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Article 7A to solicit contribution
EPTL for incorporated or doing business
Dual for combined Article 7A and EPTL
– When to Register
• Article 7 A – 30 days prior to solicitation
• EPTL – within 6 months of activity
• Dual – whichever is earlier
– Attachments
• Certificate of Incorporation, By-laws, IRS Form
1023 and IRS tax exemption letter
– Penalties for failure to register
• Article 7A - $1,000 per violation and up to
$100 per day for willful non-compliance
• EPTL - $10 per day up to $1,000 for each
failure
• Dual – combined penalties
– Unified registration statement (multi-state)
• in lieu of Art. 7A only
• used by 39 states
– Exemption
• See CHAR 410 instructions
• File CHAR 410 with Schedule E to confirm
exemption
ANNUAL FILING REQUIREMENTS
– Internal Revenue Service
• Form 990 – if gross receipts is $100,000 or
more
• Form 990EZ – if gross receipts more than
$25,000 but less than $100,000 and total
assets less than $250,000
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Form 990N – if gross receipts less than
$25,000
Form 990T – if unrelated business income is
$1,000 or more
Employment tax return
Enforcement tool to find out income and
expenses, assets, programs, excess benefit
transactions, self-dealing and lobbying
activities
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Penalties
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revocation of tax exempt status if Form 990,
990EZ or 990N not filed for 3 consecutive years
$20 per day until filed up to $10,000;
$100 penalty up to $50,000 if gross receipts
over $1 million
no penalty for late filing of 990N
When to file

15th day of the 5th month
– NYS Attorney General (CHAR 500)
• Form CHAR 500 for all registrants with a copy
of Form 990, 990 EZ and 990T
• Additional attachments
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Article 7A and dual – accountant’s audit and
financial statement if revenue over $250,000;
accountant’s review and financial statements if
revenue over $100,000 to $250,000
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When to file
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Exemption
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Article 7A and dual – 4 ½ months after end of
fiscal year
EPTL – 6 months after end of fiscal year
Article 7A and dual – contribution not exceeding
$25,000 and did not use professional fundraiser
EPTL – gross receipts did not exceed $25,000
and assets did not exceed $25,000
Penalty – same as in CHAR 410
ORGANIZATION
AND GOVERNANCE
– Bylaws
– Board of directors
– Legal duties of directors
• Duty of care
• Duty of loyalty
• Duty of obedience
– Enforcement of director’s duties
• by Attorney General
• by another director
• by 5% of members
– Personal liability of directors
• accidents and employment
• volunteers not liable unless with gross
negligence or intent to harm
– Corporate protection
• liability insurance
• indemnification of officers, directors and
employees
• placing risks on contractors
OTHER COMPLIANCE ISSUES
– Prohibited activities
• political campaigns
• substantial lobbying
• private benefit or inurement
– Record Keeping
• documentation of income and expenses
• organizational documents
• retention period
– Disclosure
• annual returns
• tax exempt documents
– Fundraising
• written acknowledgement for contribution of
$250 or more
• quid pro quo contribution of $75 or more
• use of professional fundraisers
•
raffles
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license required if net proceeds is $30,000 or
more
verified statement if net proceeds is $5,000 or
more
restrictions
• who, where, when to sell
• separate bank accounts
• final accounting or verified statement
– Dissolution
• board resolution
• membership approval
• asset distribution