Transcript Slide 1

ACS Division and Local Section
Treasurers’ Webcast
Tax Compliance, Reporting, and
Frequently Asked Questions
December 11, 2013
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Have Questions?
Use the Questions Box!
Contact ACS Webinars™at [email protected]
Polling question
As the treasurer of your organization, how many
years have you filed the tax returns for your
organization?
A. 1-2 years
B. 3-5 years
C. More than 5 years.
D. Do not know
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Topics
• Tax exempt status of ACS affiliated organizations
• Benefits of tax exemption
• Identify the actions that jeopardize tax-exempt status
• Mandatory federal tax filings
• Frequently asked questions
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Tax-Exempt Status of ACS Affiliated
Organizations
• ACS affiliated organizations include:
– Local Sections, Divisions, Subdivisions, and Regions
• Type of exempt organization: Charitable non-profit scientific
and educational organizations
• Exempt under IRC Section 501(c)(3) through ACS Group
Exemption Letter (if election is made by organization)
– IRS Group Exemption Determination Letter (most recent
issued February 4, 2003)
• Exempt from federal income tax
• Non-private foundation under IRC Section 509(a)(2) Public
Charity
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What is the ACS Group Exemption?
• IRS granted exemption to ACS affiliated organizations
through the ACS Group Exemption Letter
– ACS is the central organization
– Group exemption number: 0945
– ACS must take measures annually to keep group
exemption letter in force
– Re-election to be included under ACS group exemption
must be made every year via ACS annual report
– New local sections, divisions, regions, subdivisions can
obtain tax-exempt status by electing to be included within
the ACS group exemption letter
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What is the ACS Group Exemption? (cont.)
•
Affiliated Organizations (Local Sections, Divisions, Subdivisions,
Regions)
– ACS does not have operational and financial control
– Affiliated organizations are separate legal entities
• Each has their own federal Employer Identification Number
(EIN); (also called taxpayer identification (TIN), or federal id
number
• DO NOT USE ACS FEDERAL ID NUMBER
• If you do not know your EIN, contact ACS Tax Office
– Each one must prepare their own individual/separate financial
reporting and tax filings to maintain tax-exempt status
– Each one must maintain non-private foundation status by
meeting public support test
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Polling question
My organization does not need to elect each year to be
included under the ACS Group Exemption.
A. True
B. False
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Benefits of 501(c)(3) Status
• Income from exempt purpose related activities are exempt
from federal income tax
• Exempt from federal unemployment taxes
• Exempt from some state taxes (e.g., income, sales,
employment)
• Contributions received are tax deductible to donors
• Tax-exempt financing available
• Reduced postal rates available
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What Jeopardizes § 501(c)(3) Status?
• FAILING TO MEET FILING REQUIREMENTS
• Inurement/private benefit activities prohibited and restricted
• Lobbying activities must be insubstantial
• Political activities are absolutely prohibited
• Failing to operate with an exempt purpose
• Unrelated business activities must not be the primary
purpose
– Exempt purpose is found in organization’s organizing
documents such as Articles of Incorporation, Articles of
Association, Constitution, or Bylaws
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Mandatory Federal Tax Filing
Requirements
• Information returns (Form 990 series):
– Form 990 - Return of Organization Exempt from Income Tax
– Form 990-EZ - Short Form Return of Organization Exempt from
Income Tax
– Form 990-N (e-Postcard)
• Income tax return:
– Form 990-T – Exempt Organization Business Income Tax
Return (if you have
unrelated business income (UBI))
• Other information returns:
– Form 1099 MISC - Miscellaneous Income
– Form 1096 - Annual Summary and Transmittal of U.S.
Information Returns
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Which Form 990 to File?
Based on Gross Receipts and Total Assets
Form to
File
Gross receipts normally ≤ $50,000**
Gross receipts > $50,000 AND < $200,000, AND Total assets < $500,000
Gross receipts ≥ $200,000, OR Total assets ≥ $500,000
990-N
(e-Postcard)
990-EZ
990
** How to determine if gross receipts are normally ≤ $50,000:
Take the average gross receipts based on a 3-yr period to include tax year + 2 prior tax
periods
The Form 990 series of returns (Form 990, 990-EZ, or 990-N) are
mandatory for 501(c)(3) organizations
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Federal Tax Filing Requirements
Form 990 - Gross Receipts
What are gross receipts?
1. Contributions
2. Program Service Revenue
6. Gross rents
7. Other Investment Income
3. Membership Dues &
Assessments (includes ACS 8. Sale of Assets, Other than
Inventory
Allotments to Divisions and
Local Sections)
9. Gross Sales of Inventory
4. Interest Savings/Temporary
Investments
10. Other Revenue
5. Dividends & InterestSecurities
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Federal Tax Filing Requirements
Form 990-N
What is needed to complete 990-N?
• Employer identification number (EIN)
• Tax Year
• Legal name & address
• Other names the organization uses
• Name and address of a principal officer
• Website address (if one exists)
• Confirmation that the organization’s gross receipts are at or
below the threshold
Filing Website: http://epostcard.form990.org/
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Federal Tax Filing Requirements
Forms 990 and 990-EZ
Mandatory Schedules
• For BOTH Form 990 and 990-EZ, must include
– Schedule A, Public Charity Status and Public Support
– Schedule B, Schedule of Contributors (required if the
organization received, during the reporting year, $5,000 or
more in money or property from any ONE contributor)
• For Forms 990 ONLY, must include
– Schedule O, Supplemental Information to Form 990
• Additional schedules are required based on responses to
questions
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Schedule A - Public Charity Status
and Public Support
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Schedule B - Schedule of
Contributors
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Schedule O - Supplemental
Information
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Federal Filing Requirements –
When to File?
FILING DATES:
Due Date for all 990 returns: File by the 15th of the 5th month after
the end of the organization’s accounting period. This will be
May 15th for a calendar year filer.
EXTENSIONS For Form 990 or 990-EZ
File IRS Form 8868 to get an initial 3-month extension. An
additional 3 month extension may be requested if original 3
months was not enough time.
Form 990-N is due on May 15th of each year. NO EXTENSIONS!
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Federal Tax Filing Requirements
Where to file?
• Paper returns are filed in Ogden, UT:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0027
• Electronic filing is required for Form 990 filers with
assets of  $10 million AND at least 250 returns
• The IRS recommends that all organizations,
regardless of size, file electronically
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Polling Question
Can I file an extension for the e-postcard (990-N)?
A. Yes, until August 15th
B. No
C. Yes, until November 15th
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Federal Tax Filing Requirements
Non-Filers/Late Filers Penalties
Penalties for late filing, incomplete or
inaccurate return:
• Against organization: $20 a day for each
day the return is late ($10,000 maximum);
or 5% of the gross receipts
• Against responsible person(s): $10 a day
not to exceed $5,000
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Federal Tax Filing Requirements
Non-Filers/Late Filers Penalties
Failure to file for 3 consecutive years:
• Loss of tax-exempt status (automatic revocation)
• Must file annual income tax return (Form 1120) and pay taxes,
if owed
• Donations are not tax-deductible
• Not eligible to be included in ACS Group Exemption (will be
removed)
• Central organization (ACS) cannot obtain exemption for
subordinate organization
• You must re-apply for your organization’s tax-exemption
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AUTOMATIC REVOCATION OF TAX
EXEMPT STATUS
Beware!
You do not want to have your tax-exempt status automatically
revoked! If it is revoked, only YOU can file for reinstatement!
By law, an organization that fails to file Form 990, 990-EZ, or
990-N for three consecutive years will have its tax-exempt
status automatically revoked as of the filing due date for the
third return.
File your returns!
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AUTOMATIC REVOCATION - HOW
TO GET REINSTATED
• To get reinstatement the organization (NOT ACS) must file
FORM 1023 regardless of whether the organization was
originally required to apply for exemption
• Write “Automatically Revoked” at the top of the application
• Must pay the appropriate user fee (See Revenue Procedure
2011-8 and 2011-36)
• The organization MUST file Form 1023 even if it was covered
under a group exemption
• Visit the IRS website under Charities for a list of frequently
asked questions. www.irs.gov/charities
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Federal Tax Filing Requirements Other
• Form 990-T – Exempt Organization Business Income Tax
Return
Due Date: May 15 (6 months extension to November 15)
• Form 1099 - MISC - Miscellaneous Income
Due Date to Recipients: January 31, 2014
Due Date to the IRS: February 28, 2014
• Form 1096 - Annual Summary and Transmittal of U.S.
Information Returns
Due Date: February 28, 2014 with Form 1099-MISC
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Federal Tax Filing Requirements
Form 990-T
(Exempt Organization Business Income Tax Return)
When are you required to file Form 990-T?
• Unrelated business income  $1,000
• UBI is income from:
– A trade or business
– Conducted on a regular basis
– That is not substantially related to the
organization’s exempt purpose
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Federal Tax Filing Requirements
Form 990-T
Examples of some of the more common forms of unrelated trade
or business activities include.
• Advertising
• Gaming
• Sale of merchandise – unrelated to exempt purpose
Exclusions (not UBI)
• Interest and dividends
• Royalty income
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Federal Tax Filing Requirements Form
1099-MISC
When are you required to file Form 1099-MISC?
• Paid at least $10 in royalties
• Paid at least $600 in rents, services, prizes and awards, other
income payments, medical and health care payments,
attorney fees, speaker fees, payments to corporations for
legal services
• Scholarships/Fellowships – not required to be reported
• Travel Reimbursements – not required to be reported if
recipient provides adequate accounting of the amount to be
reimbursed and includes these four elements: amount, place,
time and business purpose
You need to obtain vendor’s taxpayer identification before making any payments
using IRS Form W-9 Request for Taxpayer Identification Number and
Certification.
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Resources
To obtain IRS federal forms and publications
IRS Website:
http://www.irs.gov/formspubs/index.html
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FREQUENTLY ASKED QUESTIONS
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Frequently Asked Questions
1. Should our organization incorporate?
The decision to incorporate is based on the facts and
circumstances of each ACS affiliated organizations. The
primary benefit to incorporating is the protection it gives to
individual officers, directors, and members from liability for
many obligations of the corporation. However, there are
additional state general corporation law compliance
requirements that entail filing of Articles of incorporation and the
payment of requisite state fees.
2. Do I need to incorporate to get a federal EIN ?
NO. Any legal entity whether incorporated or not can obtain an
EIN.
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Frequently Asked Questions cont’d
3. Why do we need an EIN? Can I use the ACS’s EIN? What form
should I file to get an EIN?
Each ACS affiliated organization MUST obtain a Federal EIN to
file federal and state returns and correspondences. An EIN may
be required to open a business bank account.
Since ACS affiliated organizations are separate legal entities
apart from the ACS. UNDER NO CIRCUMSTANCES SHOULD
THEY USE THE ACS’S EIN.
File the IRS Form SS-4, Application for Employer Identification
Number to apply for the number. To expedite the process, the
application can be filed online at the IRS’s website www.irs.gov
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Frequently Asked Questions cont’d
4. I am applying for an EIN on Form SS-4 and it requires a
TIN/SSN. Whose TIN/SSN should I use?
Use the TIN/SSN of the organization’s responsible party. The
responsible party could be one of the officers of the
organization.
The IRS defined the responsible party as follows:
Is the person who has a level of control over, or entitlement to,
the funds or assets in the entity that, as a practical matter,
enables the individual, directly or indirectly, to control, manage
or direct the entity and the disposition of its funds and assets.
The ability to fund the entity or the entitlement to the property of
the entity alone, however, without any corresponding authority
to control, manage, or direct the entity (such as in the case of a
minor child beneficiary), does not cause the individual to be a
responsible party.
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Frequently Asked Questions cont’d
5. Should I file a state tax return?
Filing a state return is dependent on state law and is typically
required only if you are incorporated and registered in the state.
6. What is IRS Form W-9?
IRS Form W-9 Request for Taxpayer Identification Number and
Certification is used to request the taxpayer identification
number (TIN) of a U.S. person, certifications, and claims of
exemption. Prior to sending payments to vendors you need to
obtain their TIN.
7. Are my organization’s purchases exempt from sales/use tax?
Each state has their own rules on sales/use tax exemption for
non-profits. In some cases, a state will exempt the non-profit as
a matter of law and in others, for example Florida, the non-profit
must apply for a sales/use tax exemption. Please check each
state for their requirements.
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Frequently Asked Questions cont’d
8. What is the ACS group exemption letter or IRS Determination
Letter?
The IRS granted tax-exempt status to the ACS and issued a
determination letter on January 18,1938. The IRS Determination
Letter is used as a proof of the tax-exempt status of ACS and its
affiliated organizations. The letter states that the ACS and its
affiliated organizations are exempt from FEDERAL INCOME
TAXES ONLY.
9. My bank needs proof that my organization is tax-exempt. What
document should I give them?
Your organization will need to provide the bank with a copy of
the ACS IRS Determination Letter and an ACS letter certifying
your tax-exempt status and affiliation with ACS.
To obtain these documents, please contact the ACS Tax
Department at [email protected] or telephone number: 202-872-6306.
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Frequently Asked Questions cont’d
10. Can we sell items without jeopardizing our tax-exempt
status?
Yes. ACS affiliated organizations can sell items that are aligned
with their tax-exempt purpose without jeopardizing their taxexempt status.
11. How should I acknowledge a charitable donation?
The IRS requires contemporaneous acknowledgement of the
charitable donation. Please see the ACS website for examples of
letters that must be given to donors.
(http://www.acs.org/content/acs/en/membership-andnetworks/ls/training/treasurers-workshop-qa.html)
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Frequently Asked Questions cont’d
12. My Local Section wants to fundraise in our state. Do I need to
register for charitable solicitation?
Generally, states require that you register if you want to solicit
charitable contributions.
13. When do I issue a Form 1099-MISC?
A Form 1099-MISC must be issued for payments of $600 or more
in rents, services, prizes and awards, speaker fees, and other
income payments. DO NOT issue Form 1099-MISC for
scholarship or fellowship grants.
Travel reimbursements are not required to be reported if
recipient provides adequate accounting of the amount to be
reimbursed and includes these four elements: amount, place,
time, and business purpose.
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Frequently Asked Questions cont’d
14. Should I issue Form 1099-MISC for awards and prizes?
In general, prizes and awards are reportable as income on the
Form 1099-MISC. However, prizes and awards received in
recognition of past accomplishments in religious, charitable,
scientific, artistic, educational, literary, or civic fields are not
reportable on Form 1099-MISC if they meet all of the following
conditions:
· The winners are chosen without action on their part,
· The winners are not expected to perform future services, and
· The payer transfers the prize or award to a charitable
organization or governmental unit
under a designation made by the recipient.
For more information, please refer to the guidelines in IRS Rev.
Proc. 87-54.
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Frequently Asked Questions cont’d
15. Are awards and prizes taxable income to the recipients?
Awards and prizes unless specifically excluded (scholarships or
fellowship grants) are included in the gross income of recipients.
16. What is a fellowship grant? Should we issue a Form 1099MISC.?
A fellowship grant is generally an amount paid to an individual to
enable him to pursue studies or research for the primary
purpose of furthering the education and training of the recipient.
A Form 1099-MISC is not required for fellowship grants.
However, you should inform the recipients that the grants might
be taxable income and to check with their tax advisor.
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Frequently Asked Questions cont’d
19.My Local Section’s tax-exempt status was automatically revoked for
failure to file annual returns for 3 consecutive years. Do I need to file
tax returns for the current and prior years?
The organization must first apply for reinstatement of their tax-exempt
status.
After its application for reinstatement has been approved, an
organization that is eligible to submit an annual electronic notice (Form
990-N) because its annual receipts are normally $50,000,can file their
current year Form 990-N. There is no filing requirement for prior years.
Other organizations not eligible to file a Form 990-N must file an annual
information return (Form 990 or Form 990-EZ ) for each taxable year that
ends while the application for reinstatement is pending. The
organization should check the “application pending” block on the top of
page 1 of the return.
For more information about filing requirements while an application for
exemption is pending, see Publication 557, Tax-Exempt Status for Your
Organization.
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Frequently Asked Questions cont’d
17.Can my Local Section claim a tax deduction for contributions
to the ACS Project SEED program?
Yes. The Local Section can report the contribution as a
deductible expense.
18. Do I need to provide the ACS with a copy of my filed Form
990 return?
Yes, this is a REQUIREMENT. Please send copies of filed
returns to [email protected] or mail to the following address:
American Chemical Society, Tax Office, 1155 16th Street, NW,
Washington, DC 20036
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Frequently Asked Questions cont’d
20. I have to file Form 1023 to get reinstated. Can someone at
ACS assist me with the reinstatement process?
The ACS Tax Office and the ACS Office of Legal Counsel can
assist with your reinstatement. The revoked organization MUST
first complete the Form 1023 to initiate the reinstatement
process and provide it to the ACS for review.
21. Where can I find the ByLaws for my Local Section?
ByLaws for ACS Affiliated organizations are available on the
ACS website at:
http://www.acs.org/content/acs/en/about/governance/committee
s/bylaws/documents.html
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Frequently Asked Questions cont’d
22. I need to file my Form 990-N. Where do I get a login ID and
password?
Please visit this website: http://epostcard.form990.org/
If this is your first time filing, you need to register as a new user.
You will need your organization’s EIN to register and follow the
instructions accordingly.
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American Chemical Society
For further information contact:
ACS Office of Tax Compliance and Reporting
1155 Sixteenth Street, N.W.
Washington, DC 20036
Name
Title
Telephone No.
Email
Rosalee Lewis
Tax Manager
(202)872-6306
[email protected]
Leila Hoen
Assistant Director
(202)872-6027
[email protected]
Lisa Wolfinger
Asst. Tax Accountant(202)872-6052
David Smorodin
Asst. General Counsel (202)-872-4510 [email protected]
Maria Tolentino
Sr. Tax Accountant (202)872-6233
[email protected]
Brinky Qiu
Tax Accountant
[email protected]
•
(202)872-6231
[email protected]
Send email inquiries to: [email protected]
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