Archive for John Stancil

Non-Profits Should Be Aware of Issues With Chip-Enabled Credit Cards

It is highly likely that you have recently received a new, updated credit card from at least one of your credit card vendors. If you did, it is almost certainly one of the new “chip-enabled cards.” You most likely are wondering “What is this all about?”

The United States is very late to the game in the chip card market. These have been in use in Europe for a number of years. It is all about security. After the cards were introduced in Europe, there was a sharp decline in credit card fraud. Without getting into too much technical detail, the old magnetic strip cards allowed the retailer to store card data in their systems, making them ripe for data theft. The chip cards, referred to as EMV (Europay, Mastercard, Visa) utilize a process referred to as tokenization to increase security. In lieu of recording the credit card number a one-time “token” number is substituted in the Read More

Written by | Posted in Non-Profit Tax • Small Business

Non-Cash Charitable Contribution Rules May Be Changing

Under current tax law, a donor may deduct fair market value for certain non-cash contributions of a capital asset to IRS qualified tax-exempt organizations.  This provision in the law has been a great benefit to organizations as well as donors.

For example, assume a taxpayer owns a capital asset such as a tract of unimproved land.  The land has a cost basis to the taxpayer of $10,000 but its fair market value is $50,000.  If this land has been owned by the taxpayer for more than 12 months, he or she gets a deduction equal to the fair market value when donated to an IRS qualified tax-exempt organization. So the taxpayer gets a $50,000 deduction for an asset costing him or her $10,000 and does not pay any tax on the appreciated amount. Read More

Written by | Posted in Individual • Non-Profit Tax

Form 8282 – What, When, And Why Must It Be Filed?

When making non-cash charitable contributions, most donors are aware of Form 8283. This form must be filed as a part of the taxpayer’s 1040 if the taxpayer made non-cash charitable contributions of $500 or more during the year. This form includes information about the recipient organization and a summary of the items that were contributed.

Form 8283 has sometimes been utilized by the taxpayer as acknowledgement from the recipient organization. However, this is not the intent of Form 8283 and the IRS does not consider a completed Form 8283 as proper acknowledgement.

Less well known is Form 8282, Donor Information Return. This return is completed by the recipient organization and sent to the IRS Service Center in Ogden, UT. In addition, a copy Read More

Written by | Posted in TaxConnections

Be Aware of Security Issues In Using Mobile Pay Devices

Many churches and other non-profit organizations now accept online and credit card contributions. Typically, the credit card transactions can be made through the organization’s website or through a kiosk located within the organization’s facilities.  In recent months the availability of mobile pay devices has become more widely available. These devices allow the organization to use smart phones, tablets, or other devices for accepting payments.  The most common providers of this technology are PayPal Here and Square.  Typically, after signing an agreement with the company, the appropriate hardware will be provided to the organization, giving them the ability to accept mobile payments. There may be a charge for the hardware. And, the organization does charge a fee based on the dollar amounts that are processed. Read More

Written by | Posted in Non-Profit Tax • Religion

Congress Changes Certain Returns Due Dates

Congress recently passed some legislation that changes the due dates of certain returns.  Partnership and S Corporation returns using a calendar year will be due on March 15 (two and one-half months after the end of the fiscal year). This is effective for tax years beginning after December 15, 2015.

C Corporation returns using a calendar year will be due will be due April 15 (three and one-half months after the end of the fiscal year). This is effective for tax years beginning after December 15, 2015 unless the fiscal year ends June 30, in which case it is effective for tax years beginning after December 31, 2025. Go figure.

The new law also changes the due date for the FinCEN Report 114 to April 15. Remember Read More

Written by | Posted in Corporate • FBAR • IRS • Tax Planning

Congress Adds Information Requirements To Form 1098

When a mortgage lender receives $600 or more in interest from a borrower, it must file a Form 1098, indicating the amount of interest. Congress recently passed legislation that added some additional information to this information return.  Information that must now be included is:

• The amount of the outstanding mortgage principal balance as of the beginning of the calendar year.

• The mortgage origination date

• The address of the property securing the mortgage. Read More

Written by | Posted in IRS • Tax Planning

German Church Tax Update

Last fall we wrote about the increased enforcement of the German Church Tax (German Church Tax Causes Controversy), in particular the enforcement of this tax on capital gains. The tax is levied by the state at 8-9% of the regular income tax for members of certain mainline churches – primarily Catholic and Lutheran church members. This tax is then passed on to the churches for use in their operations and charitable activities. The tax is only levied against registered members of Catholic, Protestant, or Jewish churches. The system does not rely on self-reporting as some churches have gotten rather aggressive against those who are alleged members of the Church but do not report being a member of a church.

As enforcement of the tax has increased, more and more church members are Read More

Written by | Posted in Capital Gains • Non-Profit Tax • Religion

The Consequences of Losing Tax-Exempt Status

When a church or religious organization loses its tax-exempt status, the obvious consequences are that donations to the organizations can no longer be deducted by donors. In addition, loss of tax-exempt status means that the organization is subject to federal and state income taxes on its net income. That last statement is not quite as bad as it sounds, though because the tax is on net income, not the gross. Most such organizations tend to spend most, if not all, of their income on programs and infrastructure. Therefore, there would be little or no net income and no income tax to pay.

There are numerous other consequences involved with losing one’s tax-exempt status that can affect the organization significantly. Read More

Written by | Posted in Non-Profit Tax • Tax Tips

How To Lose Your Tax-Exempt Status

Many people, particularly those involved in 501(c)(3) tax-exempt charitable organizations, are familiar with the process of applying to the IRS in order to receive tax-exempt status. Organizations that have obtained this status can accept tax-deductible contributions from donors. Obviously, this is critical to such organizations.

Tax-exempt status should not be taken for granted. When obtained, it is for an indefinite period. However, an organization can lose its tax exempt status, either by voluntarily surrendering it or having it revoked by the IRS. If revoked by the IRS, it may be retroactive if the church or organization omitted or misstated material facts or operated in a manner significantly different than originally represented. More frequently, however, the revocation will be effective no earlier than the date on which the organization received written notice Read More

Written by | Posted in Non-Profit Tax

Group Exemptions For Tax Exempt Organizations

Until 1969, there was no legal requirement that an organization must file with the IRS to obtain tax-exempt status.  This status was automatic if the organization could demonstrate that it met the requirements set forth in Section 501(c)(3) of the tax code. In other words, an organization claiming tax exempt status was presumed to be qualified unless the IRS determined to the contrary. However, in 1969, Section 508 was added to the tax code, specifying that no organization would be treated as tax-exempt unless it applied to the IRS for tax-exempt status. Thus Form 1023 was born as the tax-exempt status application.

Some exceptions were carved out, however.  Three classes of organizations do not have to apply for tax exempt status: Read More

Written by | Posted in Clergy • IRS • Non-Profit Tax

Would A Supreme Court Ruling In Favor of Same Sex Marriage Threaten Religious Organizations’ Tax Exemptions?

The United States Supreme Court has heard arguments in the Obergefell v. Hodges case which basically seeks to legalize same-sex marriage in the United States.  While the court has not yet announced its verdict, there is concern that, if it is legalized, the action could threaten the tax-exempt status of churches and other religious organizations.  Albert Mohler, President of Southern Baptist Theological Seminary has stated that this issue “may well be the greatest threat to religious liberty of our lifetime.

During discussions before the Court, three religious liberty issues were raised.  First, Justice Scalia asked counsel arguing for same-sex marriage if clergy would be required to perform same-sex marriages. The response was that a constitutional right for such unions would not require clergy of any faith to perform these ceremonies. Read More

Written by | Posted in Non-Profit Tax • Religion • Same Sex Couples • Tax Controversy

What Is A Private Foundation?

Most people have heard the term “private foundation,” and know vaguely that it somehow relates to philanthropic organizations.  But beyond that, most people are lost when pressed for more details about these organizations. A 501(c)(3) tax-exempt organization is either a public charity or a private foundation. The default is that an organization will be classified as a private foundation unless it can demonstrate that it falls into one of the categories specifically excluded from the definition of a private foundation. These rules are found in section 509(a). Generally, it is to the advantage of the organization to be classified as a public charity as there are fewer restrictions on the operations of the organization under this category.

A private foundation is typically a legal entity set up by an individual, a family, or a group of Read More

Written by | Posted in IRS • Non-Profit Tax
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