If you run a non-profit organization, you may find yourself in a bind when it comes to tax issues. There are many people who run non-profits as a volunteer, and therefore they have no experience with taxes and a business. Throw in the fact that it's a non-profit, and you can become extremely confused. Here is an overview on taxes when it comes to non-profit organizations, and a few tips that you need to know. If you are ever in doubt, you should confer with your accountant and a tax attorney.
Annual Filing
The biggest thing you have to remember is to file your return with the IRS. Even though you are tax-exempt, you need to let the IRS know what money you've taken in for the year and how you used that money. There is a lot of information, including the necessary forms, at the IRS website.
Individual Contributions
Make sure you provide receipts for any individual contribution you received. Your state will require you to file a report on gifts received. You also have to provide the fair market value of the services and gifts that were given to your organization.
Contract Approval Process
Your board should adopt a standard process when it comes to approving contracts and paying compensation to employees. This is especially important if your non-profit is in place to serve the public's interests, not private interests. The IRS may want to have proof that your company is doing just that.
Political Campaigns
You could lose your tax exempt status if your company participates in any political campaigns. A non-profit cannot engage in activity that is favorable for someone running for public office. These activities include any contributions to an individual's campaign, public endorsements, or public statements supporting a candidate.
Business Income
If your organization receives income that is unrelated to the charitable part of the organization, the company must pay taxes on it. This can become a bit complex when determining deductions, exceptions and exclusions, so this is definitely an area in which you would want help from an accountant to tax attorney in order to ensure you are doing it correctly.
The bottom line is that you want to be certain you are doing everything legal, filing the correct paperwork on time, and engaging in activities that are centered around your organization's mission. Otherwise, you are looking at the high possibility of losing your tax exempt status. Talk to your local tax attorney, such as LaSpada, Anthony J. PA, for more information.
Share15 December 2014
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