Tax Planning and Compliance for Tax-Exempt Organizations. Jody Blazek

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can enjoy the benefits of filing and paying their federal taxes electronically. Whether you rely on a tax professional or handle your own taxes, the IRS offers you convenient programs to make taxes easier.You can e-file your Form 990-PF, Form 940, and 941 employment tax returns, and Forms 1099 and other information returns. Visit IRS.gov/Charities-Non-Profits/Annual-Reporting-and-Filing for details.You can pay taxes online or by phone using the free Electronic Federal Tax Payment System (EFTPS). Visit EFTPS.gov or call 800-555-4477 for details. Electronic Funds Withdrawal (EFW) from a checking or savings account is also available to those who file electronically.Don't include social security numbers on publicly disclosed forms. Because the IRS is required to publicly disclose the organization's annual information returns, social security numbers shouldn't be included on this form. Documents subject to disclosure include schedules and attachments filed with the formForm 990-PF is an annual information return that must be filed by the following:Exempt private foundations (section 6033(a), (b), and (c)).Taxable private foundations (section 6033(d)).Organizations that agree to private foundation status and whose applications for exempt status are pending on the due date for filing Form 990-PF.Organizations that claim private foundation status, haven't yet applied for exempt status, and whose application isn't yet untimely under section 508(a) for retroactive recognition of exemption.Organizations that made an election under section 41(e)(6)(D)(iv).Private foundations that are making a section 507(b) termination.Include on the foundation's return the financial and other information of any disregarded entity owned by the foundation. See Regulations sections 301.7701-1 through 3 for information on the classification of certain business organizations, including an eligible entity that is disregarded as an entity separate from its owner (disregarded entity).How to avoid filing an incomplete return. Complete all applicable line items. Answer “Yes,” “No,” or “N/A” (not applicable) to each question on the return. Make an entry (including a zero when appropriate) on all total lines. Enter “None” or “N/A” if an entire part doesn't apply.Accounting Period. File the 2020 return for the calendar year 2020 or fiscal year beginning in 2020. If the return is for a fiscal year, fill in the beginning and ending dates of the tax year in the spaces at the top of the return.The return must be filed on the basis of the established annual accounting period of the organization. If the organization has no established accounting period, the return should be on the calendar-year basis.For an initial or final return or for a short tax year resulting from a change in accounting period, the 2020 form may also be used as the return for a short period (less than 12 months) ending November 30, 2020, or earlier. The 2020 form may also be used for a short period beginning after November 30, 2020, and ending before December 31, 2021 (not on or after December 31, 2021). When doing so, provide the information for designated years listed on the return, other than the tax year being reported, as if they were updated on the 2020 form. For example, provide the information in Part V, line 1, for the tax years 2016–2020, rather than for the printed years, 2015–2019.In general, to change its accounting period, the organization must file Form 990-PF by the due date for the short period resulting from the change. At the top of this short period return, write “Change of Accounting Period.” If the organization has previously changed its accounting period within the 10-calendar-year period that includes the beginning of the short period resulting from the current change in accounting period, and it had a Form 990-PF filing requirement at any time during that 10-year period, it must also file Form 1128, Application for Change in Accounting Method, with the short-period return. See Rev. Proc. 85-58, 1985-2 C.B. 740, 1985-18 I.R.B. 5.Accounting Methods. Generally, you should report the financial information requested on the basis of the accounting method the foundation regularly uses to keep its books and records. Exception. Complete Part I, column (d), on the cash receipts and disbursements method of accounting.

      I commend the IRS for the above list and decided to also include any news items from the Form 990 instruction posted on January 27, 2021, that pertained to Tax-Exempt Organizations issues not mentioned above. Some items are displayed in an abbreviated version for repeated information. One might look for release of the 2022 version.

One might also benefit from the following Form 990 Tips and Cautions:

       Certain Form 990 filers must file electronically. See General Instructions, Section E. When, Where, and How To File, later, for who must file electronically.

       Reminder: Don't Include Social Security Numbers on Publicly Disclosed Forms. Because the filing organization and the IRS are required to publicly disclose the organization's annual information returns, social security numbers shouldn't be included on this form. By law, with limited exceptions, neither the organization nor the IRS may remove that information before making the form publicly available. Documents subject to disclosure include statements and attachments filed with the form. For more information, see Appendix D.

       Organizations that have $1,000 or more for the tax year of total gross income from all unrelated trades or businesses must file Form 990-T, to report and pay tax on the resulting unrelated business taxable income (UBTI), in addition to any required Form 990, 990-EZ, or 990-N.

       An organization may not file a “consolidated” Form 990 to aggregate information from another organization that has a different EIN, unless it is filing a group return and reporting information from a subordinate organization or organizations, reporting information from a joint venture or disregarded entity (see Appendix E, Group Returns—Reporting Information on Behalf of the Group, and Appendix F, Disregarded Entities and Joint Ventures—Inclusion of Activities and Items).

       An organization that has filed a letter application for recognition of exemption as a qualified nonprofit health insurance issuer under section 501(c)(29), or plans to do so, but hasn't yet received an IRS determination letter recognizing exempt status, must check the “Application pending” checkbox on the Form 990, Item B, page 1.

Subordinate organizations in a group exemption which are included in a group return filed by the central organization for the tax year shouldn't file a separate Form 990, Form 990-EZ, or Form 990-N for the tax year.

       A public charity described in section 170(b)(1)(A)(iv), 170(b)(1)(A)(vi), or 509(a)(2) that isn't within its initial 5 years of existence should first complete Part II or III of Schedule A (Form 990 or 990-EZ) to ensure that it continues to qualify as a public charity for the tax year. If it fails to qualify as a public charity, then it must file Form 990-PF rather than Form 990 or Form 990-EZ, and check the box for “Initial return of a former public charity” on page 1 of Form 990-PF.

       Depending on the specific accounting method change being requested, the taxpayer may be able to request “automatic” consent. This means that as long as the taxpayer follows the applicable procedures, the taxpayer does not have to wait for formal approval by the IRS before applying the new accounting method. See Rev. Proc. 2019-43, 2019-48 I.R.B. 1107, or its successor, for a list of accounting method changes that generally qualify for automatic consent.

      

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