GRANTMAKING AND THE
IRS: WHAT'S NEW
This online SPECIAL ISSUE is developed by San Diego Grantmakers
to keep you informed about special topics of interest to grantmakers. Our mission is to connect, teach, develop, and inspire a diverse
group of foundations and corporations to stimulate effective
philanthropy in the San Diego region. For more information,
visit www.SDGrantmakers.org.
2006
Implementing Guidelines: Enforcement
The IRS Exempt Organizations division has issued its 2006 Implementing
Guidelines that outline the work plan and goals for the 2006
fiscal year. These guidelines indicate a continued emphasis
on increasing enforcement to protect against "abuses"
in the tax-exempt sector. The IRS has added staff in order to
examine pay and benefits at charities and private foundations
as well as large deductions by individual taxpayers. Forbes
magazine predicts that this is only the beginning of a larger
crackdown, and The Chronicle of Philanthropy reports that the
IRS is moving toward "more thorough enforcement of the
laws governing nonprofit organizations." The 2006 guidelines
are available in pdf form here.
New
Form 990
The IRS has released for public comment a revised Form 990 (including
Schedule A) for the 2005 taxable year. Although the IRS is continuing
its multiyear project of completely overhauling Form 990, the
changes proposed for 2005 are significant with respect to executive
compensation and community benefit. A preliminary draft of the
new Form 990 can be found in pdf form here.
Instructions for the new Form 990 have not yet been released
and will contain more detailed information about the changes.
The most obvious change is the increase in length from six to
eight pages. Reasons for the longer form include a larger font
size, additional room for explanations and descriptions (to
minimize attachments), and the expansion of Part V (List of
officers, directors, trustees, and key employees).
Part V has been divided into two parts: Current and Former.
The Current section should contain current officers, directors,
trustees, and key employees that served at any time during
the year, even if not compensated. Question 75 has been expanded
to include four parts to inquire about board members, related
party employees, shared compensation, and whether the organization
has a written conflict of interest policy. The Former section
should contain any former officers, directors, trustees, and
key employees that received compensation or other benefits
during the year, including loans and advances. Without the
instructions published, it is unknown how far back taxpayers
must list former employees. Additionally, in Part VI, Question
91 has been expanded to include questions about owning financial
accounts in foreign countries.
Forum Teleconference: Making the Most of Your 990-PF
The Forum of Regional Associations of Grantmakers invites you to participate in an educational teleconference on effective completion of the 990-PF form.
Tuesday, March 7: 11:00 a.m. - 12:30 p.m. ET
-or-Wednesday, April 26: 2:00 - 3:30 p.m. ET
This teleconference, part of the Forum's Effectiveness and Accountability Educational Series, will feature Lori McLaughlin of KPMG providing guidance on completing the 990-PF. No longer just a report to the IRS, the 990-PF is now the most commonly used data source about nonprofits. Reporters, researchers, grantseekers and many others look to these forms for information about an organization. This makes accurate numbers, correct entries, and properly worded descriptions more important than ever. This program will focus on the most important aspects of filling out the 990-PF, with a special focus on common errors and potentially misleading entries.
AGENDA
1. 990-PFs in the New Environment: New Issues
2. The Basics: Parts I-III of the form 990-PF
3. Compliance with Minimum Distribution Requirement: Parts X-XIII of form 990-PF
4. Computation of Excise Tax on Net Investment Income
5. Other Tricky Areas
6. Disclosure Rules
7. Participant Questions
All call participants will be sent supporting materials, including resources specifically for foundation leaders and tax preparers. To register for this valuable program, please click here. There is a $25 fee for the teleconference. Please contact Mary O'Neill at (202) 467-1132 or moneill@givingforum.org with any questions about this program.
Electronic Filing
REQUIRED ELECTRONIC FILING: Those organizations with more than $100 million of assets and
that file more than 250 documents with the IRS will be required
to e-file for 2005. IRS documents include income tax returns,
excise tax returns, employment taxes, and information returns.
For example, every W-2 filed for a single employee counts as
one IRS document. The IRS will be sending out letters to the
individual organizations that this change applies to. Additionally,
the IRS has issued guidance on how exempt organizations that
are required to file certain returns electronically may obtain
waivers of those requirements. Complete details are available
on the IRS website.
FREE ELECTRONIC FILING: Note that tax-exempt organizations can file
their information returns electronically via a new free web
service launched in 2005 by the National Center for Charitable
Statistics.
While e-filing is currently required only for large organizations,
it is expected that all organizations will have to file electronically
in the next few years.
Resource
for Private Foundations
The IRS has released a new web-based tool, called "The
Life Cycle of a Private Foundation," to help private
foundations navigate federal tax rules throughout their various
stages of development. The formation starts with creating an
organization and filing for tax- exempt status, then moves to
filing requirements and ongoing compliance and finishes with
information for closing down organizations. Specific issues
addressed include obtaining an employer identification number,
protecting a group's charitable status and meeting disclosure
requirements. The tool is available on the IRS
website, which was redesigned in November 2005 to be more
user-friendly.
Upcoming
Programs
Exceptional Board Governance: 2nd
Annual Institute for Nonprofit Stewardship
February 11, 2006
9:00-4:00 pm
Location: Joan B. Kroc Institute for Peace and Justice, USD,
5998 Alcalá Park, San Diego, CA 92110
Conference sponsored by University
of San Diego, Nonprofit Leadership & Management Program,
$65 per person
A Conversation with Steve Gunderson:
New Council on Foundations CEO
March 2, 2006
8:30-10:30 am
Location: Mingei International Museum, Balboa Park, San Diego, CA
Breakfast Program
Corporate Giving Roundtable
Leadership in San Diego's Community Investment: An All Corporate
Members Meeting
March 23, 2006
8:00 am - 10:00 am
Location: University Club Atop Symphony Towers, 750 B Street,
Suite 3400, San Diego, CA 92101
Breakfast Roundtable
Women, Money & Values
Sponsored by the Jewish Women's Foundation and the Jewish Community Foundation
March 29, 2006
9:00 am - 12:00 pm
Location: Lawrence Family JCC, Jacobs Family Campus, 4126 Executive Dr, La Jolla
$36 per person
All programs are free for SDG members except where indicated.
To RSVP, please call (619) 744-2180 or email programs@sdgrantmakers.org. NOTE: We are currently planning our member programming for the year - based on the results of the online member survey. Stay tuned!
For questions or comments about SDGrantmakers or our online
publications, visit www.SDGrantmakers.org
or contact Nancy Jamison, 619/744.2180
Nancy@SDGrantmakers.org.
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