Writtin by: Paul Bogdanoff, CPA
The year-end planning may be in full swing with the budget process for next year, employee evaluations and review of the Organization’s policy and procedures. Along with these processes we encourage management and the board of directors to review the Exempt Organization’s (EO) yearly activities to ensure that the Organization has complied with best practices for governance of an EO. Bogdanoff Dages and Co. PC has compiled a checklist of actions based on current rules and regulations that you may want to review.
- Determine that the EO filed all federal, state local reporting forms:
- Payroll Tax Returns (W-2s, 941s, 940, 1096, 1099, WH-1, WH-3, UC-1s)
- Sales tax forms, if required (ST-103)
- Secretary of State renewal of entity report
- Tangible Personal Property Tax Returns
- Exempt Organization’s Income Tax returns, 990, 990-T and NP-20.
- Verify the EO complied with all federal, state and local laws such as employment taxes, sales taxes and business filing fees.
- Be aware of gaming regulations for raffles, bingo and casino nights and mass mailing with the Attorney General’s Office.
- A conflict of interest policy is essential for protecting the charity from unethical or illegal practices. In addition, the revised 990 asks if the organization has a conflict of interest policy.
- Sample language is available on the IRS web site at www.irs.gov in the form 1023 package.
- It is recommended to have all board members and senior staff members sign the policy.
- The board is responsible for reviewing and approving the budget, key financial transactions, executive compensation and benefits, and form 990 before filing the return.
- Code section 4958 may impose penalties against board members for approving excess benefits.
- Form 990 includes questions, in Part VI of the return, directed towards these areas of EO’s governing policies.
- Insure minutes from board and committee meetings of the governing board have been documented.
- Review the EO’s Whistle Blowers and Document retention and destruction policies.
- Insure the EO has complied with code section 6104 requiring the EO make its form 1023 (or 1024 if applicable) and form 990 and 990-T available for public inspection.
- To qualify as a public charity, and avoid the limits imposed on private foundations, public support must exceed 33 1/3%.
- Review all unrelated business taxable income definitions and reporting requirements. Know the rules on gift shops, silent auctions, and charity web links to corporate sponsors.
- Make sure that staff and volunteers know the substantiation requirements for charity donations including the “quid pro quo” statement on charity receipts (particularly charity auction, golf tournaments and celebrity dinners) for benefits received.
- See IRS Publication 1771 Charitable Contributions-Substantiation and Disclosure Requirements at www.irs.gov and search for Publication 1771.
- Make sure that your charity is following good governance policies.
- Review IRS Publication 78 Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986 to insure your charitable organizations is included on the list.
After reviewing this information, if you have any questions please do not hesitate to the CPAs at the North Side of Indianapolis accounting firm of Bogdanoff Dages and Co., P.C.