The Financial Accounting Standards Board (FASB) has new rules for how nonprofits that follow Generally Accepted Accounting Principles (GAAP) must report and value “non-financial assistance” — commonly known as gifts in kind. The changes are effective for annual periods beginning after June 15, 2021, and interim periods within annual periods beginning after June 15, 2022….
Tag: taxes
Excess Benefit Transactions: Tax Court Clarifies Definition of “Disqualified Persons”
Excess benefit transactions, where economic benefits provided to so-called “disqualified persons” are greater than the value of what was received by the nonprofit organization, can lead to hefty excise taxes for those individuals, as well as reputational damage to organizations themselves. And the definition of “disqualified persons” may be much broader than you realize. In…
Employee Retention Credit: Get the Credit You Deserve
In response to the financial impact of the COVID-19 pandemic, the CARES Act established the employee retention credit (ERC) to encourage employers — including nonprofits — to keep employees on the payroll. The credit has been expanded and increased for 2021, but it’s also not too late for eligible employers to amend their 2020 employment…
IRS clarifies royalty exception to UBIT
Provisions in the Tax Cuts and Jobs Act have brought renewed attention to nonprofits’ potential liability for unrelated business income tax (UBIT). Organizations generally are subject to a 21% tax on unrelated income, but exceptions apply — including one for royalties. Although “royalties” aren’t defined in the U.S tax code or regulations, a recent IRS…
Deferral of Payroll Taxes – New Executive Order
On August 8, 2020 President Trump signed four Executive Orders (EO) designed to provide additional relief to those impacted by the COVID-19 pandemic. The orders addressed enhanced unemployment payments, student loan relief, moratoriums on evictions, and a deferral of payroll taxes; it is the last order that I will be addressing in this post. Payroll…
The CARES Act: What’s in it for Nonprofits?
When Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in late March, much attention was paid to Economic Impact Payments for individuals and various types of assistance for businesses. But the 880-page law also contains some assistance that could prove critical to nonprofits as they struggle to deal with the financial impact…
Corporate Sponsorships: Tax-free Gift or Taxable Income?
Done right, corporate sponsorships can pay off for both the nonprofits that receive funding and the sponsors that receive valuable branding opportunities. Done wrong, though, your organization could end up on the hook for unrelated business income tax (UBIT). You need to understand how to navigate the nuances before you wade in. Identify qualified sponsorship…
Government Shutdown Means 990 Filing Delays
IMPORTANT: This currently impacts only those with 12/31 and 01/31 fiscal year ends. Government shutdowns are never helpful, more so when it occurs at the end of the year because of how it impacts the IRS and those whose fiscal year end is December 31st. As of right now, many types of individual and business…