IRS fin'l req'm'ts

Extracts from http://www.stayexempt.org/ , IRS’s web-page for “Tax Basics for 501 c 3 organizations” which is like all of those who operate in San Miguel de Allende and state that the contributions to their organizations are USA tax-deductible.

Introduction - In return for being tax exempt and receiving tax deductible contributions, Congress requires 501(c)(3) organizations to disclose information about their organization to the public:

Documents You Must Disclose to anyone who requests one or more of them

	Annual returns for three years after the due date, including any extensions. This would include disclosing your IRS Form 990 or Form990EZ or 990-PF or 990-N
	and it would also include all required Form 990 schedules (except Schedule B), attachments, and supporting documents
	Your original application for exemption and all supporting documents: Form 1023, if you filed the form on or after July 15, 1987
	a letter from the IRS ruling that your organization has tax-exempt status

When do you have to disclose these documents? Normally, on the day you are asked for them.

But what if I do not have a permanent office? Good question. Some tax-exempt organizations are run by people who work out of their homes. If an organization has no office or has limited hours during certain times of the year, the requested information should be made available within two weeks.

In addition to permitting inspection of these documents, you must provide copies of the information requested, whether the request is made in person or in writing.

How much can we charge for providing copies? Only a reasonable fee to cover the cost of the copies.

But there is a simple solution to providing copies to the requester: USE the Internet. If you post the information on the Internet, you can refer requesters to the website and consider your job done. However, you still need to have paper copies available for anyone who wants to inspect but does not want to make copies.

You are NOT required to share...

Schedule B of Form 990/990-EZ Why not? You do not have to identify your contributors by name—only the amounts and natures of the contributions (in other words, by category or type of contributor)

Certain types of information that the IRS approved withholding: Trade secrets, patents, processes, styles of work, and national defense material

Why comply? Penalties! Your employees could be penalized for refusing to provide copies of certain records. How MUCH? $20 for each day of noncompliance, up to a maximum of $10,000. If the failure to comply was willful, you could face a penalty of $5,000 per return or application!

You may verify an organization's tax-exempt status and eligibility to receive tax-deductible charitable contributions by asking to see an organization's IRS letter recognizing it as tax-exempt. You may also confirm an organization's status by calling the IRS (toll-free) at 1-877-829-5500. You can see the MPWC Foundation's letter by clicking Legalities (see item 4)

For any organization that claims to be tax-deductible on USA tax returns, and if that organization has "Total Revenues" (as listed below) of more that us$25,000 a year, it must file Form990EZ. On the other hand, if it claims to be USA tax deductible and has less than us$25,000 a year, it does not have to file the Form 990-EZ, but it must keep records that would enable it to file such a form anyway. Therefore, the bookkeeping leading to the following report is still necessary. And also see (at the bottom of this page) the new requirements for Form 990-N for such "under us$25,000" organizations.

The following information has been extracted from IRS publications as noted below:

IRS Form990EZ – a 2-page IRS Return for Organizations Exempt from USA Income Tax (and only for organizations with gross receipts of less than $1.000,000, larger organizations must file more complex Form 990) – both of these forms are open to PUBLIC INSPECTION.

Among the information about your income to be disclosed is:

	Contributions, grants, gifts, etc. received
	Membership dues
	Investment income
	Received from sales of assets
	Less costs of sales and sales expenses
	Special events and activities income
	Less direct expenses
	Other revenues (listed by item and amounts)
	Total revenues

Some of the categories disclosing your expenditures that IRS requires are:

	Grants and similar amounts paid out
	Benefits paid to or for members
	Salaries and other employee expenses
	Professional fees
	Rent, utilities, maintenance, and other occupancy costs
	Printing, publications, postage, shipping, etc.
	Other expenses (listed by item and amounts)

There is also a requirement to:

	Describe what was achieved in carrying out the organization’s exempt purpose
	List officers, directors, trustees, key employees, etc. (listing must include title, average hours per week, compensation – even if not compensated, and expense account allowance)
	additionally, there is a list of 19 questions of various types to be answered.

Newer information as of 7/12/07 for a NEW FORM 990-N starting in 2008:

IRS to Notify Small Tax-Exempt Organizations of New Information Reporting Requirement

WASHINGTON — The Internal Revenue Service today announced that it began mailing educational letters this month to more than 650,000 small tax-exempt organizations that may be required to submit a new annual notice, Form 990-N, "Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ."

...With the enactment of the Pension Protection Act of 2006 (PPA), the majority of small tax-exempt organizations are now required to submit the e-Postcard. Previously, tax-exempt organizations with gross receipts of $25,000 or less were not required to submit information returns. The first e-Postcards are due in calendar year 2008. The IRS intends to have an option available for free electronic submission of the e-Postcard.

"We’re sending these educational letters to all the small exempt organizations in our records because we want to make sure they all know about the new requirement."... "The new e-Postcard reporting requirement is simple and straightforward, but organizations shouldn’t ignore it, or they risk losing their tax-exempt status."

Any organization that fails to meet its annual reporting requirement for three consecutive years automatically loses its tax-exempt status under the new law. An organization that wants to regain its exempt status will then have to reapply for recognition as a tax-exempt organization.

“Underpromise and Overdeliver”

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