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Wednesday, January 17, 2018

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But I thought that was a deductible… and other ways to stay straight from the IRS
Jacqueline Beretta

July, 2007

The background – how many and what numbers

How many of us have to go through the painstaking record keeping every year? According to the National Center of Charitable Statistics at the Urban Institute, in 2004 the USA had about 1.4 million registered nonprofit organizations. NCCS states that the nonprofit sector counts for 5.2% of our GDP (gross domestic product) and 8.3% of all wages and salaries paid in the USA.

Of the 1.4 million nonprofits, nearly 500,000 collected more than $25,000 in gross receipts and are required to file a 990. The amount filed amounted to about $1.4 trillion in revenue and $3 trillion in assets in 2004. That means 500,000 990’s are submitted every year– wow.

Seven federal tax law attributes of 501(c)(3),501(c)(4), 501(c)(5), 501(c)(6) and 527 organizations
A new chart designed by the IRS lays out an really simplifies whether such organizations may:

  • receive tax-deductible contributions
  • receive contributions or fees deductible as a business expense
  • engage in legislative advocacy
  • engage in candidate election advocacy
  • engage in public advocacy not related to legislation or election of candidates

The chart also indicates whether an organization's substantially related income and investment income are exempt from federal income tax.
Life Cycle of an Exempt Organization

The IRS, in it’s continuing effort to make things easier for us, save time and help us understand the requirements we have accepted when becoming a nonprofit, has created a great page full of information and current tools called the Life Cycle of an Exempt Organization with a menu that can take you exactly to what you need to know on the IRS website. From this page – you can go anywhere and find out everything.

e-filing your 990

Computers just keep on making our lives easier. Besides the fact that e-filing is so much easier, you receive immediate acknowlegment that you have sumitted your return, and here’s the kicker……you save trees! Other pluses are new error code explanations and built-in accuracy checks that allow you to correct your work even before you slick submit! Check out how and where to e-file.

The new e-postcard for small nonprofits

Beginning in 2008, the IRS will require about 650,000 small tax exempt organizations, whose gross receipts of under $25,000, to file a Form 990-N (an e-postcard). If you haven’t seen your letter, read this.


IRS Publication 1771, Charitable Contributions—Substantiation and Disclosure Requirements, explains the federal tax law for organizations such as charities and churches that receive tax-deductible charitable contributions and for taxpayers who make contributions. It’s good to review all the important data you need to know at least once a year if you are an organization that receives contributions of $250 or more, or if you are an organization that provides goods and services to donors who make contributions of more than $75, or even if you are you a donor. You may want to read this form the IRS…. see lots more on the IRS Publication 1771, the Charitable Contributions and Disclosure Requirements, dated July 2005.

And for our hospitals

The IRS has released a preliminary interim report (actually the IRS is still analyzing data), based on responses by almost 500 tax-exempt hospitals to a May 2006 questionaire about how they provide and report benefit to the community.

And last but not least, if you need to call or visit your local office, here is a list of IRS Taxpayer Assistance Centers in Texas.


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