Beware of Email scams claiming to be from the IRS

Posted on June 23, 2011 by cabrams
Consumers and non-profit organizations:

Please don’t fall for email scams impersonating the IRS. A recent one mentions an electronic federal tax payment or the Electronic Federal Tax Payment System (EFTPS). The e-mail states that tax payments you made through EFTPS have been rejected.

It then directs you to a link for a transaction report. If you click on that link, malicious software is downloaded and will infect your computer. The malware is designed to send back to the scammer personal and financial information contained on your computer or obtained through capturing keystrokes. The scammer uses this personal and financial information to commit identity theft!

Do not click on any links, open any attachments or reply to the sender for this or any other unsolicited emails you may receive about your tax account which claims to come from the IRS or EFTPS.

The IRS and the Financial Management Service (the Treasury bureau that owns EFTPS) do not communicate payment information through e-mail.

Basic rule: NEVER open an unexpected email claiming to be from the IRS or US Treasury Dept. And especially do not click on any links in such emails. If in doubt, you can pick up the phone and call the IRS and ask them if they are trying to contact you regarding your account. The phone numbers are provided on the IRS website at:

http://www.irs.gov/help/article/0,,id=96730,00.html
Posted in Non Profit Taxes | Comments Off

California – Independent Contractor Withholding

Posted on September 17, 2010 by cabrams

The California Franchise Tax Board (FTB) generally requires withholding agents (payers, below) to withhold 7% state income tax from payments to independent contractors for services, if the payments exceed $1,500 in a year. Payers include all types of business entities including nonprofit organizations. Payees may be residents or nonresident individuals or businesses performing services in California.

New this year: (Effective 1/1/2010)

State backup withholding if required if the recipient is subject to Federal backup withholding. This applies to residents and nonresidents.

Backup withholding is required if no taxpayer ID number is provided, or if the IRS Form W-9 is missing a taxpayer ID number or does not certify that they are exempt from withholding.

For California, the backup withholding rate on payments for services is 7%.

Before you pay an independent contractor:

If the payee (resident or nonresident) claims they are exempt from State withholding obtain either a FTB Form 590, Withholding Exemption Certificate, from them or a copy of the FTB letter granting them a waiver from withholding.

A nonresident payee may request a waiver from withholding by filing FTB Form 588, Nonresident Withholding Waiver Request. If the waiver is approved, the FTB will send the payee a letter. A copy of the letter should be provided to the payer to keep on file.

A nonresident payee may also request reduced withholding from the FTB by filing FTB Form 589, Nonresident Reduced Withholding Request.  The FTB will respond with a letter, if reduced withholding is granted.  A copy of this letter must be provided to the payer.

Payers use forms FTB Forms 592 and 592-V to submit the amounts withheld to the FTB.

Payers use Form FTB Form 592-B to give to payees at end of year to show total withheld. They will need this to file California tax returns.

Penalties

Penalties may be assessed upon a payer who neglects to withhold the appropriate amounts from payments to an independent contractor. The payer may be held responsible for 100% of the payee’s tax liability, but not more than the amount of withholding that was required.

For More Information:

See FTB Publication 1017 available at http://www.ftb.ca.gov/forms/2009/09_1017.pdf for further information for payers.

FTB Form 1076 available at http://www.ftb.ca.gov/forms/2009/09_1076.pdf provides an explanation of the state’s nonresident withholding requirements to give to payees.

Two handy decision charts can also be found on the FTB website to determine withholding requirements:

For Entertainment Industry Independent Contractors

http://www.ftb.ca.gov/individuals/wsc/agent_decision.shtml

For California source income to Nonresidents:

http://www.ftb.ca.gov/individuals/wsc/decision_chart.shtml

Posted in General Taxes, Non Profit Taxes, Tennessee Non-Profits | Comments Off

Tennessee Non-Profits – Registration with Secretary of State

Posted on September 5, 2010 by cabrams

Is your non profit organization in compliance with Tennessee registration requirements for certain tax-exempt organizations?

Every charitable organization which intends to solicit contributions from or within Tennessee, or have funds solicited on its behalf, is required to register with the secretary of state.

Exceptions — The following types of charitable organizations do not need to register:
(1) Bona fide religious institutions, educational institutions, or cooperative scholarship corporations
(2) A charitable organization which does not intend to solicit and does not actually receive gross contributions from the public in excess of thirty thousand dollars during a fiscal year. If contributions raised by such an organization during any fiscal year exceed thirty thousand dollars, the organization must register with the secretary of state.
(3) Volunteer fire departments, rescue squads or local civil defense organizations;
(4) Community fairs, county fairs, district fairs and division fairs qualified by the commissioner of agriculture to receive state aid grants
(5) Political parties, candidates for federal or state office, and political action committees required to file with federal or state election commissions;
(6) Hospitals and nursing homes that are subject to regulation by the department of health; and
(7) Any corporation established by an act of congress of the United States that is required by federal law to submit annual reports of its activities to congress after being fully audited by the department of defense.

If you do not meet one of these exceptions, registration is generally required. Further info and forms for registering with the state, may be found at http://tn.gov/sos/charity/chforms.htm

Note: Professional fundraising solicitors and fundraising counsel are also required to register with the Secretary of State.

Posted in Tennessee Non-Profits | Comments Off

Over-the-Counter Medicines

Posted on September 4, 2010 by cabrams

One of the results of the new health care law passed this March which comes into effect next year:

Starting January 1, 2011 your purchases of over-the-counter medicines generally* cannot be reimbursed from any of these tax-free arrangements unless you have a prescription for that medicine.

  • Flexible spending arrangements (FSA)
  • Health reimbursement arrangements (HRA)
  • Health Savings Accounts (HSA)
  • Archer Medical Savings Accounts (Archer MSA)
  • Basically all workplace health plans

If you take a distribution from your HSA or MSA after December 31, 2010 for over-the-counter meds you purchased after December 31, 2010, and you did not have a prescription, the distribution will be taxable income to you and generally subject an additional tax of 20%.

Purchases made before January 1, 2011, may still be reimbursed into 2011.

*Exception: Purchases of insulin may still be reimbursed.

Employers may need to amend plan language to comply with the new law.

For more details see:

IRS Notice 2010-59 and Revenue Ruling 2010-23

Posted in General Taxes | Comments Off

Federal Filing Thresholds for Non Profit Tax Exempt Orgs.

Posted on August 31, 2010 by cabrams

Today, most tax-exempt organizations, (except for churches), must file a yearly return  with the IRS. In the past, once an organization received its exempt status, it remained exempt unless the IRS revoked it. Now, due to recent legislation, if an organization fails to  file as required for three years in a row, it automatically loses its tax-exempt status. (see one-time relief program for small organizations in previous post)

Loss of exempt status means an organization must file income tax returns and pay income tax, and its contributors will not be able to deduct their donations. And private foundations may no longer be able to grant funds to an organization that is not longer tax-exempt.

In general, the return that must be filed depends on the organization’s gross income.

From the IRS website (for 2009 reporting year):

Financial activity Filing requirement
Gross receipts normally ≤ $25,000
Note: Organizations eligible to file the e-Postcard may choose to file a full return.		 990-N (e-Postcard)
Gross receipts < $ 500,000 and
Total assets < $1.25 million		 990-EZ or 990
Gross receipts ≥ $500,000, or
Total assets ≥ $1.25 million		 990
Private foundation (regardless of financial activity) 990-PF

Note:  The filing thresholds will change with the 2010  reporting year (Tax years ending 12/31/2010 or later). For 2010 and following years:

2010 Tax Year and later
(Filed in 2011 and later)		 Filing Requirement
Private foundation 990-PF
Gross receipts normally ≤ $50,000
(may choose to file a full return)		 990-N
Gross receipts < $200,000, and
Total assets < $500,000		 990-EZ
or 990
Gross receipts ≥ $200,000, or
Total assets ≥  $500,000		 990
Posted in Non Profit Taxes | 1 Comment

IRS Relief for Small Exempt Organizations – Expires October 15, 2010

Posted on August 1, 2010 by cabrams

IRS Announces One-Time Filing Relief for Small Exempt Organizations That Failed to File for Three Consecutive Years

The IRS is providing one-time relief to allow small tax-exempt organizations to come back into compliance and retain their tax-exempt status even though they failed to file for three consecutive years. If your previous year’s non profit taxes need to be filed, check the links on the following IRS website page for eligibility:

http://www.irs.gov/charities/article/0,,id=225702,00.html

Posted in Non Profit Taxes | 1 Comment