Exempt Organization Tax

Maintain Your Tax-Exempt Status

Tax laws are continually changing and evolving. It’s imperative for exempt organizations and foundations to remain compliant in order to maintain their tax-exempt status. Working with tax advisors who are knowledgeable and experienced in all the complexities will prove extremely valuable to your cause. Knowing how the various rules and regulations impact your organization is the first step to being able to make solid, informed decisions. Dedicated to guiding people through the process, we build a foundation of trust and rapport with our clients to help them protect their exempt status and avoid costly issues with the IRS.

Our tax advisors specialize in a wide variety of segments to help you navigate all the complexities and strengthen your organization.  In addition to the following offerings, we provide:

• IRS Dispute Resolution & Collections: build the strongest case to support your position in a dispute with the IRS.
• State & Local Tax (SALT): address tax concerns head on to avoid future compliance issues.

Analysis of Activities & Corporate Structure

It's important to consider how your business operations and corporate structure affect your tax status and your overall tax situation.

There are multiple organization structures that can be used to conduct operations, and each structure has its own tax, legal and operational considerations. Understanding the difference between exempt mission-related activities and unrelated activities—and the relative size of each—can be important when looking at alternative structures. It’s also important to understand how various transactions between organizations should be structured.

We can help you consider the right operating structure to give you the best financial, tax and legal answers. We will help you structure activities in a manner that ensures your tax-exempt status is in good standing and tax impacts are minimized.

Employer Assistance Programs

Show your employees you've got their back during hard times. Setting up an Employer Sponsored Assistance Program can allow you to provide financial support to employees in need. In many cases, the assistance can qualify as a tax-free gift.

The benefits you can provide depend on if you’re structured as a public charity, donor advised fund or private foundation. Benefits may include assistance for personal hardships and disasters, such as an illness or house fire, or they may be limited to qualified disasters like presidentially declared disasters or results from terrorist actions.

Proper planning and documentation are crucial when implementing a program. Failure to design the program in accordance with the rules and regulations may have an impact on your organization’s tax-exempt status and could create taxable compensation to your employees.

We’ve worked with a variety of organizations to set up employer-sponsored assistance programs that cater to their unique situation. We can help you determine the best course of action and prepare proper documentation, so you'll remain in good standing with the IRS. We'll make sure that you understand each step of the process and that the plan meets your needs.

Entity Formation

The tax-exempt application process can be complicated and time consuming. However, the value of tax-exempt status is well worth the time to complete an accurate application that will pass IRS review. If you are considering starting a nonprofit organization, our nonprofit and tax professionals can help you:

• Understand the appropriate type of exempt organization to meet your operational goals
• Anticipate the areas of IRS concern
• Ensure organizing documents have required organizational language

We have helped exempt organizations of all types and sizes address their tax-exempt status issues. We can help manage the complexities of forming a nonprofit, obtaining exempt status and securing public charity status.

Excess Benefit Analysis

Exempt organizations are subject to strict rules regarding the types of transactions they can engage in with interested parties. IRS penalties for excess benefit transactions can be steep, but even more damaging is potential public perception issues. Nonprofit professionals can help you prevent liabilities and maintain your reputation by assisting you in:

• Identifying when the rules apply to you
• Structuring and documenting transactions to mitigate risk
• Establishing procedures to meet the reputable presumption of reasonableness

Our nonprofit professionals have a thorough understanding of the complex excess benefit rules and regulations. We'll take the time to understand your organization's unique needs and can help you structure and document transactions with interested parties to minimize risk to the organization, including your executives and board members.

Reinstatement of Exempt Status

Failing to file Form 990 for three consecutive years can result in revocation of exempt status. Losing your tax-exempt status means you are no longer exempt from federal and state income tax, various state and local taxes and no longer eligible for tax-deductible contributions. It is possible to request a reinstatement of your lost tax-exempt status,

To avoid common mistakes, it’s important to discuss your situation and specific circumstances with someone who is familiar with the reinstatement rules before beginning the reinstatement process. Our professionals know how to best address your situation because we've helped a wide variety of clients through the process.

We'll make it easy; we can help you compile the appropriate information, come up with an applicable reasonable cause statement, and file the necessary paperwork. After you've been reinstated, we can assist with filing your annual returns, so you can avoid having exemption revoked.

Tax Reporting and Compliance

Nonprofit organizations are facing increased scrutiny from regulators, watchdog agencies and the public. Due to the public nature of exempt organization tax returns, accurate reporting and disclosure allows your organization to not only meet reporting requirements but also build support for your mission. Nonprofit tax professionals combine their knowledge of nonprofit and for-profit tax to assist you with a variety of reporting requirements, including:

• Federal tax compliance (990, 1120, 1065)
• International activity reporting including foreign investments
• Donation substantiation reporting (8282, 8283, W-2G)
• Payroll tax and service provider reporting

Our nonprofit professionals help more than 3,000 nonprofit organizations stay in compliance with tax reporting requirements. We have extensive experience in information and tax reporting and compliance, and we're well versed in international reporting and advisory. We'll help you keep exempt status, avoid reporting penalties, efficiently manage your organization and cultivate donor and volunteer support.

Unrelated Business Income Studies

It is becoming more common for nonprofits to generate income through activities that fall outside their exempt purpose, and these initiatives may have unexpected tax consequences. If your organization has nontraditional revenue streams, you could benefit from an unrelated business income study. Nonprofit tax professionals can help your organization by:

• Analyzing activities subject to unrelated business income tax
• Evaluating various planning alternatives to support treating the activity as nontaxable, including restructuring
• Identifying the appropriate trade or business activity
• Developing cost allocation methods for taxable activities that can help minimize your tax liability

Our nonprofit and tax professionals are highly experienced and committed to the nonprofit industry. We understand the tax complexities associated with unrelated business income and how to approach this issue. We will work closely with your organization to help you understand your revenue sources, develop an unrelated business income strategy and reduce your tax burden.