AFCEA International
Chapter Accounting and Tax Update
23 June 2014
CYBER Symposium
1
2
WHAT’S NEW WITH TAXES?
NOT TOO MUCH
• No changes in the tax codes relative to filing limits and types of returns
– Form 990-N (e-postcard) – gross receipts under $50k
– Form 990-EZ – gross receipts under $200k and total assets under $500k
– Form 990 – gross receipts over $200k or total assets greater than $500k
• No changes in filing timeline – 15th day of the 5th month following year-end
– 30 September year-end – due NLT 15 February
– 31 December year-end – due NLT 15 May
• Some reminders:
– Don’t file for 3 consecutive years – you lose your tax exempt status
– Form 990 – public document open to public inspection
– Late filing – hefty penalties - $10,000 to $50,000 – File an extension
– IRS Publication 557 – everything you want to know about Non-Profits
3
Form 990-N (e-postcard)
Form 990 – N (e-postcard): For small tax exempt organizations where annual
“… gross receipts are normally $50,000 or less.”
You need basic information – EIN, tax year, legal name and address, any other
names used by the organization, name and address of the principal officer,
web site (if applicable), confirmation of gross receipts normally $50,000
or less, confirmation that the organization has not terminated operations.
4
Form 990-EZ and Form 990
File the Form 990–EZ when:
Gross receipts are less than $200,000 and total assets are less than $500,000
File the Form 990 when:
Gross receipts equal or exceed $200,000 or total assets equal or exceed $500,000.
5
Form 990-EZ and Form 990
Supporting Schedules – when applicable:
Schedule A – Public Charity Status and Public Support – 501(c)(3)
Schedule B – Schedule of Contributors - 501(c)(3)
Schedule C – Political Campaign and Lobbying Activities – 501(c)(6)
Schedule D – Supplemental Financial Statements – 501(c)(3) and (6)
Schedule G – Supplemental Information Regarding Fundraising or Gaming
Activities – 501(c)(3)
Schedule I – Grants and Other Assistance to Organizations - 501(c)(3) and (6)
Schedule L – Transactions with Interested Persons - 501(c)(3) and (6)
Schedule O – Supplemental Information – 501(c)(3) and (6)
6
When to file Form 990
The Form 990 (990, 990-EZ, 990-N) is due “…. by the 15th day of the 5th month
after the organization’s accounting period ends.”
If your chapter operates on a calendar year, the return is due by May 15th. If you
operate on a fiscal year end of September 30, the return is due February 15th.
If you can’t complete the return by that date, file for an extension. Use Form 8868
to request an automatic 3 month extension of time to file.
Failure to file – Code Section 6652(c)(1)(A) – gross receipts under $1M
- $20/day or 5% of gross receipts up to $10,000
If gross receipts greater than $1M
- $100/day up to $50,000
7
Reinstatement of Tax Exempt Status
• Group exemption no longer an option – you must re-apply as a single unit
• User Fee is $400 to $850 depending upon gross receipts
• What’s filed for reinstatement:
–
–
–
–
Form 1023 (chapter educational foundation) or Form 1024 (chapter)
Prior three years tax returns
Declarations and other supporting documentation
User fee
– And then you wait – 4, 6, 8 months …
• A new Determination Letter is issued with a new effective date for taxexempt status.
• There may be a “taxable” period between revocation and re-instatement
• Next step – reestablish under the AFCEA Group Exemption Number
8
ACCOUNTING OPERATIONS
• Each chapter and educational foundation is a separate and distinct legal
entity. Therefore:
– Separate bank accounts
– Separate financial reporting
– No commingling of funds
• When can the two meet in the middle?
– Intercompany transactions – these are not common
• Internal Controls – keeping the books clean
– Revenues deposited timely, intact, and in the proper account
– Disbursements by check, authorized by an approving officer
– Approval processes and procedures defined over finances, contract
execution, operations, etc.
– Board oversight – periodic finance reports to the Board
– Develop an Accounting and Finance Policy Manual
9
Contract Review and Execution
AFCEA Governance, By-Laws, Article XII, Section 5:
“No Chapter shall have signatory authority to obligate AFCEA
International or the Chapter on any contractual obligation in
excess of $25,000. Any contract with a value or expense in excess
of $25,000 must be reviewed and executed by AFCEA
International in a manner consistent with the AFCEA
International Bylaws and Policy.”
10
Contract Best Practices
• The contract must name the chapter as the executing party
• Review all terms and conditions
• Check deposit amounts for reasonableness and due dates
• Force Majeure provisions – government cancellations
• Other termination provisions – rebooking the event to avoid penalties
• Refunds of deposits or apply to future events
• Reward points / programs – should be in the name of the chapter
11
Contract Best Practices
• Management Services Agreements:
–
–
–
–
Be clear with the terms of the agreement
Renewal Clause – automatic? Long term?
Terms defining a transition plan to a new service provider
The Chapter cannot delegate or assign fiduciary or management decision
making responsibilities to a third party
– Data and Intellectual Property – web hosting, access to data, ownership of
data, requests for information
– Provider cannot execute agreements for the chapter
• CPA Firms can be engaged for write up work, financial statement preparation
and tax return preparation. The same terms apply to these agreements.
12
The Bottom Line
Stating the obvious – this is complicated
Your chapter board and your treasurer are responsible for the tax filings and the
integrity of the financial operations, internal controls, and financial reporting.
The IRS will work with you on tax issues but they are also looking for
compliance with the tax codes. Non-profit’s are a target of opportunity for the
IRS.
Your treasurer should have a financial background in order to adequately perform
the duties and responsibilities of the position and to report to the board. This
includes ensuring timely tax filings. Solicit a CPA for the board – many will
volunteer their time and services.
13
14
QUESTIONS???
Pat Miorin
pmiorin@afcea.org
703-631-6166
15