News for nonprofits When your charity receives noncash contributions, don’t overlook these reporting requirements: First, you may have an obligation to complete part iv of form 8283, “noncash charitable contributions.” it’s the donor’s responsibility to submit the form to you for completion, because only the donor knows the value of the donation and whether form 8283 is required. Part iv acknowledges that your organization is qualified to receive charitable donations and provides general information. The signer of the acknowledgment must be an official authorized to sign your organization’s tax returns, or someone specifically designated to sign form 8283. Second, file form 8282, “donee information return: sale, exchange or other disposition of donated property,” if you sell, exchange, consume or otherwise dispose of donated noncash contributions within three years of when they were received. The form isn’t required for disposal of 1) publicly traded securities, 2) items valued at $500 or less or 3) items consumed or distributed for charitable purposes. File within 125 days after the date of disposition. Finally, your organization will need to track noncash contributions by type for form 990, schedule m, if your organization received more than $25,000 in noncash contributions during the year. • 2009 IRS focus Irs initiatives this year affecting nonprofits include a new charitable spending initiative, continued work on nonprofit governance, noncash contributions and a study of student loan organizations: Charitable spending initiative. The irs says it will look at fundraising, public contributions, grants and revenue from related or unrelated trades or businesses to learn more about the sources of funds in the charitable sector and their impact on the accomplishment of charitable purposes. It also plans to review officer compensation, fundraising expenses and program service activities to learn the effect each has on the funds that are available for charitable spending. According to the agency, it will focus on organizations with unusual fundraising levels and those that report unrelated trade or business activity but have low levels of program service expenditures. Nonprofit governance. The irs plans to develop a checklist to be used by agents when they examine exempt organizations. The checklist is intended to help determine whether the organization’s governance practices have impacted the tax compliance issues identified in the examinations. The agency also will begin a training program to educate irs employees about governance implications. A third area of focus is identifying additional form 990 governance questions that could be used in compliance initiatives. Noncash contributions. This initiative will focus on how noncash gifts are valued, the expenditures involved in the transactions and the accuracy of the form 990 reporting in this area. Student loan organizations. The irs study will look at internal and external information to identify student loan organizations with related for-profits that may be providing impermissible benefits to insiders or third parties. The irs announced these initiatives in its “work plan for fy 2009,” which was contained in its first annual report, published in november 2008. • Tax-exempt entities ring in at 1.8 million According to Lois Lerner, director of the IRS’s Exempt Organizations Division, there are approximately 1.8 million tax-exempt organizations in the United States (compared with 1.1 million tax-exempt organizations in 1995). The division processed more than 70,000 exemption applications in fiscal year 2008, Lerner stated at a Nov. 25 press conference. • |