May 15: State and Federal Filing Deadlines and Beginning of the Year Review of Insurance, Donor Letters and Corporate RecordsApril 30, 2015 – Alerts Nonprofit Organizations Alert
Form 990/990-PF Return
For nonprofit organizations operating on a calendar year-end, the applicable Form 990 Return must be filed on or before May 15, unless a proper extension is filed. For nonprofits operating on a fiscal year-end, the applicable Form 990 Return must be filed on or before the 15th day of the fifth month following the nonprofit’s fiscal year-end. There are significant penalties for failure to timely file a Form 990/990-PF Return. Also, failure to file the applicable Form 990 Return for three consecutive years will result in the automatic revocation of your nonprofit organization’s tax-exempt status.
There are several different types of Form 990 Returns, and the return required of your nonprofit organization will depend on its tax classification and its annual gross receipts and total assets. To determine which Form 990 Return your nonprofit organization is required to file, please see the IRS website for a helpful breakdown of the Form 990 Returns.
The Form 990/990-PF Return can be complex, and the IRS and certain state agencies have been more attentive to compliance issues, many of which must be disclosed on the Form 990/990-PF Return. For these reasons, it is imperative that every nonprofit organization have an accountant experienced in the tax rules applicable to nonprofits. If your nonprofit organization needs a referral for an accountant experienced in preparing and filing Form 990 Returns, please contact us.
If your nonprofit organization engages in fundraising activities, it must register to solicit funds in each state in which it solicits funds. These solicitation registrations must be renewed annually and are typically due to the applicable state(s) on or before May 15 for calendar year-end nonprofits or on or before the 15th day of the fifth month following your nonprofit’s fiscal year-end. Failure to register or renew your nonprofit’s solicitation registration(s) may result in penalties. If your nonprofit organization needs a referral for an accountant, attorney or consultant experienced in preparing and filing solicitation of funds registration statements, please contact us.
Change in Responsible Party
All entities with an Employer Identification Number (EIN) are required to submit Form 8822B to update the IRS on any changes to the entity’s responsible party (generally, the president or treasurer). The form must be filed within 60 days of the change. While the instructions to Form 8822B note that there are no penalties for failure to file the form, interest and penalties set forth on any notice of deficiencies or assessments made against a nonprofit entity that were sent to the wrong responsible party will not be abated. Departing officers and directors should make sure that the nonprofit entity files a Form 8822B within 60 days of officer and director elections.
Nonprofit organizations should always review at the end of each year whether they have proper insurance coverage. If this review was not done due to other more pressing year-end obligations, it is imperative that your officers, directors and/or management team immediately review your organization’s insurance policies to ensure that the organization has adequate general liability insurance coverage and directors and officers insurance coverage. Proper coverage will depend on a nonprofit organization’s activities and total assets. Failure to maintain proper coverage could result in a nonprofit organization’s directors, officers and/or agents being personally liable for the nonprofit organization’s actions. If your nonprofit organization needs a referral for an insurance broker who regularly obtains insurance for nonprofit organizations, please contact us.
Written Acknowledgment and Quid Pro Quo Disclosures
At the end or beginning of each year, nonprofit organizations should review the written acknowledgement and quid pro quo letters it sends to its donors to ensure that such letters are in compliance with federal rules and regulations. If a nonprofit organization does not follow these rules, its donors may not be able to deduct their charitable contributions and the IRS may assess fines against the nonprofit. For more information on these rules, please see our recent blog post .
At the end or beginning of each year, a nonprofit organization should review its bylaws to ensure that the bylaws remain in compliance with applicable federal and state laws. For instance, the State of New York recently overhauled its Not-for-Profit Corporation Law, forcing many New York-based nonprofit organizations to amend their bylaws to come into compliance with the new requirements. Therefore, it is imperative that nonprofit organizations annually review their bylaws to ensure compliance with applicable federal and state laws.
Corporate Records: Meeting Minutes and Written Consents
If a nonprofit organization took any of the following actions over the past year, the nonprofit organization should confirm that such actions were properly documented in either meeting minutes or written consents:
- A change in the nonprofit organization’s articles of incorporation, bylaws and/or governing policies;
- A change in the purpose and/or activities of the nonprofit organization;
- A change in the nonprofit organization’s mailing address or registered address;
- A change in the nonprofit organization’s registered agent;
- A change in the nonprofit organization’s directors, officers or trustees;
- A change in the sources of revenue that were disclosed on the nonprofit organization’s Form 1023 Application for Exemption;
- A change in the amount and method of fundraising;
- A change in the nonprofit organization’s responsible party; and/or
- A change in the nonprofit organization’s policies, including but not limited to, its Signatory and Disbursement Policy, Conflict of Interest Policy, Short-Term Investment Policy, Long-Term Investment Policy, Document Retention Policy, etc.
In addition to documenting the above actions, the nonprofit organization may have to notify the IRS of the changes. Many of these changes can be disclosed on the nonprofit organization’s Form 990 Return. The more fundamental changes (such as amendments to the articles of incorporation or bylaws or modifications to the nonprofit organization’s purpose and/or activities), however, should be disclosed directly to the IRS’ Customer Service Group.
For more information about this alert, please contact Richard S. Caputo at 610.458.3121 or [email protected] , Jacqueline Motyl at 610.458.1420 or [email protected] or any other member of the firm’s Nonprofit Organizations Practice .