|
Federal
New Annual Filing Requirement for Small Tax-Exempt Organizations
Tax-exempt
organizations with annual gross receipts of $25,000 or
less that previously were not required to file tax
returns with the IRS are now required to file an annual
electronic notice with the IRS (Form 990-N, also known
as the e-Postcard). The requirement applies to tax
periods beginning after December 31, 2006 and the filing
will be due annually by the 15th day of the fifth month
after the close of an organization’s fiscal year. The
filing must be done electronically via the Internet (no
software will be required). The IRS is in the process
of developing the filing system and will publicize
filing procedures when the system is ready for use.
The following
information about the organization is to be provided:
legal name; any other names used; mailing address;
website address, if applicable; employer identification
number (EIN); name and address of a principal officer;
annual tax period; statement that annual gross receipts
are still normally $25,000 or less; and, if applicable,
a statement that the organization is going out of
business.
Exceptions to
the filing requirement include organizations included in
a group return, private foundations required to file
Form 990-PF, and section 509(a)(3) supporting
organizations required to file Form 990 or Form 990-EZ.
Churches, their integrated auxiliaries, and conventions
or associations of churches are also not required to
file.
If an
organization does not file the e-Postcard for three
consecutive years – or if an organization does not file
a Form 990 or Form 990-EZ for three consecutive years -
it will lose its tax-exempt status.
For answers
to frequently asked questions about the Form 990-N,
please see
http://www.irs.gov/charities/article/0,,id=173864,00.html.
Proposed Changes to Form 990
The IRS
released a draft revision of Form 990 that reflects the
most significant changes since 1979. Much of the
information requested is the same as on the current
form, but it is reorganized, there are additional
questions and schedules, and some questions have been
removed. The Form 990-EZ, currently used by
organizations with annual gross receipts between $25,000
and $100,000 and less than $250,000 of assets, may be
eliminated and such organizations would use the revised
Form 990 instead. The IRS received comments from the
public on the proposed form, which are posted on
www.irs.gov. The IRS expects a
revised Form 990 to be in effect beginning in 2009 for
the 2008 tax year. For more information, please see
http://www.irs.gov/charities/article/0,,id=171216,00.html.
Recent Guidance from the IRS
Political
Activities.
Particularly
important given the election season, the IRS released a
revenue ruling (Rev. Rul. 2007-41) (http://www.irs.gov/irb/2007-25_IRB/ar09.html)
regarding what political activities are prohibited for
tax-exempt organizations. To illustrate, the revenue
ruling describes 21 situations and discusses which are
permissible and which are not.
Applying
for Tax Exemption.
The IRS
issued a revenue procedure (Rev. Proc. 2007-52) (http://www.irs.gov/irb/2007-30_IRB/ar16.html#d0e17097)
that describes the procedures by which an organization
applies for tax-exempt status, and by which the IRS
determines whether to grant tax-exempt status.
Disclosure
of Unrelated Business Income Tax Returns.
The IRS has
provided interim guidance (Notice 2007-45) (www.irs.gov/irb/2007-22_IRB/ar12.html)
on the new requirement for 501(c)(3) organizations to
make available for public inspection a copy of their
unrelated business income tax (UBIT) returns (Form
990-T). The disclosure procedures are generally the
same as those required for disclosure of an
organization’s Form 990. Some organizations not subject
to other public disclosure requirements, such as
churches, are required to disclose a Form 990-T.
Valuing
Donated Property.
The IRS
revised its publication on valuing donated property
(Publication 561) (http://www.irs.gov/pub/irs-pdf/p561.pdf).
New Regulations for Section 403(b) Plans
The Treasury
Department released new regulations
(http://www.ustreas.gov/press/releases/reports/td%2093403_checked_.pdf)
regarding Section 403(b) plans, which are sponsored by
501(c)(3) organizations to offer retirement benefits to
employees. The regulations place new administrative
responsibilities on employers.
For example,
the employer is required to maintain a written plan.
The employer does not need to do everything under the
plan, but must coordinate responsibilities among itself
and anyone else performing functions under the plan and
ultimately is responsible for whether the plan complies
with the regulations. The plan may incorporate by
reference other documents, but there must be a single
organizing document maintained by the employer who must
make sure that there are no conflicts between the plan
and the documents incorporated by reference.
Failure to
comply with the written plan requirement will cause all
contracts and accounts under the plan to become
immediately taxable.
The
regulations will generally be effective for taxable
years beginning after December 31, 2008, including the
requirement to maintain a written plan, although there
are some different effective dates for certain
provisions and for certain types of employers.
Risk Matrix for the Charitable Sector
The Treasury
Department’s Office of Foreign Asset Control (OFAC)
released a Risk Matrix for the Charitable Sector that
sets forth common risk factors to be considered by
organizations providing funds or other resources abroad
to help such organizations comply with U.S. sanctions
programs. Considerations on the Risk Matrix include
whether the grantee has clear charitable purposes and a
history of legitimate charitable activities and
discloses specifically how grants will be used; whether
the grantee works in areas where terrorist organizations
are active; and whether there will be a written grant
agreement that protects the grantor. For more risk
factors and additional information, please see
www.treas.gov/offices/enforcement/ofac/policy/charity_risk_matrix.pdf.
U.S. Supreme Court Decision re: Minimum Wage and Overtime for Home Care
Companions
In June 2007,
the U.S. Supreme Court ruled that the U.S. Department of
Labor’s regulation exempting employers of home care
companions from the minimum wage and overtime
requirements of the federal Fair Labor Standards Act
(FLSA) is a permissible interpretation of the FLSA.
As a general
rule in the area of wage and hour law, when federal and
state laws differ the law that is most employee-friendly
applies. Therefore, the decision will have little
impact on employers of home care companions in New
Jersey and New York because the wage and hour laws in
those states are more stringent and require that home
care companions be paid at least the minimum wage and
overtime. In Connecticut, however, the Connecticut
Department of Labor follows the federal rules when it
comes to the minimum wage and overtime requirements
applicable to domestic service employment.
To read more
about this topic,
please
see the article on the Partnership’s website.
Recent EEOC Guidance on Discrimination against Caregivers and Health
Care Workers
In May 2007,
the U.S. Equal Employment Opportunity Commission (EEOC)
released two very detailed documents setting forth
examples of conduct directed toward working parent and
other caregivers that the EEOC says may be illegal under
various federal laws, including the Civil Rights Act of
1964 and the Americans with Disabilities Act of 1990.
The EEOC issued the guidance in view of the increase in
the number of mothers of young children in the workforce
and the increase in the number of workers who care for
aging parents and disabled family members. These
guidance documents can be found on the EEOC’s website:
Enforcement Guidance and
FAQs.
In February
2007, the EEOC issued
Questions and Answers about Health Care Workers and the
Americans with Disabilities Act. The
EEOC said that it issued the guidance because health
care is the largest industry in the American economy,
health care workers confront more workplace hazards than
workers in any other sector, and health care workers
suffering with illnesses and injuries face unique
challenges because of societal misperceptions that
qualified health care providers must themselves be free
from any physical or mental impairment.
All Employers Must Start Using New Form I-9 Issued by the Federal
Government
On November 7, 2007, the
U.S. Citizenship and Immigration Services (USCIS)
released the long-awaited revision to the “I-9 Form”
(the Employment Eligibility Verification Form) that all
employers are required to complete for each new employee
hired in the United States. Employers are not
required to complete the new form for employee for whom
an earlier version of the I-9 Form was completed.
The revised Form has
eliminated several forms of identification that
employers previously could accept from new hires. These
forms of identification can no longer be accepted by
employers. It is thus critical that all employers start
using the new I-9 Form immediately.
For details, go the
USCIS website to read/download:
●
the Government’s Press Release:
http://www.uscis.gov/files/pressrelease/FormI9Update110707.pdf
●
the Fact Sheet/Q&A:
http://www.uscis.gov/files/pressrelease/FormI9FS110707.pdf
●
the revised I-9 Form:
http://tinyurl.com/y4mhry
●
the Handbook for Employers: Instructions for Completing
the Form I-9:
http://www.uscis.gov/files/nativedocuments/m-274.pdf
Connecticut
Recent Legislation Prohibiting Certain Campaign Contributions
Connecticut has passed
new legislation prohibiting certain entities, including
nonprofit organizations, that are party to a state
contract with a value of $50,000 or more or a
combination of state contracts with a value of $100,000
or more from making a contribution to or soliciting for
contributions for (i) an exploratory committee for the
election of a candidate to the state senate or house (if
the contract or solicitation is with the General
Assembly), or to the office of Governor, Lieutenant
Governor, Attorney General, State Comptroller, Secretary
of State, or State Treasurer; (ii) a political action
committee that can make contributions to or expenditures
for the candidate; (iii) a party committee.
The prohibition also
applies to organizations in the process of bidding for a
state contract; an organization’s chief executive
officer (or if there is no such officer, the officer who
has comparable duties and powers); an officer or an
employee who has managerial or discretionary
responsibilities with respect to a state contract; the
spouse or a dependent child who is eighteen years of age
or older of an individual described in this paragraph;
and a political committee established or controlled by
or on behalf of an individual described in this
paragraph.
Violations of the law
can result in the contract being voided, ineligibility
for a new contract, or criminal penalties for willful
violations. Officials who accepted such contributions
can also be punished.
For more information,
including more about what contracts are covered and
exceptions, the law (Connecticut P.A. No. 07-1) can be
found at
http://www.cga.ct.gov/2007/ACT/Pa/pdf/2007PA-00001-R00SB-01112-PA.pdf.
Liquor Permits for Charitable Organizations
Recent legislation in
Connecticut increases from four to eight the number of
one-day liquor permits a charitable organization may
obtain in a calendar year. A permit allows the retail
sale of alcohol, such as for a special event, for
consumption on the premises owned or leased by the
organization during the same hours as a restaurant may
sell liquor. The fee for a permit is $25.
The law (Connecticut
P.A. No. 07-4) can be found at
http://www.cga.ct.gov/2007/ACT/PA/2007PA-00004-R00HB-07140-PA.htm.
New Jersey
Determining Independent Contractor vs. Employee Status
A common issue that
employers face is properly classifying a worker as an
independent contractor or an employee, which has
important implications. For example, employers are
generally not required to withhold taxes or provide
employee benefits for independent contractors, and an
independent contractor’s work-related personal injury
claims will not be covered by workers’ compensation
insurance.
New Jersey recently
amended its laws to provide a unified test for
determining employee status under its unemployment
compensation law, wage and hour laws, and gross income
tax law. Under this new law, a worker who meets any one
of the following three tests will be deemed an employee:
● if the employer
exercises control and direction over the worker (e.g.,
telling the worker what to do and when to do it, setting
specific timelines, and training the worker);
●
unless the worker’s services are performed either
outside the location where the business operates or are
outside the usual types of services the company
provides; or
●
if the worker cannot prove that he or she has
established his or her own business.
Pay-to-Play Filing Deadline Extended for New Jersey Charities
The New Jersey Election
Law Enforcement Commission (ELEC) has extended to
November 30, 2007 the filing date for New Jersey
nonprofit corporations that receive $50,000 or more in
government funds or public contracts annually to provide
information about the political contributions of the
organization’s officers or board members. The
announcement of these requirements led to extended
public debate about whether the disclosure requirements
as applied to nonprofits were appropriate or useful,
which debate culminated in a request for an advisory
opinion from New Jersey’s Attorney General. The ELEC,
however, has not modified the requirements except to
extend the filing date to November 30.
The disclosure
regulations require that nonprofit corporations that
receive $50,000 or more in state contracts must annually
disclose to the ELEC reportable contributions made to
political campaigns or parties by the organization’s
officers and directors and their spouses. The November
30, 2007 disclosure deadline applies to governmental
funding received in 2006. Covered state contracts
include contracts with state, county, or local
governments, and with school boards. Only contributions
greater than $300 are considered to be reportable.
For further information on the Pay-to-Play
requirements, please click here for the ELEC’s website:
https://wwwnet1.state.nj.us/lpd/elec/ptp/p2p.html
New Jersey Employers Cannot Discriminate on the Basis of Gender
Identity and Expression
As of July 2007, New
Jersey’s amended Law Against Discrimination expressly
bars discrimination on the basis of gender identity and
gender expression. The amended law defines “gender
identity or expression” as “having or being perceived as
having a gender related identity or expression whether
or not stereotypically associated with a person's
assigned sex at birth.” The NJ law provides that
employers may still require employees to adhere to
reasonable workplace appearance, grooming, and dress
standards, but must allow employees to appear, groom,
and dress consistent with their gender identity or
expression. The amended law further provides that while
public accommodations that are in their nature
reasonably restricted exclusively to individuals of one
sex (e.g., summer camps, bathrooms, dressing rooms, and
educational institutions) may limit admission to one
sex, they must admit individuals based on their gender
identity or expression.
The amended version of
the New Jersey law is available at
http://www.njleg.state.nj.us/2006/Bills/AL06/100_.PDF.
As in New Jersey, courts
and administrative agencies in Connecticut and New York
have interpreted the prohibition against sex and/or
disability discrimination to also bar discrimination on
the basis of gender identity or gender expression.
New York
Not-for-Profit Organizations May Hold Meetings by Conference Call
Unless Restricted
Legislation was signed
allowing New York not-for-profit organizations to use
conference calls to conduct board or committee meetings,
unless doing so is restricted or prohibited in an
organization’s Certificate of Incorporation or by-laws.
This changes the law which had been that conference
calls were only permitted to be used if specifically
allowed in an organization’s Certificate of
Incorporation or by-laws. The legislation can be found
at
http://assembly.state.ny.us/leg/?bn=A05554.
New Requirements for Organizations Receiving or Seeking Member Item
Funding
There is a new
requirement that New York entities, including
not-for-profit organizations, receiving member item
funding from New York State legislature members must
file disclosure and accountability certifications as
part of the contracting process regarding conflicts of
interest, the organization’s good standing, and the use
of funds for public purposes. The certifications vary
slightly depending on whether the value of the contract
is $50,000 or above or below $50,000.
For more information and
the certifications, please see
http://www.oag.state.ny.us/press/2007/mar/mar22a_07.html.
In addition,
organizations spending more than $5,000 annually to
obtain member item funding are required to register as a
lobbyist with the New York State Commission on Lobbying
and file periodic reports. Beginning January 1, 2008,
registered lobbyists will be subject to additional
reporting obligations in connection with requests for
member item funding.
Restrictions on Use of Social Security Numbers
A New York law effective
January 1, 2008 applicable to employers, including
not-for-profit organizations, restricts the use of an
individual’s social security number. “Social security
number” is defined in the law and in the discussion
below to include a social security number and any number
derived from a social security number.
The law prohibits
employers from making a social security number available
to the general public; printing a social security
number on an employee identification card; requiring a
social security number to be transmitted over the
Internet unless certain security precautions have been
taken; and subject to limited exceptions, printing a
social security number on materials that are mailed.
Employers must also take
reasonable measures to ensure that no officer or
employee has access to an individual’s social security
number for any purpose other than for a legitimate or
necessary purpose related to the conduct of its
business, and provide safeguards necessary or
appropriate to preclude unauthorized access to the
social security number and to protect the
confidentiality of such number.
The law does not
prohibit the collection, use, or release of a social
security number if required by state or federal law; for
internal verification, fraud investigation or
administrative purposes; or for any business function
specifically authorized by the Gramm-Leach-Bliley Act.
Employers may
be subject to financial penalties for violations.
For more information,
the law can be found at
http://public.leginfo.state.ny.us/menugetf.cgi?COMMONQUERY=LAWS.
New Protections for Nursing Mothers
An amendment to the New
York Labor Law extends protections to nursing mothers in
the workplace (http://public.leginfo.state.ny.us/menugetf.cgi?COMMONQUERY=LAWS).
The law requires employers to provide reasonable unpaid
break time or permit an employee to use paid break time
or meal time each day to express breast milk for her
nursing child for up to three years following
childbirth. An employer must make reasonable efforts to
provide a room or other location in close proximity to
the work area where an employee can express milk in
privacy, and may not discriminate in any way against an
employee who chooses to express breast milk in the
workplace. A growing number of states have similar
laws.
Resources
Simplified Process for Obtaining EIN Online
The IRS has simplified
its online process for obtaining an employer
identification number (EIN). For more information and
to apply online, please see
http://www.irs.gov/businesses/small/article/0,,id=102767,00.html.
Directory of Fiscal Sponsors/Agents
Capaciteria, an online
searchable database of administrative resources, has a
directory of fiscal sponsors/agents. Please
see
www.capaciteria.org/index.php?env=-inlink/index:m173-1-1-1-s&reset=1
|
