Tag Archive for Joining Nonprofit Board

The Tax Exempt and Government Entities Group (“TE/GE”) Releases 2017 Work Plan

The Tax Exempt and Government Entities Group (TE/GE) of the Internal Revenue Service (IRS) recently released its Fiscal Year 2017 (FY2017) Work Plan. The work plan summarizes the IRS’s accomplishments for FY2016 and outlines its focus for FY2017.

TE/GE explains that it is focusing on improving processes and doing more with less. The work plan states that the department’s gold standard for any new program or process change will be that it is transparent, efficient and effective.

The use of “data-driven decision making” for audit selection is one iStock_000010827673_Smallof the IRS’s more important and effective process changes. The IRS previously indicated that there are over 190 queries in its data-driven case selection technique for Form 990, Return of Organization Exempt From Income Tax. The filters used in its return selection modeling process for examination of Forms 990 have not been made public, though tax-exempt organizations and their tax advisors are certainly aware of many of the exposure areas. Please see our blog published in February 2016 that highlights some common audit selection indicators.

The five strategic issue areas for FY2017 are a continuation of the FY2016 IRS work-plan focuses, and include the following:

Exemption – issues such as non-exempt purpose activity and private inurement.

Protection of assets – issues including self-dealing, excess benefit transactions and loans to disqualified persons.

Tax gap – tax liabilities arising from employment tax and from unrelated business income tax – audit adjustments for items such as excessive expense allocations, net operating loss deductions, rental activity, advertising, debt-financed rental and investment income.

International – issues such as funds spent outside the U.S., exempt organizations operating as foreign conduits and Report of Foreign Bank and Financial Accounts (FBAR) filing requirements.

Emerging issues – such issues as non-exempt charitable trusts and the new compliance requirements for tax-exempt hospitals.

The Exempt Organizations Rulings and Agreements group is expecting to continue to improve processing and timeliness of applications for tax-exemption. To increase its efficiency, last year the IRS began to reject incomplete applications, which they return with an explanation of the reason for the rejection. This ensures that only completed applications are assigned to review agents for review, thereby allowing for a more efficient and speedy process.

The IRS’s examination group is expecting to review private foundation returns that have irregularities. They are also planning on developing an “ongoing rolling statistical sample” review of tax-exempt organizations to assess the overall level of compliance of the exempt organization community. The IRS’s Exempt Organizations Examinations plans are expected to identify and address high-risk areas of noncompliance with the federal tax laws applicable to tax-exempt organizations.

Please contact us if you would like to discuss how the FY17 IRS work plan may affect your organization

For more information please contact Laura J. Kenney at lkenney@blumshapiro.com or at 617.221.1944.

BlumShapiro offers the accounting, tax and business consulting expertise non-profits need today. We are one of the largest non-profit accounting service providers in New England, our blend of accounting expertise and knowledge of non-profit organizations means we can offer you tremendous added value. We can assist you in complying with state and federal grant requirements, charitable giving rules, capital campaigns, endowment fund responsibilities and other specialized needs. Learn more >>

Laura J. Kenney, CPA
Tax Director

View Laura’s Bio Here >>

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statues, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.

5 Questions to Ask Before Joining a Board

Joining a Nonprofit BoardAs we gain experience and grow in our respective “day jobs,” some of us will be offered the opportunity to serve on the board of a non-profit organization.  Others among us may seek out such an opportunity as a way to give back to the community that has given them so much.  In either case, there are some questions that you will need to ask yourself before committing to such a position.

1.    What is the organization’s mission?

First and foremost, what does the organization do and is it something that you believe in.  Your duty as a board member will be to act in the best interest of the organization. For this reason, you should make sure that the mission does not conflict with any of your personal beliefs/interests (or interests of any other organization (your employer or other) that you may represent). Identify any potential conflicts of interest prior to joining a board.  And above all, you want to make sure that it is an organization whose mission you can stand behind.  As we discuss with the next question, a lot may be asked of you, with little to no compensation.  So make sure you are putting your efforts towards an organization and a mission that you truly believe in.

2.    What responsibilities would you have?

Discuss with the executive director or chairman of the board, some of the responsibilities that will be expected of you.  Some of the items to discuss are:

  • Frequency, typical duration, dates and location of meetings
  • Expected availability of board members between meetings and involvement on other committees
  • Length of your term as well as any term limits, and other limits on a board member’s continuing involvement, including any mandatory terminations for failure to attend meetings
  • Any meeting, travel, meal and expenses you will be expected to absorb or contribute

3.    What’s in the organization’s Form 990 (and other documents)?

I recommend reviewing the organizations Form 990 before agreeing to serve on a board.  The Form 990 provides detailed financial information and governance information about the organization. Other documents that you should review are the organization’s governing documents, including articles or the certificate of incorporation, bylaws or regulations as well as any board policies or guidelines, especially those regarding conflicts of interest and statements of mission. You’ll definitely want to review the latest (hopefully audited) financial statements as well.  Also, check the organization’s website, to gather additional information.

4.    What protections are available to the organization’s board members?

You should confirm the extent that board members of the organization will be entitled to protection of laws limiting liability of volunteers under federal and any applicable state law, as well as the protections of a business judgment rule and of statutory indemnification under state law. More importantly, you should determine the extent that the organization’s board members will be protected by:

  • Contractual indemnification; and
  • D&O insurance policies

The most important of these protections is likely volunteer protection. Typically, you lose volunteer protection if you are paid other than reimbursements of out-of-pocket expenses or you are enriched through a conflicting relationship.

5.    Can you be a valuable asset for this organization and are you willing to dedicate the time and effort to be that valuable asset?

Assuming the questions above were all answered to your liking, the true question is whether or not you are willing to make the sacrifices necessaryto help the organization in whatever way you can.  If the organization is something that you truly believe in and it appears that they have their house in order, then it’s a matter of determining how much you are able and willing to offer.  If you feel like you have a little extra to give (pro bono) back, there are plenty of organization that would love the help.  I hope you find a great organization that you can be proud to be a part of and I know they’ll be proud (and glad) to have you.

Sean Niland, Intacct ConsultantSean Niland is a manager in our Consulting Group, Sean provides implementation, conversion assistance, training and ongoing support for the firm’s clients.  His industry experience includes privately held businesses such as hospitality and professional service firms; non-profit organizations such as health and human service agencies and arts and cultural organizations; and municipalities.

Sean is certified in Intacct, AccuFund and Tagetik.