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Transcript of Federal laws changed. All tax exempt organizations were required to begin filing annual IRS tax...
![Page 1: Federal laws changed. All tax exempt organizations were required to begin filing annual IRS tax forms in 2007 4-H National HQ decided to cease providing.](https://reader035.fdocuments.us/reader035/viewer/2022072011/56649de85503460f94ae21cd/html5/thumbnails/1.jpg)
TAX EXEMPT ISSUES FOR UK COOPERATIVE
EXTENSION
![Page 2: Federal laws changed. All tax exempt organizations were required to begin filing annual IRS tax forms in 2007 4-H National HQ decided to cease providing.](https://reader035.fdocuments.us/reader035/viewer/2022072011/56649de85503460f94ae21cd/html5/thumbnails/2.jpg)
What Changed
Federal laws changed. All tax exempt organizations were required to begin filing annual IRS tax forms in 2007
4-H National HQ decided to cease providing group exemption for clubs and affiliates (councils) in July 2010
Increased need for financial transparency and accountability for all Extension funds
![Page 3: Federal laws changed. All tax exempt organizations were required to begin filing annual IRS tax forms in 2007 4-H National HQ decided to cease providing.](https://reader035.fdocuments.us/reader035/viewer/2022072011/56649de85503460f94ae21cd/html5/thumbnails/3.jpg)
Guiding Principles for Solution
Provide financial accountability and transparency
Be minimally disruptive, yet provide accountability
Establish a tax exempt basis for UK CES
Provide options rather than dictate actions
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All Options Must Provide:
Financial Accountability Budget Transparency Group Oversight Adherence to UK money handling
and financial procedures Electronic Recordkeeping with the
goal of standardizing categories to facilitate aggregation of records
![Page 5: Federal laws changed. All tax exempt organizations were required to begin filing annual IRS tax forms in 2007 4-H National HQ decided to cease providing.](https://reader035.fdocuments.us/reader035/viewer/2022072011/56649de85503460f94ae21cd/html5/thumbnails/5.jpg)
Possible Exemption Paths
Governmental ExemptionCounty Extension is tax exempt
because Extension Districts are considered a governmental subdivision of the Commonwealth (KRS 164.620)
501(c)3 statusNeeded to accept certain grants or to
conduct numerous gaming or raffle fund raisers (see KY regulations on Gaming)
![Page 6: Federal laws changed. All tax exempt organizations were required to begin filing annual IRS tax forms in 2007 4-H National HQ decided to cease providing.](https://reader035.fdocuments.us/reader035/viewer/2022072011/56649de85503460f94ae21cd/html5/thumbnails/6.jpg)
Four Options for Handling Funds(All Organizations)
Option A: Governmental, multi-checkbookGroups keep checkbooks
Option B: Governmental, single checkbook per program council
Option C: Governmental, District Board holds the checkbook
Option D: Seek 501(c)3 Status
![Page 7: Federal laws changed. All tax exempt organizations were required to begin filing annual IRS tax forms in 2007 4-H National HQ decided to cease providing.](https://reader035.fdocuments.us/reader035/viewer/2022072011/56649de85503460f94ae21cd/html5/thumbnails/7.jpg)
Option A – Governmental Multiple Checkbooks
County 4-H councils and 4-H entities:
will maintain control/have autonomy over own funds and own bank account
May use own EIN on bank account.
County 4-H Council will have general oversight of all 4-H entities in county.
Appropriate agent will be responsible for adherence to procedures
![Page 8: Federal laws changed. All tax exempt organizations were required to begin filing annual IRS tax forms in 2007 4-H National HQ decided to cease providing.](https://reader035.fdocuments.us/reader035/viewer/2022072011/56649de85503460f94ae21cd/html5/thumbnails/8.jpg)
Option B – GovernmentalSingle Checkbook (per Program
Council)
All 4-H funds in the county will be handled centrally by the County 4-H Council.
Separate sub-accounts will be established in a Quicken, Quickbooks or similar electronic bookkeeping system for each entity’s funds.
Appropriate agent will be responsible for adherence to procedures.
![Page 9: Federal laws changed. All tax exempt organizations were required to begin filing annual IRS tax forms in 2007 4-H National HQ decided to cease providing.](https://reader035.fdocuments.us/reader035/viewer/2022072011/56649de85503460f94ae21cd/html5/thumbnails/9.jpg)
Option C – Governmental- District Board Checkbook
County 4-H Council funds will be handled centrally by the County Extension District Board.
Separate sub-account will be established for County 4-H Council in a Quicken, Quickbooks or similar electronic bookkeeping system.
The appropriate agent will be responsible for adherence to procedures.
![Page 10: Federal laws changed. All tax exempt organizations were required to begin filing annual IRS tax forms in 2007 4-H National HQ decided to cease providing.](https://reader035.fdocuments.us/reader035/viewer/2022072011/56649de85503460f94ae21cd/html5/thumbnails/10.jpg)
Option D: 501(c)3
Apply for own 501(c)3 exempt status Needs Memorandum of Understanding
between the Director of the Cooperative Extension Service and each 501(c)3 entity which will accomplish: Financial Accountability to District Board Programmatic Accountability to County 4-
H Council and County Extension Council
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Note for 4-H only: If 501(c)3 status is needed for grants, KY
4-H Foundation is willing to handle funds to meet requirements of being a 501(c)3 entity. Subject to Service Fee (currently 5%)
Multi-county/District entities have 2 choices:Link to the KY 4-H Foundation ORLink to a county 4-H program for
government exemption and follow their guidelines
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Results of Options A, B, C
4-H entities: Will no longer submit a 990-N, 990-EZ
or 990.
Will be tax exempt as a “government” org.
May work with KY 4-H Foundation if 501(c)(3) status is needed for grants.
![Page 13: Federal laws changed. All tax exempt organizations were required to begin filing annual IRS tax forms in 2007 4-H National HQ decided to cease providing.](https://reader035.fdocuments.us/reader035/viewer/2022072011/56649de85503460f94ae21cd/html5/thumbnails/13.jpg)
Results of Option D
4-H entity will complete application process to become 501(c)(3).
4-H entity will file the appropriate form of 990 annually to IRS.
Entity will be tax exempt as a 501(c)(3) org.
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4-H Decision Needed
By March 15, EACH 4-H club/council or entity handling funds must decide the option chosen. (Option A, B, C, or D)
Agent will report the choice of each group to the State 4-H Office via a Google document.
State will send information to 4-H National Headquarters.
4-H National HQ will send info to IRS.
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