March 2011 Focus On The 990 (3)

595 views

Published on

Hot Topics: the 2010 IRS Form 990

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
595
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
3
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide
  • Slide 3 of 6 this Part
  • Slide 3 of 6 this Part
  • Slide 4 of 6 this part
  • March 2011 Focus On The 990 (3)

    1. 1. The New 990— Hot Topics and Current Issues Special Issues Relating to Governance and Compensation Reporting for Nonprofit Organizations March 3, 2011
    2. 2. Speakers <ul><li>Cynthia R. Rowland </li></ul><ul><li>Coblentz, Patch, Duffy & Bass </li></ul><ul><li>(415) 772-5747 </li></ul><ul><li>[email_address] </li></ul><ul><li>John Panetta </li></ul><ul><li>Burr Pilger Mayer </li></ul><ul><li>(415) 288-6256 </li></ul><ul><li>[email_address] </li></ul>
    3. 3. Overview <ul><li>History of Recent Revisions to the 990 </li></ul><ul><li>Which one? </li></ul><ul><ul><li> 2010 2011 </li></ul></ul><ul><ul><li>990 N “Postcard” - < $25,000 < $50,000 </li></ul></ul><ul><ul><li>990 EZ Receipts - $25,001-$499,999 $50,001-$199,999 </li></ul></ul><ul><ul><ul><ul><li>Assets - <$1,250,000 <$500,000 </li></ul></ul></ul></ul><ul><ul><li>990 Receipts - > $500,000 > $200,000 </li></ul></ul><ul><ul><ul><ul><ul><li>Assets - > $1,250,000 > $500,000 </li></ul></ul></ul></ul></ul><ul><ul><li>990PF Always Always </li></ul></ul>
    4. 4. Hot Topics for 990 Filers <ul><li>Governance Issues </li></ul><ul><ul><li>IRS Objectives </li></ul></ul><ul><ul><li>AG’s views </li></ul></ul><ul><li>Compensation Issues </li></ul><ul><ul><li>Roadmap to 990 and Schedules </li></ul></ul><ul><ul><li>Compensation Analysis </li></ul></ul>
    5. 5. Charity Governance on the 990 <ul><li>Part VI </li></ul><ul><ul><li>Section A: Governing Body and Management </li></ul></ul><ul><ul><ul><li>Independence of Board Members </li></ul></ul></ul><ul><ul><ul><li>Family & Business Relationships </li></ul></ul></ul><ul><ul><ul><li>Changes to Governing Documents </li></ul></ul></ul><ul><ul><ul><li>“ Material diversion” of Assets </li></ul></ul></ul><ul><ul><li>Section B: Policies </li></ul></ul><ul><ul><ul><li>Conflict of Interest, Whistleblower, Record retention </li></ul></ul></ul><ul><ul><ul><li>Determination of Compensation; Joint Venture Policy </li></ul></ul></ul><ul><ul><li>Section C: Disclosures </li></ul></ul><ul><ul><ul><li>Availability to Public of Governing Documents </li></ul></ul></ul>
    6. 6. Section A: Governing Body and Management <ul><ul><li>Independence of Board Members (reflecting 990-definition of “independence”) </li></ul></ul><ul><ul><ul><li>Not compensated by filing or related organization </li></ul></ul></ul><ul><ul><ul><li>Paid $10,000 or less by filing or related organization as an independent contractor, and </li></ul></ul></ul><ul><ul><ul><li>Member or a family member not required to report a transaction with filing or related organization on Schedule L – excess business transaction, loan, grant, </li></ul></ul></ul><ul><ul><li>Family & Business Relationships amongst Managers </li></ul></ul><ul><ul><ul><li>Family = spouse, siblings, children, grandchildren, great grandchildren + spouses of all </li></ul></ul></ul><ul><ul><ul><li>Business relationship = one employed by the other, or one does business with another for over $10,000 (if not in the ordinary course of the first person’s business) </li></ul></ul></ul><ul><ul><ul><li>The two are ODT or >10% owners of a business or investment entity </li></ul></ul></ul>
    7. 7. Section A (continued): Governing Body and Management <ul><ul><li>Delegation of Authority by the Board </li></ul></ul><ul><ul><li>Changes to Governing Documents </li></ul></ul><ul><ul><li>Fact that there has been “Significant diversion” of Assets </li></ul></ul><ul><ul><li>Rights held by “Voting membership” (also, Description of Members, even if Non-voting) </li></ul></ul>
    8. 8. Section B: Policies <ul><ul><li>Oversight of 990 review process by Board/managers </li></ul></ul><ul><ul><li>Conflict of Interest (“COI”) policy enforcement/management </li></ul></ul><ul><ul><li>Nature of Inputs for Compensation-setting on CEO/Executive Director, along with other Officers and “Key Employees” </li></ul></ul><ul><ul><li>Whether organization employs Whistleblower and Record retention policies </li></ul></ul><ul><ul><li>Whether Policies are Employed to Protect Tax-Exemption if Engaged in Joint Ventures with Taxable Entities </li></ul></ul>
    9. 9. Section C: Disclosures <ul><ul><li>Governing Documents </li></ul></ul><ul><ul><li>COI Policy </li></ul></ul><ul><ul><li>Financial Statements </li></ul></ul>
    10. 10. Compensation on the 990 <ul><li>Part VII, Compensation Disclosure </li></ul><ul><ul><li>Who : Officers, Directors, Trustees, “Key” employees(>$150K in Comp), Highly Compensated (>100K in comp) + Former OKHC + Former D or T (if >$10K in capacity as former D or T) </li></ul></ul><ul><ul><li>What : W-2/1099 Comp for Calendar year + Employer contribution to retirement plans + Employer paid health benefits + Other if over $10K (e.g. Employer provided housing, legal, financial, dependent care or adoption assistance) + Comp from “Related” Org if >$10K) </li></ul></ul><ul><li>Schedule J </li></ul><ul><ul><li>If above >$150K, then detail on Base + Bonus + Retirement/Deferred Comp + Non-taxable benefits + Severance + Change in Control payments + Longevity Awards </li></ul></ul><ul><li>Schedule L </li></ul><ul><ul><li>Loans – To/From Current or Former Officers, Directors, Trustees, Key Employees, Highly Compensated Employees, “Disqualified” Persons & Substantial Contributors </li></ul></ul><ul><ul><li>Grants – To Current or Former ODTK + Substantial Contributors + “Related” Parties; Reasonable Effort </li></ul></ul><ul><ul><li>Transactions – With Current or Former ODTK + Family Members (if >$10K/1% of Revenue); Reasonable Effort </li></ul></ul>
    11. 11. Part VII, Compensation Disclosure <ul><ul><li>Who : </li></ul></ul><ul><ul><ul><li>Officers, Directors, Trustees, </li></ul></ul></ul><ul><ul><ul><li>“ Key” employees(>$150K in Comp), </li></ul></ul></ul><ul><ul><ul><li>Highly Compensated (>100K in comp) </li></ul></ul></ul><ul><ul><ul><li>Former Officer, Key Employee, or Highly Compensated </li></ul></ul></ul><ul><ul><ul><li>Former Director/Trustee (if >$10K in capacity as former D or T) </li></ul></ul></ul><ul><ul><li>What : W-2/1099 Comp for Calendar year + Employer contribution to retirement plans + Employer paid health benefits + Other if over $10K (e.g. Employer provided housing, legal, financial, dependent care or adoption assistance) + Comp from “Related” Org if >$10K) </li></ul></ul>
    12. 12. Part VII, Compensation Disclosure <ul><ul><li>What : </li></ul></ul><ul><ul><ul><li>W-2/1099 Comp for Calendar year </li></ul></ul></ul><ul><ul><ul><li>Employer contribution to retirement plans </li></ul></ul></ul><ul><ul><ul><li>Employer paid health benefits </li></ul></ul></ul><ul><ul><ul><li>Other if over $10K (e.g. Employer provided housing, legal, financial, dependent care or adoption assistance) </li></ul></ul></ul><ul><ul><ul><li>Comp from “Related” Org if >$10K) </li></ul></ul></ul>
    13. 13. Schedule J <ul><ul><li>If amounts exceed $150K, then detail on </li></ul></ul><ul><ul><ul><li>Base </li></ul></ul></ul><ul><ul><ul><li>Bonus </li></ul></ul></ul><ul><ul><ul><li>Retirement/Deferred Comp </li></ul></ul></ul><ul><ul><ul><li>Non-taxable benefits </li></ul></ul></ul><ul><ul><ul><li>Severance </li></ul></ul></ul><ul><ul><ul><li>Change in Control payments </li></ul></ul></ul><ul><ul><ul><li>Longevity Awards </li></ul></ul></ul>
    14. 14. Schedule L – Transactions with Interested Persons Part I – Excess Benefit transactions <ul><li>A transaction whereby the public charity or social welfare organization provides value to a “disqualified person” greater than what it receives. </li></ul><ul><li>A Disqualified Person is one in a position to exercise substantial influence over the organizations, e.g. CEO, CFO, member of the Board. It also includes: </li></ul><ul><ul><li>family members of a DP </li></ul></ul><ul><ul><li>an entity controlled 35% or more by the DP or a family member </li></ul></ul><ul><ul><li>a donor or donor advisor of a Donor Advised Fund (DAF) </li></ul></ul><ul><ul><li>an investment manager to a DAF. </li></ul></ul><ul><li>Must report name of DP + description of transaction + whether the transaction was “corrected” + amount of tax imposed on DP or Org + whether tax was reimbursed by Org. </li></ul>
    15. 15. Part II – Loans to/from Interested Persons <ul><li>Interested persons for this section include: </li></ul><ul><ul><li>current or former ODTK + 5 highest paid employees </li></ul></ul><ul><ul><li>for public charities and civic organizations, also DPs </li></ul></ul><ul><li>Must report: </li></ul><ul><ul><li>Name of IP = purpose of loan </li></ul></ul><ul><ul><li>Original amount </li></ul></ul><ul><ul><li>Balance Due </li></ul></ul><ul><ul><li>In Default + approved by Board + Written Agreement </li></ul></ul>
    16. 16. Part III – Grants Benefiting Interested Persons <ul><li>Interested person for this section includes: </li></ul><ul><ul><li>Current or former ODTK, </li></ul></ul><ul><ul><li>A substantial contributor (gave at least $5,000), </li></ul></ul><ul><ul><li>Member of grant selectio0n committee, </li></ul></ul><ul><ul><li>Family member of any of above, </li></ul></ul><ul><ul><li>Entity 35% controlled by any of above, and </li></ul></ul><ul><ul><li>Employee (or child of employee) of a substantial contributor or entity 35% controlled by a substantial contributor but only if the employee (or child) received the grant y direction of the substantial contributor or entity 35% controlled by the substantial contributor. </li></ul></ul><ul><li>Report: name of IP + relationship to Org + amount and type of assistance. </li></ul><ul><li>Reasonable efforts to obtain this data (e.g. questionnaire) will be sufficient. </li></ul>
    17. 17. Part IV – Business transaction Involving Interested Persons <ul><li>Interested Persons for the section include: </li></ul><ul><ul><li>Current or former ODTK </li></ul></ul><ul><ul><li>Entity 35% or more controlled by any of above or family member, </li></ul></ul><ul><ul><li>A non Tax –exempt entity in which a current or former ODTK serves as ODTK or partner/shareholder with >5% ownership interest. </li></ul></ul><ul><li>Transaction includes contracts for services, sale, lease, license or joint venture where the IP holds >10% profits or capital interest. </li></ul><ul><li>Transaction thresholds = $10,000 or 1% of the Org’s revenue but must report if all transactions with an IP >$100,000 or compensation >$10,000 to family member of current or former ODTK. </li></ul><ul><li>Report name of IP, relationship of IP to Org, amount, description of transaction & whether the transaction involved a sharing of Org’s revenue </li></ul><ul><li>Reasonable efforts to obtain this data (e.g. questionnaire) will be sufficient. </li></ul>
    18. 18. The New 990— Hot Topics and Current Issues Special Issues Relating to Governance and Compensation Reporting for Nonprofit Organizations

    ×