Faith-Based Accounting

Are You Ready for the New 990?

The IRS issued the revised Form 990 and Form 990-EZ during the past year. It is effective for 2008 tax years which are filing in 2009. To say that the IRS made a few changes would be an understatement. The IRS completely changed the look of the form and now requires information not previously required. The new Form 990 is 11 pages and has additional schedules that you may be required to complete.

Check it out at http://www.irs.gov/charities/article/0,,id=185561,00.html.

The Form 990EZ is a condensed version of the new Form 990 which is available to taxpayers that fall under a certain threshold. It is 4 pages and has additional schedules that you may be required to complete.

You can check it out at http://www.irs.gov/pub/irs-tege/f990rez.pdf.

The IRS is allowing organizations time to adjust to the new forms by changing the filing requirements for three years. You will want to see what you are required to file in 2009 and the years following. We are finding some our Form 990 clients have an opportunity to file the Form 990-EZ which reduces the reporting significantly.

You can find the IRS phase in of filing requirements at http://www.irs.gov/charities/article/0,,id=184445,00.html.

What are we recommending?

We are suggesting clients get up to speed on the new information that is now being requested from the IRS. To help our client with this, we are hosting an informational session on January 13th from 8 – 10 am. We encourage you to contact us if you would like to attend. You do not have to be a client. We also suggest that you take a few minutes to watch the IRS’s web-based mini-course on preparing to file the new Form 990.

Check it out at http://www.stayexempt.org/mini-courses/newform990/player.html.

Raffles

It’s not unusual for church groups to have raffles as fund-raising events. And sometimes the prizes can be quite large!

Some things to remember:

1. Generally, if the prize is more than $600, the group awarding the prize MUST report it to the IRS.  Use IRS Form W-2G.

2. If the prize is more than $5,000, the group awarding the prize must also withhold federal income tax, and forward the amount to the IRS.

a. If it’s a cash prize, you reduce the prize by 25% and remit that amount to the IRS.

b. If it’s a non-cash prize, you should obtain 25% of the value of the prize from the winner before giving him/her the prize.

3. In some states, Texas for example, it is illegal to offer cash prizes for raffles.

FYI, a friend of mine won $15,000 in a church raffle last month!!! From what I understand, the church gave him five $3,000 checks, thinking this would skirt around the IRS requirements. No withholding; and the church didn’t even get his Social Security number for reporting purposes. So, if the IRS doesn’t know, I wonder if my friend will report the winnings all by himself! I’ll let you know what I find out.