Specifically, organizations that qualify to apply for reinstatement under Sections 4 or 7 of this revenue procedure may use Form EZ. Section 4 of Revenue Procedure refers to organizations that: Were eligible to file either Form EZ or Form N for each of the three consecutive years that they failed to file; Have lost their tax-exempt status for the first time; and Submit the application for reinstatement with 15 months of the date of the revocation letter or the date the IRS posted the organization's name on the Revocation List - whichever is later.
Section 7 refers to organizations that are not seeking reinstatement retroactive to the date of revocation but, instead, are only seeking reinstatement as of the post-mark date of its application for reinstatement of tax-exempt status. However, you do have to attest, under penalties of perjury, that your organization has the proper organizing documents and that those documents contain the necessary provisions required to obtain federal tax-exempt status under Internal Revenue Code Section c 3.
To file Form EZ, you must first create an account at www. Once you have registered with Pay. The IRS has created an eligibility worksheet located on page 11 of the Form EZ instructions to determine whether or not a particular organization may use the new form. As mentioned previously, one of the main qualifications is the anticipated level of gross receipts.
There are many other qualifications and any organization that wishes to file the Form EZ must complete the eligibility worksheet before submitting the form online. Yes, provided you meet the other eligibility criteria. The exception to this is if you are seeking private operating foundation status. Private operating foundations may not use the new form regardless of their anticipated annual gross receipts.
Benefits of the h Election Why it's important for your nonprofit to engage in advocacy Please note: The IRS requires the individual who files the application for tax exemption if he or she is not an attorney or CPA to register with the IRS.
A sampling of what concerns us about the Form EZ In a sample reviewed by the National Taxpayer Advocate , over a third of the applications for tax-exemption using the Form EZ were from organizations that did not meet the basic requirements, yet the IRS still approved them as tax-exempt public charities under Code Section c 3!
The New York Times quoted Nina Oson, the National Taxpayer Advocate, as saying that the new Form EZ is 'effectively making a mockery' of the IRS' supposed oversight function for determining which applications for tax-exemption are derserving of that status.
Boards and Governance. Form These questions are aimed at determining whether benefits paid to these individuals are appropriate, that is, whether they are consistent with exempt status under section c 3. Charitable organizations are frequently subject to intense public scrutiny, especially where they appear to have inappropriately benefited their officers, directors or trustees. The IRS also has an oversight role with respect to charitable organizations. An important part of this oversight is providing organizations strategies that will help avoid the appearance or actuality of private benefit to individuals who are in a position of substantial authority.
For example, a conflict of interest would occur if an officer, director or trustee votes on a contract between the organization and a business that the officer, director or trustee owns.
Conflicts of interest frequently arise when setting compensation or benefits for officers, directors or trustees. A conflict of interest policy is intended to:. Apart from any appearance of impropriety, organizations will lose their tax-exempt status unless they operate in a manner consistent with their charitable purposes. Serving private interests more than insubstantially is inconsistent with accomplishing charitable purposes. For example, paying an individual who is in a position of substantial authority excessive compensation serves a private interest.
Yes, bonuses provided through retirement plans, such as those under Code sections b or , are treated as non-fixed payments for Form , Part V. The questions in Part V are aimed at determining whether benefits provided to officers, directors and trustees along with other financial transactions are consistent with exempt status.
Form Part VI serves several purposes, including securing the information we need to determine whether an organization is or will be publicly supported , and therefore not a private foundation. Part VI-A Statement of Revenue and Expenses requires you to provide actual or projected financial information such as, budgets for three to five years depending on how many years your organization has existed. Part VI-B requires a balance sheet for your organization's most recently completed tax year.
A balance sheet is a snapshot of assets, liabilities and fund balances net assets on a particular date. The tax years for which you must provide financial information for the Statement of Revenues and Expenses in Part VI depends on the number of tax years your organization has completed since it was formed.
The following examples explain how to determine the number of years your organization has completed since it was incorporated or formed.
Example 1: X was incorporated as a nonprofit organization on June 4, It selected an annual accounting period that ends December Therefore, its first tax year is June 4, through December 31, Its second tax year is January 1, through December 31, Its third tax year is January 1, through December 31, Its fourth tax year is January 1, through December 31, Example 2: Y was formed as a trust on June 4, It selected an annual accounting period that ends June Therefore, its first tax year is June 4, through June 30, Its second tax year is July 1, through June 30, Its third tax year is July 1, through June 30, Its fourth tax year is July 1, through June 30, If your organization has existed for less than 5 years, you must complete the schedule in Part VI for each year in existence and provide projections of likely revenues and expenses based on a reasonable and good faith estimate of future finances for a total of:.
If your organization was in existence for 5 years or more, you must complete the schedule for the most recent 5 tax years. Part VII of Form combines in one place information we need to rule on several related issues:. Generally, a principal officer is the president, vice president, secretary or treasurer.
Form captures the names of those individuals in Part I on line 9 where the form captures information about officers, directors and trustees.
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