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Church Internal Controls

Michele — Wed, 19 Jan 2011 13:27:17 +0000

Tim Goetz, one of the co-founders of Aplos, also happens to be an Executive Pastor of a church. Because of his unique accounting background, coupled with his church experience, to say he understands the demands and order required for church finance is an understatement. Tim writes about the importance of “Church Internal Controls” on his latest blog and internal control assessment. This is a must read for anyone who wants to do some preventive steps for their organization.

IRS Exempt Organizations FY2011 Workplan

Michele — Sun, 09 Jan 2011 23:32:23 +0000

The IRS Exempt Organizations Division 2011 for its Fiscal Year 2011 was released last month. The new year is a good time to review the Division’s priorities and how they might impact your organizations.

(Thanks to the Nonprofit Law Blog for this helpful information.)

The Division will support five overarching IRS focus areas:

Impact of Recent Legislation. The Affordable Care Act (ACA), the Hiring Incentives to Restore Employment (HIRE) Act, theAmerican Recovery and Reinvestment Act (ARRA).
International Focus. The Division’s concern in this area is whether charitable assets of exempt organizations are being diverted internationally for non-charitable purposes.
Medical Residents.
National Research Program Study of Employment Tax Returns. Expect much greater scrutiny and enforcement. The IRS estimates employment tax misreporting constitutes a large part of the tax gapclose to $54 billion per year. Nonprofits should be especially careful about proper classifications of employees and independent contractors, fringe benefits, officer compensation, and employee expense reimbursements.
Non-filer Initiatives. The IRS plans to effectively use enforcement resources to deter non-filers.

The Division’s new and ongoing initiatives include:

Controlling Organizations- The IRC 512(b)(13) Project. The tax treatment of payments between controlled entities and their controlling tax-exempt parent organizations touches on several areas of tax law including unrelated business income, the allocation of income and deductions among taxpayers, and the transfer of property to controlled organizations.
Charitable Spending Initiative. This is a study to learn more about sources and uses of funds in the charitable sector and their relationship to the accomplishment of charitable purposes. Initially, organizations targeted for examination include those with high levels of fundraising expenses, organizations reporting unrelated trade or business activity with relatively low levels of program service expenditures, organizations with high ratios of officer compensation in comparison to program service expenditures, and organizations with low levels of program service expenditures in comparison to total revenue.
Colleges and Universities. The Division will continue to examine their unrelated business income, endowments and executive compensation practices.
Form 990 as a Compliance Tool. The Form 990 is the IRS primary tool to increase transparency and to promote and enforce compliance with Federal tax law. The IRS will use the updated form to identify non-compliant and potentially non-compliant organizations for examination.
Governance. Starting in FY 2010, EO began using a check sheet to capture governance practices and the related internal controls of the organizations being examined. EO will analyze the data over the long term to gain a better understanding of the intersection between governance practices and tax compliance.
Section 501(c)(4), (5) and (6) Organizations. In recent years, IRS examinations have concentrated on section 501(c)(3) organizations. Beginning in FY 2011, the IRS will increase its focus on section 501(c)(4), (5) and (6) organizations, particularly with respect to political activity, inurement and the extent of compliance with the requirements for tax exemption.

The following projects are being wound down and being assimilated into the Division’s general casework (a so-called “project to process” approach):

Combined Annual Wage Reporting. Make sure your employment tax reporting is accurate and complete.
Consumer Credit Counseling Project. Not too many of 501(c)(3) credit counseling organizations left – 41 of 63 of the largest had their tax exemptions revoked in the initial phase; more than half of the remaining are in the process of having their exemptions revoked.
Down Payment Assistance Project. Similarly, 87 of 91 DPA organizations funded solely by homesellers have had, or are in the process of having, their exemptions revoked.
Executive Compensation Compliance Initiative: Loans Project. Over $5.5 million in intermediate sanctions (e.g., for excessive compensation to insiders) were assessed as a result of examinations and 11% of the examinations led to proposed revocations or terminations of the organizations.
Political Activities Compliance Initiative (PACI). This initiative addressed allegations of prohibited political campaign activities by 501(c)(3) organizations. While the EO Division substantiated more than half of the allegations, it closed most of these cases only with warnings. Because some of the violations are becoming increasingly overt (Pulpit Freedom Sunday), at some point, we expect the IRS to start enforcing the electioneering prohibition more vigorously.
Supporting Organizations- The 509(a)(3) Compliance Project. Of 300 supporting organizations examined, 30 were terminated, 72 had their exemptions revoked, and 59 were reclassified as private foundations or other forms of public charities.

You can read the entire FY2011 Workplan and Annual Report here.

[Aplos strives to find information and articles in order to keep you up to date on the latest news and information. Please let us know if you have articles you would like to see here on our blog or have a question about specific fund accounting practices.]

Starting the Year off Right

Michele — Wed, 05 Jan 2011 05:01:11 +0000

New Year’s Resolutions are a common topic of conversation this time of year. In fact, I am willing to bet that most of you have already committed to a specific goal to improve your personal life. Many areas come to mind when I consider what needs improvement in my own life. One of these areas happens to be my organizational skills (or lack there of) within my own nonprofit. I just happen to come across a great article to help myself get organized for 2011. So in nice bullet point fashion, I am on my way and hope you will be too!

Organization: Work Smarter by Helen Antholis at the Performance Advantage Inc blog for a self-assessment that will help you identify and prioritize the areas you should address to improve your productivity.

(Aplos is a fund accounting software that strives to keep your accounting simple.)

Tax Benefits of Giving

Michele — Fri, 17 Dec 2010 13:41:32 +0000

While we at Aplos believe your donation to a charity should come from a heart of selflessness and generosity, we know that individuals benefit for their benevolence on their tax return as well. Below is an article from Charity Navigator in regards to some of these benefits.

A gift to a qualified charitable organization may entitle you to a charitable contribution deduction against your income tax if you itemize deductions.
If the gifts are deductible, the actual cost of the donation is reduced by your tax savings. For example, if you are in the 33% tax bracket, the actual cost of a $100 donation is only $67 ($100 less the $33 tax savings). As your income tax bracket increases, the real cost of your charitable gift decreases, making contributions more attractive for those in higher brackets. The actual cost to a person in the lowest bracket, 15%, for a $100 contribution is $85. For a person in the highest bracket, 35%, the actual cost is only $65. Not only can the wealthy afford to give more, but they receive a larger reward for giving.
A contribution to a qualified charity is deductible in the year in which it is paid. Putting the check in the mail to the charity constitutes payment. A contribution made on a credit card is deductible in the year it is charged to your credit card, even if payment to the credit card company is made in a later year.
Most, but not all, charitable organizations qualify for a charitable contribution deduction.
You can deduct contributions only if they are made to or for the use of a qualified recipient. No charitable contribution deduction is allowed for gifts to certain other kinds of organizations, even if those organizations are exempt from income tax. Contributions to foreign governments, foreign charities, and certain private foundations similarly are not deductible. Below, you can view a list of organizations for which your donations can be deducted. All organizations rated by Charity Navigator qualify for charitable status, and you can deduct your donations, subject to certain limitations.

An organization could lose its charity status if it devotes a substantial part of its activities to formulating propaganda or otherwise trying to influence legislation. However, an organization, other than a church, may qualify as a charity and still perform some of these activities by keeping its political expenditures to an “insubstantial” part of its activities. Furthermore, donations to needy individuals are not deductible.
There are limits to how much you can deduct, but they’re very high.
For most people, the limits on charitable contributions don’t apply. Only if you contribute more than 20% of your adjusted gross income to charity is it necessary to be concerned about donation limits. If the contribution is made to a public charity, the deduction is limited to 50% of your contribution base. For example, if you have an adjusted gross income of $100,000, your deduction limit for that year is $50,000.

The rules on 20% limits and 30% limits are way too complicated to delve into in this space. If you are giving to organizations other than those mentioned above, first consult with your tax adviser to determine whether these other ceilings will apply. If you give an amount in excess of the applicable limitation to charity in one year, the excess is carried over for the next five years.
Rules exist for non-cash donations.
If you contribute property owned for more than one year, the value of the deduction is normally equal to the property’s fair market value. You have an advantage when you contribute appreciated property because you get a deduction for the full fair market value of the property. You are not taxed on any of the appreciation, so, in effect, you receive a deduction for an amount that you never reported as income.

You should clearly contribute, rather than throw out, old clothes, furniture and equipment that you no longer use. However, bear in mind the condition of your donated goods. The IRS only permits deductions for donations of clothing and household items that are in “good condition or better.”

If you bring $1,000 in clothes or furniture to Goodwill or the Salvation Army, make sure that you get a receipt. Never throw such contributions into a bin where no receipt is available. If you are in the 25% bracket, that receipt may be worth $250 in tax savings to you. And remember that the IRS requires a qualified appraisal to be submitted with your tax return if you donate any single clothing or household item that is not in good used condition or better, and for which you deducted more than $500.
Remember to document.
No deduction is allowed for a separate contribution of $250 or more unless you have a written confirmation from the charity. A canceled check alone is not enough. If the contribution is to a religious organization solely for an intangible religious benefit (annual dues, for example) written proof is still required. All other contributions of cash require the charity to estimate the fair market value of any goods or services given to you in exchange for your contribution.

Starting in 2007, the IRS requires written documentation to substantiate deductions for all monetary donations – including cash. In case of an audit, you must have a canceled check, credit card statement or a written acknowledgement from the charity (showing the charity’s name, the date of the donation and the amount given). You will no longer be able to deduct those few dollars you dropped in a charity’s collection bucket without a receipt from the charity to back up your claim.

Remember, it’s always better to give than receive. The glory of charitable donations is that you give and receive at the same time.

Organizations to Which You Can Give and Deduct Your Donation

Your contribution to every organization that Charity Navigator evaluates is tax deductible. If an organization is not evaluated by Charity Navigator, and you still want to support them, you are generally allowed a 50 percent ceiling on your adjusted gross income for contributions if they are any of the following organizations:

Churches and other religious organizations;
Tax exempt educational organizations;
Tax exempt hospitals and certain medical research organizations;
A government unit, such as a state or a political subdivision of a state;
Publicly supported organizations such as a community chest;
Certain private foundations that distribute all contributions they receive to public charities within two-and-a-half months after the end of the foundation’s fiscal year;
A private operating foundation which pools all of its donations in a common fund;
Certain membership organizations that rely on the general public for more than a third of their contributions.

Learn more about the tax implications of charitable giving in our FAQ.

Year End Checklist for Nonprofits

Michele — Sun, 05 Dec 2010 23:58:10 +0000

If your organization’s fiscal year is from January to December, this time of year may leave you feeling a wide range of emotions. You find yourself grateful for the generosity and support of your volunteers, board members, donors, and others who have shared with you in your passion to make a difference! And, you are likely to feel a little overwhelmed with the responsibility of sending out giving statements by the end of January, closing out your fiscal year financials, and preparing for the required 990 Form.

The good news is that if you are using our fund accounting software, you can rest easy knowing how simple Aplos makes sending out giving statements. Also, if you are thinking of switching to a simpler fund accounting software, now is the time to change! Even if you are not a current customer, I hope this list helps keep you organized and sane during this busy season.

1. Make sure you have all donations entered with current addresses.

2. Decide what type of letter you want to send to your donors. Click here for a great resource. This is a great opportunity to let your donors hear specifically how their contribution made a difference.

3. Don’t forget to include other types of donations.

4. See what requirements your organization must meet on the federal, state, and local level.

5. Start reading the instructions for the Form 990 now. You might need to research some topics or include information that takes some time to find and organize.

Those are just a few ideas to get you started. Our desire to support you goes beyond our software so let us know if you need any help!

Aplos $200 Visa Gift Card Giveaway

Michele — Wed, 01 Dec 2010 06:29:08 +0000

What would you do with $200 dollars in Visa cash? Pay for some Christmas gifts? Go out to a nice dinner? Buy yourself something? Pay your gas for the month? Aplos is giving away a $200 Visa gift card to one lucky person!

Aplos is fund accounting software for nonprofits. We realize nonprofits and churches need to spend time on their mission – not on trying to figure out complicated accounting software. Click here to learn more about Aplos.

As for the giveaway, entering to win is simple, just like our software.

Official Contest Rules

$200 Visa Gift Card Giveaway

No purchase is necessary to enter or win. A purchase will not increase your chance of winning. The Aplos Twitter Giveaway (Giveaway) is sponsored and run by Aplos. Participation in the Giveaway constitutes entrants full and unconditional agreement to and acceptance of these Official Rules.

Giveaway Period. The Giveaway commences at 6 A.M. PST on December 1, 2010 and ends at 11:59 P.M. PST on December 25, 2010 if a minimum of 200 entries are received. If we do not obtain 200 entries by Dec. 25, 2010, the contest will continue until the minimum number is received. Sponsor shall select one (1) winner, at random, during giveaway period.

Eligibility. The Giveaway is open to anyone age 13 or older as of the date of entry who resides in the 50 United States, except where prohibited by law or in any state that would require advance registration of this Giveaway. The Giveaway is void in Puerto Rico and U.S. territories and possessions. You are not eligible to participate in the Giveaway if you are not located within the 50 United States. Giveaway is void where restricted or prohibited by law. Employees of Aplos and their immediate families (parents, siblings, children, and spouses of each) are not eligible.

How to Enter.

1. Go to your twitter page, if you don’t have one you can start one for free. www.twitter.com

2. Make sure you are following Aplos_Software. This is the only way we can notify you if you win!

3. Tweet out the following message exactly as it appears only once. (Multiple entries could jeopardize your Twitter account)

#Win a $200 Visa Gift Card from Aplos, simplifying #fundaccounting! Follow @Aplos_Software and ReTweet www.aplossoftware.com/blog/?p=552

4. If youve completed ALL 3 steps prior to the cutoff date, as set forth below, you’ve successfully entered for a chance to win a $200 Visa Gift card from Aplos.

Sponsor reserves the right to deny any entry based on submission of incomplete information or non-compliance with these Official Rules. Sponsor is not responsible for late, lost, delayed, damaged, misdirected, incomplete, illegible, or unintelligible entries.

Winner Selection. Sponsor will select one winner, at random, for giveaway. The cutoff date for posting a tweet for the giveaway is December 25, 2010. However, if the minimum number of 200 entrants is not received by December 25, 2010, the giveaway will continue until such date that the minimum number is received. The winner will be notified via direct tweet through the email associated with the corresponding Twitter Account. The winner has three (3) days from this email notification to respond and confirm the winning entry. If the initial winner does not respond within this period, then a second drawing will be held. If necessary, subsequent drawings will be held until there is a confirmed winner provided time permits. The winner shall be required to complete an affidavit or declaration of eligibility/liability and, where permitted by law, a publicity release, which must be signed and returned and received by Sponsor within seven (7) days of the date printed on the prize notification. Failure to comply may result in forfeiture of all rights to prize(s). Sponsor is not responsible for and shall not be liable for late, lost, misdirected, or unsuccessful efforts to notify winners. If a prize or prize notification letter is returned as undeliverable, prize may be forfeited and an alternate winner will be awarded.

Prize. $200 Visa Gift Card

General Terms and Conditions. By participating, entrants agree that Sponsor, its shareholders, agents and representatives, affiliates, subsidiaries, advertising, promotion and fulfillment agencies, and legal advisors are not responsible or liable for, and shall be released and held harmless from: (i) telephone, electronic, hardware or software program, network, Internet, or computer malfunctions, failures, or difficulties of any kind; (ii) any condition caused by events beyond the control of Sponsor that may cause the Giveaway to be disrupted or corrupted; (iii) any printing or typographical errors in any materials associated with the Giveaway; (iv) any and all losses, damages, rights, claims and actions of any kind in connection with or resulting from participation in the Giveaway, acceptance, possession, or use of any prize, including without limitation, personal injury, death, and property damage, and claims based on publicity rights, defamation, or invasion of privacy. Sponsor reserves the right, in its sole discretion, to amend and interpret these Official Rules at any time, and to terminate, suspend or cancel Giveaway at any time for any reason, including, without limitation, if a computer virus, bug, or other technical problem or security breach corrupts the administration, security, or proper conduct of the Giveaway. Participation in this Giveaway constitutes permission (except where prohibited by law) to use winners name, hometown (including state or province) and/or likeness for promotional purposes without further compensation. All issues and questions concerning the construction, validity, interpretation and enforceability of these Official Rules, or the rights and obligations of participant and Sponsor in connection with the Giveaway, shall be governed by, and construed in accordance with the laws of the State of California, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of California or any other jurisdiction), that would cause the application of the laws of any jurisdiction other than the State of California. Any claim arising out of the foregoing shall be instituted solely in a court situated in Fresno County, California, and entrant and Sponsor irrevocably agree to submit to the personal and exclusive jurisdiction of such court. All federal, state and local laws and regulations apply. All other trademarks are the property of their respective owners.

Sponsor. Aplos Software, Clovis, California.

Twitter Disclaimer. Multiple entries could jeopardize your Twitter account according to Twitter Terms and Conditions. Creating multiple accounts in order to obtain more than one entry is prohibited and could result in a suspension of all Twitter accounts.

Good Luck!

Lessons Learned Starting a Church or Nonprofit from Scratch

Michele — Wed, 03 Nov 2010 13:28:30 +0000

My husband and I started our nonprofit about a year ago and I had no idea what was about to transpire. The nonprofit world was actually quite foreign to me, thus the crash course that inevitably ensued this last year. Couple that with working for a fund accounting software company, that specializes in a product specifically for the part-time volunteer, and I became educated rather quickly. While researching articles, understanding terminology, reviewing websites, understanding donations, and finding ways to maximize exposure, I found myself becoming quite opinionated about various concepts. Admittingly, I am the type of individual who is passionate and driven by values. Below are some thoughts I have on various aspects of your organization. My hope is that you find them helpful and enhance your organization’s ultimate goal!

Contact information

I believe a great website is absolutely essential. If you aren’t fully convinced, please refer to a previous post. Please make your email address, phone number, and mailing address available to create the easiest scenario for others to contact you. Your home screen is a great location!

Donation Information

Because the life of your organization is dependent on donations. Make donating simple by placing a button on you website. For ideas and information on how to get started, click here for further information.

Volunteer Opportunities

A friend of mine just told me about a great resource that will help you design forms so that individuals may sign up for opportunities via your website. Wufoo is great for those of us that don’t know the first thing about coding a website. Of course, there are other options. Creating opportunities and having ideas lined out are great ways to keep your volunteers motivated and in their niche. Who doesn’t want volunteers serving in their sweet spot when both the volunteer and the organization benefit? Here is a great idea from an nonprofit near and dear to my heart, Neighborhood Thrift.

Facebook/Twitter Page

I have grown to appreciate the social media madness of Facebook and Twitter. Some of you may skip over this section as you have already made up your mind to rule these out as options. I am asking you to be open to suggestion and put aside your hesitations for a moment. Just imagine all of the individuals that you desire to know about your church or nonprofit and mission! I believe twitter and facebook are phenomenal ways to connect individuals to your organization! Read here for further insight.

Blog

Words…they have power and especially when they placed strategically on your website or on a blog. Just google anything you desire to know about and see for yourself. I suggest doing a little research on Search Engine Optimization and finding key words for your organization’s website that will draw in individuals as they search for specific topics.

Accounting

Don’t assume that you have to spend a great deal of time and money invested here. Believe me, I know fund accounting can seem quite daunting in the beginning. Your choice of software influences the amount of stress you will endure. I am an inexperienced volunteer who happens to use Aplos to make my life more efficient and simple. No complicated fund accounting software with too many tabs, menus, and reports to keep me confused.

Organization

Whether you constuct a fancy flow chart or simply like big yellow legal pads, know every aspect of your organization. List out the different activities and responsibilities and have a plan for each. Ask individuals what interests they have and be ready to give them options. You need to be clear on your vision and mission and establish each area of your organization with that mission in mind.

Determining Your Accounting Year – Fiscal versus Calendar

Michele — Tue, 26 Oct 2010 12:14:42 +0000

One of the very first tasks you will encounter when entering information into Aplos or any fund accounting software involves determining your accounting year or “tax year”. (Within Aplos, System Preferences allows you to enter the appropriate information.)

An accounting year is simply the 12 month period over which an organization’s accounts are calculated. Deciding what 12 month period you use depends a great deal on what makes the most sense for your organization.

Calendar year – A calendar tax year is 12 consecutive months beginning January 1 and ending December 31.

Fiscal year – A fiscal tax year is 12 consecutive months ending on the last day of any month except December. A 52-53-week tax year is a fiscal tax year that varies from 52 to 53 weeks but does not have to end on the last day of a month.

For more in depth information, take a look at the IRS Publication 538.

Great Article to help you Evaluate Software

Michele — Fri, 01 Oct 2010 13:11:07 +0000

I love reading articles written by individuals who “get it”. By “get it” I mean they have an incredible understanding of what is involved in choosing a great fund accounting software. In the following article entitled “Help! We Need An Accounting System” by Kate Barr, she takes into account the considerations needed before purchasing a system. Her insight is at the heart of what we have tried to emphasize at Aplos.

“Help! We Need An Accounting System” by Kate Barr

In the last two months I have heard too many stories of nonprofits who have installed accounting software that was recommended as the “perfect” system for them by a consultant or their accountant. It then turns out that no other software was even considered, and it just happens to be the accountant’s preferred system, which of course is always “perfect” for any nonprofit. Since many of these nonprofits don’t have expertise or even comfort talking about accounting, they trust the professional and plunge in with the purchase. Unfortunately, in many cases the software is far too complex for the organization, requires extensive accounting knowledge, or is simply a bad fit. The software will probably work for them as long as the experienced accountant is in place to manage it, but I can predict, based on experience, that within two years these organizations will either need to spend some money to fix an unwieldy system or change their accounting software again.

We are upgrading our accounting software next month to a newer version of the program we’ve been using for over eight years. We’d hit he point where reports were less efficient and there’s an ongoing technical glitch that can only be solved with the upgrade. Before we took this step I asked for a review of some other accounting packages to make sure that we’re using the “right” software. That begs the question of what is the “right” software for nonprofit organizations. The answer, of course, depends on what you need. The tough part is how to find that answer for an individual organization. Since Nonprofits Assistance Fund is a nonprofit focused on financial management we are fortunate to have a lot of experience and expertise within our staff to complete our own accounting review. For all the nonprofits that don’t have this expertise and rely on other resources to help, the help that’s available is pretty spotty, unfortunately, and complicated with hidden agendas.

Even without accounting expertise, an executive director or board treasurer can complete a basic assessment of accounting needs and insist that this review be used as a selection guide. Here are the basic questions:

Start with the end in mind — what kind of reporting will be needed? This includes reports for management and the board, for individual programs and grants, and for audit preparation.
Do you receive restricted grants or donations? It’s important to be able to maintain separate restricted and unrestricted balances, but you may not need a full ‘fund accounting’ system. Many organizations, even large ones, use Excel spreadsheets for some of this detail.
Do you need extensive program, project, or grant-based income and expense tracking?
What other financial functions do you need to include in the system, such as billing for services, accounts payable, payroll, and fixed assets and depreciation?
Are there any external factors (like a significant government contract) that require you to maintain a specific list of accounts, codes, or report formats?
Who will make regular accounting entries and what training or experience is needed?
What reports are standard with the software and how easy is it to create new reports
Does it take a CPA or equivalent accounting knowledge to produce regular monthly financial reports?
The last question to ask a consultant – what is the simplest system available that will meet these needs? The most frequent error I see is selecting accounting software that’s much more than the organization needs or knows how to manage. Keep it simple. (Did she say simple? I could not agree more!)

Form 990 Help (Getting Prepared)

Michele — Thu, 23 Sep 2010 17:04:25 +0000

Before sitting down to fill out your form 990, I encourage you to gather some paperwork and information required on the form. Some items on the list may or may not be needed depending on your organization and the type of return you are required to file. Because Aplos tends to focus more on smaller nonprofits, I will cover the 990-EZ for now.

1. Appropriate Form Instructions. See the IRS website for these. As long and detailed as the instructions may be, they are there to help. (For those of you accustomed to putting things together without using the instructions, this is not the time to trust your instincts.)

2. Information about your organization: Name, Address, Phone Number, Officer Information, Identification Number, Year of Formation, Form of Organization.

3. Gross receipt amount. (The type of form you file will depend on this number so it is extremely important you figure this out before filling out the wrong form.) For 2009 tax years, only those organizations with gross receipts of less than $500,000 and total assets of less than $1,250,000 at the end of the tax year can use the Form 990-EZ. If the organization does not meet these requirements, it must file Form 990, unless excepted under General Instruction B.

4. Part I – Revenue, Expenses, and Changes in Net Assets or Fund Balances

Gather the appropriate docuements that your software allows. In Aplos, the Income Statement will generate the numbers needed for Revenue and Expenses. In the Net Asset section, you will need your prior’s year’s return, if applicable.

5. Part II – Balance Sheets (Important Note: Make sure you are aware of your Total Assets in this section. If the amount is more than $1,250,000, you must fill out a 990 instead of 990-EZ)

Within Aplos, you may print out a Balance Sheet for the appropriate information. You will also need to refer to your prior year’s return if applicable.

6. Part III – Statement of Program Service Accomplishments

This section can be a little daunting but we will work through what is needed carefully. Basically, you want to consider the three largest program services your organization offered (measured by total expenses incurred). The IRS suggests the following:

Describe program service accomplishments through measurements such as clients served, days of care, number of sessions or events held, or publications issued.

Describe the activitys objective, for both this time period and the longer-term goal, if the output is intangible, such as in a research activity.

Give reasonable estimates for any statistical information if exact figures are not readily available. Indicate that this information is estimated.

Be clear, concise, and complete in the description. Avoid attaching brochures, newsletters, newspaper articles about the organization, etc.

You will need to account for specifics here and should definitely pay close attention to the 990-EZ instructions here.

7. Part IV. List of Officers, Directors, Trustees, and Key Employees

List each person who was an officer, director, trustee, or key employee of the organization at any time during the organization’s tax year, even if they did not receive any compensation from the organization.

While officers, directors, or trustees might seem more obvious, consider your volunteers who were truly key players in your organization. Again, refer to the instructions here so that you comply with the IRS requirements and avoid penalties.

8. Part V – Other Information

Basically, all of the following are possiblities depending on your organization and how it’s classified.

Schedule A – http://www.irs.gov/pub/irs-pdf/f990sa.pdf (Public Charity Status and Public Support)

Form 8870 – http://www.irs.gov/pub/irs-pdf/f8870.pdf (Personal Benefit Contract – any life insurance, annuity, or endowment contract that benefits, directly or indirectly, the transferor, a member of the transferor’s family, or any other person designated by the transferor (other than an organization described in § 170(c)).

Form 4720 – http://www.irs.gov/pub/irs-pdf/i4720.pdf (Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code)

Proceed through the questions and read the instructions as needed for clarification.

9. Part VI – Section 501(c)(3) Organizations and Section 4947(a)(1) Nonexempt Charitable Trusts Only

For this section, you will need to disclose contributions to political campaigns or candidates, lobbying activities, if your organization is a school, or compensation of employees or independent contractors if amounts are over $100,000.

10. Paid Preparer’s Signature

If you are having someone else complete this information for you, be advised of the following.

By checking this box “Yes,” the organization is authorizing the IRS to contact the paid preparer to answer any questions that may arise during the processing of the return. The organization is also authorizing the paid preparer to:

- Give the IRS any information that is missing from the return,

- Call the IRS for information about the processing of the return, and

- Respond to certain IRS notices about math errors, offsets, and return preparation.