Beginning in 2010, the IRS Exempt Organizations (EO) Division is focusing on two key areas: employment tax and charitable spending. Employment tax has recently been a focal point for the IRS. Exempt organizations have the same payroll obligations as for-profit businesses, such as proper classification of workers and the reporting and payment of employment taxes.
For the next three years, the IRS will analyze data from audits of 500 randomly selected exempt organizations to determine whether they properly comply with employment tax law and reporting requirements, specifically focusing on worker classification, fringe benefits, officer compensation, employee expense reimbursement and non-filers. The IRS has indicated that many of these exams have already started.
The second IRS EO initiative examines charitable funding sources and their relationship to the accomplishment of charitable purposes. The study will look at revenue sources, particularly fundraising, public contributions, grants and revenues from related or unrelated trades or businesses, as well as unrelated business income expenses, officer compensation, fundraising expenses, program service activity spending and the effect of these expenditures on charitable spending.
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Questions? Contact Debi L. Ladyman, CPA, Partner at 317.383.4072 or
firstname.lastname@example.org or Joe Vande Bosche, CPA, Partner at 317.383.4039 or email@example.com .