Where to go for Non-Profit Paperwork EssentialsThe IRS….http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Life-Cycle-of-a-Public-Charity

Life Cycle of a Public CharityDuring its existence, a public charity has numerous interactions with the IRS – from filing an application for recognition of tax-exempt status, to filing the required annual information returns, to making changes in its mission and purpose. The IRS provides information, explanations, guides, forms and publications on all of these subjects – they are available through this IRS Web site. The illustration below provides an easy-to-use way of linking to the documents most charities will need as they proceed though the phases of their “life cycle." You can also view a graphical depiction of the chart, with links to our website.

 Starting Out Organizing Documents

o Required Provisions o Sample Organizing Documents

o Governance and related topics Bylaws

o State law requirements Employer Identification Number

o Application Form o Online EIN Application

Charitable Solicitation o Initial State Registration o Periodic State Reporting o State Charity Offices

Help from the IRS

Applying to IRS Requirements for Exemption Application Forms

o Exemption Application o Group exemption

o User Fee o Power of Attorney

Starting Outo Disclosure of Applications

IRS Processing o While You Wait o Rulings and Determination Letters

Help from the IRS o Application Process Step by Step o Customer Account Services o Publication 4220 , Applying for 501(c)(3) Tax-Exempt Statuso Publication 557 , Tax-Exempt Status for Your Organization

Required Filings Annual Exempt Organization Return

o Requirements for Filing e-File for Exempt Organizations

o e-Postcard for Small Exempt Organizations Unrelated Business Income Tax

o Requirements for Filing o Form 990-T o Form 990-T instructions o Form 990-W o Estimated Tax

o Exceptions and Exclusions o Publication 598 , Tax on Unrelated Business Income for Exempt Organizations

Help from the IRS o Customer Account Services o Publication 4221-PC , Compliance Guide for 501(c)(3) Public Charitieso Publication 557 , Tax-Exempt Status for Your Organization

Ongoing Compliance Jeopardizing Exemption

o Inurement/Private Benefit o Intermediate Sanctions o Lobbying/Political Activity o Not Filing Annual Return or Notice

Employment Taxes o Requirement to Pay o Exceptions and Exclusions o Worker Classification o Forms and Publications

Retirement Plan Compliance Substantiation and Disclosure

o Charitable Contributions o Publication 1771, Charitable Contributions Substantiation and Disclosure Requirementso Written acknowledgments o Quid pro quo contributions o Charity auctions

o Noncash Contributions o Donor ( Form 8283)o Donee ( Form 8282)

Starting Outo Publication 561 , Determining the Value of Donated Property

Public Disclosure Requirements Help from the IRS

o Customer Account Services o Publication 4221-PC , Compliance Guide for 501(c)(3) Public Charitieso Publication 557 , Tax-Exempt Status for Your Organization

Significant Events Reporting Changes to IRS

o Termination of Exempt Organization Private Letter Rulings and Determination Letters Audits of Exempt Organizations

o Potential Examination Consequences o Examination Procedures o Power of Attorney

Termination of an Exempt Organization Help from the IRS

A little more detail from the IRS sites…

http://www.irs.gov/Charities-&-Non-Profits/Substantiating-Charitable-Contributions

Charitable Organizations - Substantiation and Disclosure Substantiating Charitable ContributionsMany charitable organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with section 170. Most eligible organizations are listed in Exempt Organizations Select Check (Pub 78 database).

A charitable organization must provide a written disclosure statement to donors of a quid pro quo contribution in excess of $75. A quid pro quo contribution is a payment made to a charity by a donor partly as a contribution and partly for goods or services provided to the donor by the charity. For example, if a donor gives a charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution. In this example, the charitable contribution portion of the payment is $60. Even though the part of the payment available for deduction does not exceed $75, a disclosure statement must be filed because the donor's payment (quid pro quo contribution) exceeds $75. The required written disclosure statement must:1. Inform the donor that the amount of the contribution that is deductible for federal income tax

purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the value of goods or services provided by the charity, and

2. Provide the donor with a good faith estimate of the value of the goods or services that the donor received.

The charity must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution. If the disclosure statement is furnished in connection with a particular solicitation, it is not necessary for the organization to provide another statement when the associated contribution is actually received.

No disclosure statement is required when:1. The goods or services given to a donor meet the standards for insubstantial value set out in

Revenue Procedure 90-12, 1990-1 C.B. 471, and Revenue Procedure 92-49, 1992-1 C.B. 987 (as updated);

2. There is no donative element involved in a particular transaction with a charity (for example, there is generally no donative element involved in a visitor's purchase from a museum gift shop); or

3. There is only an intangible religious benefit provided to the donor. The intangible religious benefit must be provided to the donor by an organization organized exclusively for religious purposes, and must be of a type that generally is not sold in a commercial transaction outside the donative context.

Vehicle DonationsAdditional substantiation and disclosure rules may apply when a donor contributes a vehicle to a charitable organization and claims the value of the vehicle is more than $500. See Publication 4302, A Charity's Guide to Vehicle Donations, and Publication 4303, A Donor's Guide to Vehicle Donations, for more information.

Charity AuctionsDonors who purchase items at a charity auction may claim a charitable contribution deduction for the excess of the purchase price paid for an item over its fair market value. The donor must be able to show, however, that he or she knew that the value of the item was less than the amount paid. For example, a charity may publish a catalog, given to each person who attends an auction, providing a good faith estimate of items that will be available for bidding. Assuming the donor has no reason to doubt the accuracy of the published estimate, if he or she pays more than the published value, the difference between the amount paid and the published value may constitute a charitable contribution deduction.

In addition, donors who provide goods for charities to sell at an auction often ask the charity if the donor is entitled to claim a fair market value charitable deduction for a contribution of appreciated property to the charity that will later be sold. Under these circumstances, the law limits a donor's charitable deduction to the donor's tax basis in the contributed property and does not permit the donor to claim a fair market value charitable deduction for the contribution. Specifically, the Treasury Regulations under section 170 provide that if a donor contributes tangible personal property to a charity that is put to an unrelated use, the donor's contribution is limited to the donor's tax basis in the contributed property. The term unrelated use means a use that is unrelated to the charity's exempt purposes or function, or, in the case of a governmental unit, a use of the contributed property for other than exclusively public purposes. The sale of an item is considered unrelated, even if the sale raises money for the charity to use in its programs.

Charitable Contributions - Written AcknowledgmentsThe written acknowledgment required to substantiate a charitable contribution of $250 or more must contain the following information: Name of the organization;

Amount of cash contribution;

Description (but not value) of non-cash contribution;

Statement that no goods or services were provided by the organization, if that is the case;

Description and good faith estimate of the value of goods or services, if any, that organization provided in return for the contribution; and

Statement that goods or services, if any, that the organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case.

In addition, a donor may claim a deduction for contributions of cash, check, or other monetary gifts only if the donor maintains certain written records.

Additional Information:

Publication 1771, Charitable Contributions - Substantiation and Disclosure Requirements

Charitable Organizations - Substantiating Noncash ContributionsA charity may need to provide additional substantiation with respect to noncash contributions. (NOTE: Special rules apply to certain contributions of motor vehicles.)

Dispositions of Donated PropertyIf an organization receives charitable deduction property and within 3 years sells, exchanges, or disposes of the property, the organization must file Form 8282, Donee Information Return. However, an organization is not required to file Form 8282 if:

The property is valued at $500 or less, or The property is distributed for charitable purposes.

Form 8282 must be filed within 125 days after the disposition. A copy of Form 8282 must be given to the previous donor. If the organization fails to file the required information return, penalties may apply.

Charitable Deduction PropertyThis is any property (other than money or publicly traded securities) for which the donee organization signed an appraisal summary or Form 8283, Noncash Charitable Contributions.

Publicly Traded SecuritiesThese are securities for which market quotations are readily available on an established securities market as of the date of the contribution.

Appraisal SummaryIf the value of the donated property exceeds $5,000, the donor must get a qualified appraisal for contributions of property (other than money or publicly traded securities). The donee organization is not a qualified appraiser for the purpose of valuing the donated property. For more information, get Publication 561, Determining the Value of Donated Property.

Form 8283For noncash donations over $5,000, the donor must attach Form 8283 to the tax return to support the charitable deduction. The donee must sign Part IV of Section B, Form 8283 unless publicly traded securities are donated. The person who signs for the donee must be an official authorized to sign the donee's tax or information returns, or a person specifically authorized to sign by that official. The signature does not represent concurrence in the appraised value of the contributed property. A signed acknowledgement represents receipt of the property described on Form 8283 on the date specified on the

form. The signature also indicates knowledge of the information reporting requirements on dispositions, as previously discussed. A copy of Form 8283 must be given to the donee.

Additional information: Form 8283 instructions Publication 1771 , Charitable Contributions: Substantiation and Disclosure Requirements Publication 4302 , A Charity's Guide to Vehicle Donations

Charitable Contributions - Quid Pro Quo ContributionsThis is a payment a donor makes to a charity partly as a contribution and partly for goods or services. For example, if a donor gives a charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution. In this example, the charitable contribution part of the payment is $60. Even though the deductible part of the payment is not more than $75, a disclosure statement (below) must be provided by the organization to the donor because the donor's payment (quid pro quo contribution) is more than $75. Failure to make the required disclosure may result in a penalty (below) to the organization.

Disclosure Statement

The required written disclosure statement must:

a. Inform the donor that the amount of the contribution that is deductible for federal income tax purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the fair market value of goods or services provided by the charity, and

b. Provide the donor with a good faith estimate of the fair market value of the goods or services that the donor received. The charity must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution. If the disclosure statement is furnished in connection with a particular solicitation, it is not necessary for the organization to provide another statement when it actually receives the contribution.

No disclosure statement is required if any of the following is true:

i The goods or services given to a donor have insubstantial value as described in Revenue Procedures 90-12 and 92-49,

ii. There is no donative element involved in a particular transaction with a charity (for example, there is generally no donative element involved in a visitor's purchase from a museum gift shop).

iii. There is only an intangible religious benefit provided to the donor. The intangible religious benefit must be provided to the donor by an organization organized exclusively for religious purposes, and must be of a type that generally is not sold in a commercial transaction outside the donative context. For example, a donor who, for a payment, is granted admission to a religious ceremony for which there is no admission charge is provided an intangible religious benefit. A donor is not provided intangible religious benefits for payments made for tuition for education leading to a recognized degree, travel services, or consumer goods.

iv. The donor makes a payment of $75 or less per year and receives only annual membership benefits that consist of:

1. Any rights or privileges (other than the right to purchase tickets for college athletic events) that the taxpayer can exercise often during the membership period, such as free or discounted admissions or parking or preferred access to goods or services, or

2. Admission to events that are open only to members and the cost per person of which is within the limits for low-cost articles described in Revenue Procedures 90-12 and 92-49 (as adjusted for inflation). Also see the discussion of insubstantial value above.

Good Faith Estimate of Fair Market Value

An organization may use any reasonable method to estimate the fair market value (FMV) of goods or services it provided to a donor, as long as it applies the method in good faith. The organization may estimate the FMV of goods or services that generally are not commercially available by using the FMV of similar or comparable goods or services. Goods or services may be similar or comparable even if they do not have the unique qualities of the goods or services being valued.

Example 1. A charity provides a one-hour tennis lesson with a tennis professional for the first $500 payment it receives. The tennis professional provides one-hour lessons on a commercial basis for $100. A good faith estimate of the lesson's FMV is $100.

Example 2. For a payment of $50,000, a museum allows a donor to hold a private event in a room of the museum. A good faith estimate of the FMV of the right to hold the event in the museum can be made by using the cost of renting a hotel ballroom with a capacity, amenities, and atmosphere comparable to the museum room, even though the hotel ballroom lacks the unique art displayed in the museum room. If the hotel ballroom rents for $2,500, a good faith estimate of the FMV of the right to hold the event in the museum is $2,500.

Example 3. For a payment of $1,000, a charity provides an evening tour of a museum conducted by a well-known artist. The artist does not provide tours on a commercial basis. Tours of the museum normally are free to the public. A good faith estimate of the FMV of the evening museum tour is $0 even though the artist conducts it.

Penalty for Failure to Disclose

A penalty is imposed on a charity that does not make the required disclosure of a quid pro quo contribution of more than $75. The penalty is $10 per contribution, not to exceed $5,000 per fundraising event or mailing. The charity can avoid the penalty if it can show that the failure was due to reasonable cause.

http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Organizing-Documents---Charity

Organizing Documents - CharityTo qualify for exemption under section 501(c)(3), an organization must be organized exclusively for purposes described in that section. This means, among other things, that the organization’s organizing

documents must contain certain provisions. The IRS provides sample organizing documents that contain the required provisions.

Good governance is important to increase the likelihood that organizations will comply with the tax law, protect their charitable assets and, thereby, best serve their charitable beneficiaries. Accordingly, charities should consider governance practices and related topics to assure sound operations and compliance with the tax law.

In addition to the topics mentioned above, state law governs filing requirements for and the contents of articles of organization.http://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Exempt-Organization---Bylaws

Exempt Organization - BylawsBylaws are an organization's internal operating rules. Federal tax law does not require specific language in the bylaws of most organizations. State law may require nonprofit corporations to have bylaws, however, and nonprofit organizations generally find it advisable to have internal operating rules.

State Law Requirements for Bylaws

For additional information on what the state may require with respect to bylaws, you may want to contact state officials.

Annual Accounting Period

Exempt organizations must keep books, reports and file returns based on an annual accounting period called a tax year. A tax year is usually 12 consecutive months. Organizations that want to specify an annual accounting period generally do so in their bylaws.

There are two kinds of tax years: Calendar Tax Year

This is a period of 12 consecutive months beginning January 1 and ending December 31; or Fiscal Tax Year

This is a period of 12 consecutive months ending on the last day of any month except December.

Required Provisions

Federal tax law does not require specific language in the bylaws of most organizations.

http://www.irs.gov/Charities-&-Non-Profits/Employer-Identification-Number

Employer Identification NumberEvery organization must have an employer identification number, even if it will not have employees. The employer identification number is a unique number that identifies the organization to the Internal Revenue Service.

To apply for an employer identification number, you should obtain Form SS-4 and its Instructions. You may also apply for an employer identification number on-line, by telephone, or by fax. Make sure that you select church or church-controlled organization or other nonprofit organization as the type of entity. For

more information about employer identification number application procedures, see Question 4 of FAQs regarding Applying for Tax Exemption.

Please note that the employer identification number is not your tax-exempt number. That term generally refers to a number assigned by a state agency that identifies organizations as exempt from state sales and use taxes. You should contact your state revenue department for additional information about tax-exempt numbers.