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Nonprofit Tax Services

 

From thought leadership to industry events, TaxBud is at the forefront of the nonprofit conversation.

Overview

Nonprofits are operating in challenging times. Amid evolving regulations, greater transparency requirements, and increasingly intense scrutiny from federal, state, and other government agencies, complexities abound for associations, hospitals, charities, schools, foundations, and other 501(c) entities.

TaxBud’s Nonprofit Tax Services group provides partner-led, relationship-driven service dedicated to the unique challenges facing nonprofits. We work collaboratively with organization leadership to develop strategies that minimize both tax burdens and compliance risk associated with all relevant regulatory bodies. We provide advisory and support in four key areas:

TaxBud provides a wide range of private client services:

  • Alternative Investment Planning

  • ASC 740 Tax Provisions

  • Form 990 Compliance

  • Unrelated Business Income Tax Planning

    Our goal is to serve as a technical resource for the nonprofit community, providing insights and perspective on a wide range of regulatory and accounting issues. The Institute produces numerous publications, a quarterly newsletter, and sponsors seminars and webcasts throughout the year.

     

    Alternative Investment Planning

    The compliance complexities beyond the attractive returns.

    While often lucrative from an investment standpoint, alternatives present a compliance challenge to nonprofits: income earned may be subject to unrelated business tax liabilities for an otherwise tax-exempt entity. There are often specific state and foreign filing requirements, passive activity rules and at-risk limitations, income tax calculated based on trust or corporate rates, and Nexus requirements in various states. Alternative investments may include partnerships, and therefore Schedule K-1’s, which add further challenges to meeting proper reporting and tax treatment guidelines.

    TaxBud offers the depth of experience needed to determine taxable income, adhere to proper filing requirements, and support all of it. We analyze each K-1 individually to establish whether there is unrelated business income, and how that income should be categorized. At all times, our approach is highly collaborative, both with clients and with professionals throughout the TaxBud network, ensuring that we understand the unique issues of every alternative investment class, and its implications for each nonprofit entity. TaxBud works with a wide range of nonprofit organizations, both large and small.

     

    ASC 740-10 (FIN 48)

    Uncertain tax positions for nonprofit organizations.

    ASC 740, formerly known as FIN 48, offers guidance on uncertain tax positions. It is broad in scope and now applies to both nonprofit and for-profit entities. The need to declare an uncertain tax position is a complex determination, comprising the specific circumstances, the likelihood that it will be upheld upon examination, and the amount that should be recognized for tax purposes.

    TaxBud brings a deep understanding of the ASC 740-10, and its accountants regularly review tax positions disclosed on the ASC 740-10 memorandum for our numerous nonprofit audit clients. For organizations that are not currently clients, we offer a comprehensive range of services, including identifying tax positions, researching positions, drafting the memorandum, and submitting to the existing audit firm.

    In our experience, most nonprofits argue that they are exempt from paying income taxes. Still, we encourage every organization to evaluate its status in the applicable jurisdiction, whether federal, state, local, or foreign.

     

    Form 990 Compliance

    A public window into your nonprofit.

    The Form 990 presents an open look inside a nonprofit organization. This transparency now requires that the forms are managed simultaneously for regulatory compliance and public perception. As with any public-facing communication, this presents both opportunities and possible pitfalls.

    TaxBud’s accountants work closely with the IRS on the implementation of the Form 990, as they do with other rules and regulations affecting nonprofit organizations. We understand the complexities and the delicate nature, especially with the increasing scrutiny on nonprofits. We monitor the annual changes in reporting requirements, and work consistently and collaboratively with your organization to advise on the best possible options for both present and future filings.

     

    Unrelated Business Income Tax Planning

    Earnings that may not be exempt.

    Nonprofit organizations sometimes engage in activities that produce revenue considered to be commercial, and therefore taxable. Because this unrelated business income (UBI) is outside the normal scope of operations, it may not qualify for inclusion under the entity’s tax-exempt status. Firms need to proceed with caution with these types of activities.

    TaxBud professionals are experienced with all aspects of the complex UBI laws, current IRS guidance, and industry standard practices. We ensure our clients are compliant and timely with their filings and take a proactive approach to both current and future transactions.