Maintaining Your Non-Profit's Tax Exempt Statusis Important

Non-profit organizations touch the lives of millions of individuals by advocating and providing services for those in need. These organizations, for the most part, survive by receiving contributions from the public. If organized and incorporated correctly under code section 501 these contributions are tax-exempt. The tax-exempt status results in the need for high regulation and monitoring to ensure that these organizations stay true to their mission and don’t abuse their tax-exempt status. The biggest of the watchdogs is the Internal Revenue Service. So, what happens when the IRS finds that a non-profit is conducting business outside the scope of their non-exempt status? Below we will summarize a few key factors within recent IRS Letter Rulings which revoked a non-profit organizations tax-exempt status.

In the first case, a tax-exempt organization, under IRS audit failed to produce support that it was operating for the exempt purposes it originally registered. Tax-exempt organizations must be operated exclusively for the exempt purposes it registered to do and at all times it must be able to furnish support of their activities.

Another non-profit failed to exclusively operate an exempt purpose. Instead the organization rented a building to the general public who were not of a charitable class.

The final organization failed both the organizational and operational test. The organization’s certificate failed to restrict their activity to one or more exempt purposes. Also, the organization could not prove that it did not benefit private interests such as the founder. The IRS did state that the activities appear to further charitable activities, but the bylaws explicitly stated that there could be a distribution of earnings to private shareholders, which is expressly prohibited under section 501.
As evidenced above, running afoul the non-profit rules will prove a costly mistake. Consultation with a tax professional in regards to non-profit compliance is an imperative step to ensure tax-exempt status is maintained .

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

Giving Tuesday Tips to Protect Your Donation

Giving Tuesday Tips to Protect Your Donation

On the heels of Thanksgiving follows two days of shopping unlike any other: Black Friday and Cyber Monday. Over the course of these two days retailers reign in billions of dollars in sales. After the madness of consumerism subsides comes a day of reflection and giving now known as Giving Tuesday. On this day individuals and businesses alike are urged to give to a charity of their desire. So, what steps can taxpayer’s follow to ensure that their charitable giving not only benefits their intended purpose, and qualifies as a taxable deduction? The IRS has provided a tool by the name of EO Select Check to confirm the organization’s tax exempt status here.

It is crucial that a willing contributor confirm the organization’s tax exempt status through the IRS tool above. Confirmation of an organization’s tax-exempt status via the IRS tool qualifies a taxpayer’s deduction and provides assurance that the organization conducts business in accordance to their tax exempt purpose.

Should you have any questions about your charitable giving on Giving Tuesday or any other day please do not hesitate to contact your W&G tax advisor email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

Special Tax Benefits for Individuals in the Armed Forces

Armed Forces Special Tax Benefits

Even those in the military are responsible for income taxes, but as a honored service man or woman there are ways that these members can reduce their tax liability and even qualify for certain credits as evidenced below.

Tax-Free Pay

If an enlisted personnel, warrant officer, or commissioned warrant officer is serving in a “Combat Zone” (defined in IRS Publication 3, Armed Forces Tax Guide) or provides direct support to a “Combat Zone” then their pay could be partially or entirely tax-free. Pay includes but is not limited to, active duty pay in any month you served in a combat zone, imminent danger pay, and reenlistment bonus if earned in a month you served in a combat zone.

Commissioned officers are eligible for the exclusion, but it is limited to the highest rate of enlisted pay for each month serving in a combat zone.

Also note that if you are in a combat zone that you can receive an automatic extension to file your taxes.

Tax Deductions

Reservists who need to travel more than 100 miles from their home can deduct unreimbursed travel expenses. If a service member needs to move they may be able to deduct unreimbursed moving expenses; this would usually apply if the taxpayer has a permanent change of station.
For uniforms, if the rules say that the service member cannot wear it off-duty then they can deduct the cost to upkeep their uniform (less any uniform allowance they may receive).

Tax Credits

If a service member is receiving combat pay then a decision to include this as taxable income must be made. The reason for taking an otherwise non-taxable payment and reverting it to taxable income would be to increase the amount of the Earned Income Tax Credit. The maximum refundable tax credit for 2016 is $6,269. A service member should look to see what would provide them the stronger benefit by either excluding their combat pay or to include it as income to increase their Earned Income Tax Credit.

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

IRS Warns of Insurance Tax Form Scam

IRS Warns of Insurance Tax Form Scam

An old but newly revamped scam is being implanted and it revolves around insurance forms. Would-be scammers are now phishing for taxpayer’s personal and confidential information by targeting insurance forms. The preferred method of this scam targets accessing annuity and life insurance accounts by spoofing the email address of your tax professional. For example, your tax professional’s email address is This email address is being protected from spambots. You need JavaScript enabled to view it. and you receive an email from This email address is being protected from spambots. You need JavaScript enabled to view it.. If you were to quickly scan the email all would look fine, but one sender is the actual tax professional and the other your scam artist. The email will contain a request to complete a fake IRS insurance form, which is then used to contact insurance companies to obtain loans or make account withdrawals.

Our warning remains the same for everyone since we are all potential scam targets: remain vigilant and cautious. Never supply confidential information unless absolutely positive of the ultimate recipient. If in doubt pick up the phone and verify with your trusted advisor

For more information, or if you have any questions about this or any other tax matter, please contact your Wilkin & Guttenplan advisor or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..

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