Sunday, June 28, 2009

Mandatory Reporting of Foreign Bank Accounts

For tax exempt organizations, one of the little known IRS reporting requirements centers around foreign bank and investment accounts held by U.S. individuals or entities. The U.S. Treasury requires Form TD F 90-22.1 be filed to report holdings in foreign accounts by June 30th of each year. The reporting is required in the event that an individual or entity has accounts containing $10,000 or more in the aggregate. Penalties for not filing are staggering and can easily exceed the value of the accounts.

I find that many tax exempt organizations do not realize that they are subject to this filing. As the world shrinks, many organizations conduct operations in foreign countries. It is not unusual for an organization or a church to maintain foreign investment or bank accounts due to missions activities. Most organizations are not familiar with these filing requirements. Many times the professionals working with the organizations may not even realize that there are accounts in other countries.

If this blog is setting off alarms in your head, and you think your church or organization may have a reporting obligation in this area, then it is time to find out more information. For those who have not complied with this filing, the IRS does have a voluntary compliance program to help bring people and organizations into compliance without penalties.

If this update applies to you or your organization, more information on the subject may be located through the IRS website at

Wednesday, June 17, 2009

Entering the World of the Blog

Since I am not always the quickest to embrace technology, much to the dismay of my staff and my husband, I have been slow to enter the world of blogs. However, there is a constant stream of information flowing across my desk that I wish I could share with exempt organizations of all types and especially with all of my wonderful clients. To that end, I have decided the best way to share interesting information is to blog the information. So here goes my entrance into the world of the blog, I hope that a few organizations find it and find the information helpful.

Minister Sentenced to 21 Months For Tax Evasion

Recently a minister was sentenced to 21 months in jail for failing to report all of the income received from his church. In reporting his taxable income, the church failed to include payments made on the minister's personal credit cards, payments for life insurance premiums, values for automobiles as well as other personal expenses that were paid by the church. U.S. v. Clark, 103 AFTR 2d 2009-1349, 3/20/2009.

This case indicates the importance in identifying and properly reporting all aspects of a minister's compensation. While many of you may find the above items unusual, it is not unusual for a tax exempt organization to end up paying for personal expenses of its top executives. However, in most cases, the only amounts reported for payroll purposes are just what is run through the payroll system. This type of activity is one of the reasons the new Form 990 requires extensive reporting on compensation paid to an organization's officers, directors and key employees. Additionally, the IRS has in the past, and stated it will in the future, conducted examinations of the compensation section of specifically selected Forms 990.

Tax Tip: A nonprofit organization should review all of the payments made to or on behalf of staff members and determine which payments are taxable and which are not. Then properly treat the taxable benefits according to all the rules regarding payroll reporting and taxation.