Tuesday, November 17, 2009

Year End To Do Items

The holidays are upon us and soon it will be the end of the year. Now is a good time to turn your thought toward a couple of housekeeping items necessary to plan for 2010.

Item 1: It's time to review compensation packages and make sure they are properly designated for 2010. Review the package to make sure all components are properly stated and approved. Housing allowances should be separately stated and clearly approved by the right authority. Even if nothing is changing for 2010, restate the entire package and the housing allowance for good measure.

Item 2: Get ready for charitable contribution reporting. Review the way the software program is preparing receipts and make sure all the required items will be printed on the receipts. The IRS is giving taxpayers a lot of scrutiny in this area. Many agents are looking for receipts to be signed by someone in the organization and to be on organization letterhead. These are not requirements, but the agents are pursuing these issues as if they were requirements. If the receipts are going to be printed on plain paper, consider what can be done to make them look official. Please make sure the receipts contain the required wording, i.e., there were no goods or services given in exchange for the listed donations.

Item 3: Have the governing body approve the budget for 2010. This gives the employees the right to operate the organization during the year.

Item 4: Make sure the organization has a conflict of interest policy, a document retention policy and a whistleblower policy adopted by the end of the year.

Item 5: Get ready for payroll reporting!!!! Review all of the benefits provided to the employees and the payroll items to ensure that everything is properly reported on the Forms W-2. Remember that payroll is more than just what goes on the paycheck. The IRS is gearing up to do 6,000 payroll exams starting in 2010, so it is definitely time to get everything in order.

Item 6: Review all of the vendors and make sure they are properly marked to have the Forms 1099-Misc issued. Don't forget to key payments to LLCs as reportable on the Forms 1099-Misc. The IRS can assess a 25% backup withholding tax to the organization if it fails to issue a 1099-Misc when required.

While there are certainly many other demands on our time during this time of the year, it will be greatly beneficial to divert a little time to the above items prior to December 31st.

IRS Releases Draft of 2009 Form 990

The IRS has released the draft of the 2009 Form 990. It can be located at http://www.irs.gov/ under their Draft Forms section. A quick review of the form does not reveal any major changes in the form. One notable change is the clarification that is now allowed when the organization is a part of a consolidated certified financial audit. Questions have been added that allow an organization to indicate whether it received an individual certified financial audit or was a part of a consolidated financial audit. I have not had the opportunity to review all of the schedules to determine any changes that may have been made.

In early November, the IRS issued sets of Frequently Asked Questions (FAQ) for Schedules A and L of the Form 990. These are just a part of the FAQs that have been released this year to assist in clarifying various filing issues for 2008 returns. It is hopeful that some of this information will make it into the 2009 instructions.