WEDNESDAY, FEBRUARY 26, AM CENTRAL TIME. Ed Del Conte, CPA Senior Associate II Springfield. Jo Anne Felonia Associate Houston

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1 WEDNESDAY, FEBRUARY 26, AM CENTRAL TIME An Update n IRS Frm 990 Kevin Ensminger, CPA, CFP Senir Manager Kansas City Ed Del Cnte, CPA Senir Assciate II Springfield J Anne Felnia Assciate Hustn Kerry Griesinger, CPA Senir Assciate II Luisville TO RECEIVE CPE CREDIT Participate in entire webinar Answer plls when prvided If viewing this webinar in grup Cmplete grup attendance frm with Title & date f live webinar Yur cmpany name Yur printed name, signature & address All grup attendance sheets must be submitted t training@bkd.cm within 24 hurs f live webinar Answer plls when prvided If all eligibility requirements are met, each participant will be ed their CPE certificates within 15 business days f live webinar 2 // experience access 2 1

2 AGENDA 2013 Frm 990 & related schedules update Other exempt entity tax tpics & IRS fcus areas Q&A 3 CORE FORM 990 UPDATE & CHANGES UPDATE Ed Del Cnte, CPA Senir Assciate II Springfield 4 2

3 GENERAL REMINDERS Scial Security numbers shuld nt be used t identify individuals // experience access FORM 990 UPDATE Cre frm generally similar t 2012 Frm 990 IRS cntinues t make slight mdificatins/clarificatins t frms & instructins Filing threshld fr 2013 Frm 990-N Electrnic Ntice (e- Pstcard) Grss receipts f $50,000 r less Filing threshld fr 2013 Frm 990-EZ Grss receipts less than $200,000 & ttal assets at end f tax year less than $500,

4 E-FILE REQUIREMENTS Organizatins must e-file if Filed at least 250 returns f any type Ttal assets f $10 millin r mre at end f tax year Exceptin Shrt perid returns filed due t change in accunting perid Returns reprting name change Frm 8868 (extensins) may be filed electrnically r in paper frm Frm 990-T, may nt be filed electrnically 7 HEADER ITEMS A-M Header Item-B Name Change required attachments Terminated required attachments Header Item-H

5 PART IV CHECKLIST OF REQUIRED SCHEDULES Line 2 Instructins clarify when public charity can exclude frm Schedule B cntributrs falling belw greater-than-$5,000/2% threshld Lines 15 & 16 Inclusin f term freign rganizatin Inclusin f term freign individuals Grants & ther assistance t r fr benefit 9 PART IV CHECKLIST OF REQUIRED SCHEDULES Line

6 PART IV CHECKLIST OF REQUIRED SCHEDULES Line 25b Instructins clarify when rganizatin needs t answer Yes t reprt it became aware f excess benefit transactin with disqualified persn in prir year Line 26 Instructins clarify rganizatin must cmplete Schedule L, Part II if it reprted any amunts n Frm 990, Part X, lines 5, 6 r PART VI, GOVERNANCE, MANAGEMENT & DISCLOSURE Line 3 Instructins clarify what cmpensatin frm management cmpany t interested persns shuld be reprted in Schedule O 12 6

7 PART VII COMPENSATION OF OFFICERS, DIRECTORS, TRUSTEES, KEY EMPLOYEES, HIGHEST COMPENSATED EMPLOYEES & INDEPENDENT CONTRACTORS Clarifies directrs cmpensatin fr nndirectr independent cntractr services t rganizatin & related rganizatins must be reprted in Sectin A Clarifies cmpensatin frm management cmpany t fficer, directr, trustee, key emplyee r highest cmpensated emplyee is generally nt reprtable in Sectin A 13 PART VIII STATEMENT OF REVENUE Line 1 Instructins clarify discunts n services cannt be reprted as cntributins Line 10b Instructins clarify cst reprted n this line 14 7

8 PART IX STATEMENT OF FUNCTIONAL EXPENSES Line 11 Instructins clarify hw t reprt expense payments & reimbursements t cntractrs Example Pharmacy perated by a third-party vendr Cntract is fr vendr services & cst f drugs, etc. Expense related t services shuld be reprted n Line 11g under Part IX Reprt expenses relating t drugs & pharmaceuticals under Line GLOSSARY Clarifies cntributins include neither dnatins f services nr discunts prvided n sales f gds in rdinary curse f business Clarifies when VEBA is reprted as related rganizatin by its cntributing emplyers & spnsring rganizatins filing Frm 990 Includes new definitin f dmestic individual 16 8

9 APPENDIX D PUBLIC INSPECTION OF RETURNS Clarifies public inspectin & disclsure requirements apply t bth riginal & amended returns 17 APPENDIX E GROUP RETURNS Clarifies hw t determine, fr purpses f grup return, whether diversin f subrdinate s assets meets 5%/$250,000 threshld fr Part VI, line 5 Clarifies when t reprt business transactins between subrdinates & their interested persns in Schedule L, Part IV 18 9

10 APPENDIX F DISREGARDED ENTITIES & JOINT VENTURES Clarifies when t treat singlemember LLC as disregarded entity f its sle member/wner Generally, single-member LLC is treated as disregarded entity unless Electin is made t be separate assciatin Claiming tax-exempt status in its wn right 19 SCHEDULE A Clarify requirements fr functinally integrated & nnfunctinally integrated Type III supprting rganizatins, including transitin rules fr hw thse rganizatins can meet integral part test fr tax year 2013 Cautin Type III nnfunctinally integrated supprting rganizatins t value their nnexempt-use assets fr 2013 tax year 20 10

11 FORM 990, SCHEDULES D, E, F, G, H & I CHANGES UPDATE UPDATE J Anne Felnia Assciate Hustn 21 SCHEDULE D SUPPLEMENTAL FINANCIAL STATEMENTS Sme taxpayers are nt including schlarship funds in Part I, Clumn (b) as funds r ther accunts Schedule D, Part IV (Escrw & Custdial Arrangements) instructins state filers shuld explain in Part XIII any credit cunseling, debt management, credit repair r debt negtiatin services rganizatin prvided 22 // experience access 22 11

12 SCHEDULE D SUPPLEMENTAL FINANCIAL STATEMENTS Part V Line 1b (cntributins) als includes transfers t rganizatin s endwment funds Part VIII nw requires descriptin f each prgram-related investment n separate line f Part VIII table 23 SCHEDULE E SCHOOLS N significant changes 24 // experience access 24 12

13 SCHEDULE F STATEMENT OF ACTIVITIES OUTSIDE U.S. If filer has investments dmiciled verseas but traded n U.S. stck exchange, reprting is nt required Regins frmerly knwn as Russia and the newly Independent States shuld be renamed Russia and Neighbring States Filers are nt required t explain hw they estimate number f recipients fr Grants and Other Assistance t Individuals Outside the U.S. (Part III, clumn (c)) 25 SCHEDULE F STATEMENT OF ACTIVITIES OUTSIDE U.S. Frms 3520, 3520-A, & 5713 shuld nt be attached t Frm 990 Includes grants & ther assistance t dmestic individuals r dmestic rganizatins fr purpse f prviding grants t designated freign beneficiaries Prgram related investments (PRI) can cnslidate n exempt rganizatin s financial statements. In this case, assets, liabilities & equity f PRI are reprted n exempt rganizatin return 26 13

14 SCHEDULE F STATEMENT OF ACTIVITIES OUTSIDE U.S. If rganizatin was U.S. transferr f prperty t freign crpratin during tax year, Frm 926 may need t be filed Based n cnversatins between AICPA & IRS, they believe Frm 926 is necessary if rganizatin made grants t freign rganizatins that are crpratins 27 SCHEDULE F STATEMENT OF ACTIVITIES OUTSIDE U.S. Part V. Supplemental Infrmatin Prvide narrative infrmatin required t supplemental respnses in Part I, line 2, regarding rganizatin s prcedures fr mnitring use f its grants & ther assistance utside U.S.; Part I, clumn (f), regarding methd used t accunt fr expenditures n rganizatin s financial statements; & Part II, line 1, & Part III regarding methd used t accunt fr cash grants & nncash assistance n rganizatin s financial statements 28 14

15 SCHEDULE G SUPPLEMENTAL INFORMATION REGARDING FUNDRAISING OR GAMING ACTIVITIES Line 9 Enter all states in which rganizatin cnducted gaming during tax year, including states in which rganizatin slicited residents t participate in gaming activity 29 SCHEDULE H HOSPITALS Schedule H, Part I, Line 7 (Cmmunity Benefit Table) nw requires restricted grants received by hspital t be used fr cmmunity benefit t be reprted as direct ffsetting revenue in Part I, line 7, clumn (d) Instructins fr Part I, line 7i and Wrksheet 8 are revised t allw reprting f cntributins fr cmmunity benefit funded in whle r in part by restricted grant frm related rganizatin Part I instructins clarify financial assistance des nt include self-pay r prmpt pay discunts 30 15

16 SCHEDULE H HOSPITALS Part V, Sectin A (Facility Infrmatin) prvides that rganizatin must list state license number fr each f its hspital facilities Hspital rganizatin that cmpletes Part V, Sectin B (Facility Plicies & Practices) fr ne r mre hspitals must cmplete separate Part V, Sectin C fr each facility Part V, Sectin B includes new line 12, which needs t be checked if hspital facility cnsidered residency as factr in calculating amunts charged t patients during year 31 SCHEDULE I GRANTS & OTHER ASSISTANCE TO ORGANIZATIONS, GOVERNMENTS & INDIVIDUALS IN U.S. Dmestic rganizatin crpratin/partnership created r rganized in U.S. r under law f U.S. r f any state r pssessin Trust is dmestic rganizatin if curt within U.S. r a U.S. pssessin is able t exercise primary supervisin ver administratin f trust & ne r mre U.S. persns (r persns in U.S. pssessins) have authrity t cntrl all substantial decisins f trust 32 16

17 SCHEDULE I GRANTS & OTHER ASSISTANCE TO ORGANIZATIONS, GOVERNMENTS & INDIVIDUALS IN U.S. Dmestic gvernment state, U.S. pssessin, plitical subdivisin f state r U.S. pssessin, U.S. r District f Clumbia Dmestic individual persn including freign citizen, wh lives r resides in U.S. (r U.S. pssessin) & nt utside f U.S. (r U.S. pssessin) 33 SCHEDULE I GRANTS & OTHER ASSISTANCE TO ORGANIZATIONS, GOVERNMENTS & INDIVIDUALS IN U.S. D nt reprt n this schedule freign grants r assistance, including grants r assistance prvided t dmestic rganizatins, dmestic gvernments r dmestic individuals fr purpse f prviding grants r ther assistance t designated freign rganizatin, freign gvernment r freign individual 34 17

18 FORM 990, SCHEDULES J, K, L, M & N CHANGES UPDATE UPDATE Kerry Griesinger, CPA Senir Assciate II Luisville 35 SCHEDULE J COMPENSATION Instructins Clarify if rganizatin relied n cmpensatin cnsultant wh used methd described in ne f bxes n line 3 t help determine cmpensatin fr tp management fficial, rganizatin may check bx fr that methd n line 3 36 // experience access 36 18

19 SCHEDULE J Instructins Clarify severance payment reprtable n Part I, line 4a includes payment pursuant t separatin agreement entered int by parties Part III must list name f each unrelated rganizatin that prvided cmpensatin t fficers, directrs, trustees, key emplyees & highest cmpensated emplyees, type & amunt f cmpensatin unrelated rganizatin paid r accrued & persn receiving r accruing such cmpensatin 37 SCHEDULE K Part III, line 7 Instructins explain when qualified 501(c)(3) bnd issue will meet private security r payment test Meets test if mre than 5% f payment f principal r interest n bnd issue is either made r secured by payments r prperty used r t be used fr a private business use Part III, lines 8a, 8b, 8c Includes new instructins fr lines 8a, 8b and 8c regarding sale r dispsitin f bnd-financed prperty 38 // experience access 38 19

20 SCHEDULE L Instructins Clarify fr Part III, 35% cntrlled entities may be cntrlled by family members f fficers, directrs, trustees r key emplyees Explain when freign rganizatin may be treated as 501(c)(3) charity fr purpses f Part IV reprting exceptins Clarify if rganizatin transfers funds t interested persn t make investments n behalf f rganizatin as its agent r cntractr, investment management r service fees (NOT value f investments) are reprtable as business transactin amunt in Part IV 39 // experience access 39 SCHEDULE M N changes frm // experience access 40 20

21 SCHEDULE N Instructins Clarify what dcumentatin must be attached t Frm 990 upn liquidatin, terminatin, disslutin r merger If certified cpy f its articles f disslutin r merger is nt available, rganizatin may submit reslutins f its gverning bard apprving disslutin r merger, &/r plans f liquidatin r merger apprved by its gverning bard D nt reprt liquidatin, terminatin r disslutin in letter t IRS Exempt Organizatins Part I, Line 6b Leave 6b blank if answer t line 6a is N 41 OTHER TAX UPDATES UPDATE Kevin Ensminger, CPA, CFP Senir Manager Kansas City 42 21

22 IRS EXEMPT ORGANIZATION WORK PLAN IRS annually releases statistics & discussins f accmplishments fr Exempt Organizatins (EO) Divisin This reprt prvides insight int past activities f EO divisin & their plans fr increasing cmpliance initiatives, educatinal effrts & numerus ther areas Prir reprts available n IRS website at Organizatins/EO-Implementing-Guidelines-and-Wrk-Plan IRS did nt issue wrk plan fr FYE // experience access PRIORITY GUIDANCE PLAN List f exempt rganizatin prjects Treasury Department & IRS intend t address befre June 30, Fllwing are thse that apply t r affect exempt rganizatins Revenue Prcedures updating grantr & cntributr reliance criteria set frth in IRC 170, incme tax charitable deductin, & 509, public charity classificatin Updates t Revenue Prcedure regarding EO Select Check which is IRS nline tl fr checking exempt status f rganizatins Guidance under IRC 501(c)(4) regarding measurement f rganizatin s primary activity t determine whether it is perated primarily fr prmtin f scial welfare, including guidance n plitical campaign interventin Issuance f final regulatins under Internal Revenue Cde 501(r) & 6033 n additinal requirements fr charitable hspitals as added by Affrdable Care Act 44 22

23 PRIORITY GUIDANCE PLAN List f exempt rganizatin prjects Treasury Department & IRS intend t address befre June 30, Fllwing are thse that apply t r affect exempt rganizatins Additinal guidance fr Type III supprting rganizatins n meaning f cntrl by dnr, supprt f gvernmental entities & relatinship test Guidance n self-dealing rules regarding private fundatin s investment in partnership in which disqualified persns are als partners Final regulatins regarding prgram-related investments held by private fundatins PRIORITY GUIDANCE PLAN List f exempt rganizatin prjects Treasury Department & IRS intend t address befre June 30, Fllwing are thse that apply t r affect exempt rganizatins Guidance regarding new rules applicable t dnr advised funds as added by Pensin Prtectin Act f 2006 Issue regulatins regarding return & filing requirements fr excise tax due fr cmmunity health needs assessments failures by charitable hspitals as added by Affrdable Care Act Final regulatins issued regarding disclsures by IRS t state fficials regarding exempt rganizatins Final regulatins issued relating t church tax inquiries & examinatins 46 23

24 OTHER DEVELOPMENTS Rev. Prc Prvides prcedures fr reinstating tax-exempt status f rganizatins that have had their tax-exempt status revked fr nt filing tax returns fr three cnsecutive years (under Sectin 6033(j)(1)) Streamlined Retractive Reinstatement Prcess fr Frm 990-EZ & 990-N filers Retractive Reinstatement fr Frm 990 filers Bth are eligible if cmpleted within 15 mnths after later f date f Revcatin Letter r date IRS psts rganizatin s name n Revcatin List If after 15 mnths, reinstatement & penalty abatement subject t IRS apprval 4/25/13 IRS s release f final reprt related t Clleges & Universities Cmpliance Prject BKD webinar 12/4/ Questins? 24

25 Thank Yu! Kevin Ensminger, CPA, CFP Senir Manager Ed Del Cnte, CPA Senir Assciate II J Anne Felnia Assciate Kerry Griesinger, CPA Senir Assciate II CONTINUING PROFESSIONAL EDUCATION (CPE) CREDITS BKD, LLP is registered with the Natinal Assciatin f State Bards f Accuntancy (NASBA) as a spnsr f cntinuing prfessinal educatin n the Natinal Registry f CPE Spnsrs. State bards f accuntancy have final authrity n the acceptance f individual curses fr CPE credit. Cmplaints regarding registered spnsrs may be submitted t the Natinal Registry f CPE Spnsrs thrugh its website: The infrmatin in BKD webinars is presented by BKD prfessinals, but applying specific infrmatin t yur situatin requires careful cnsideratin f facts & circumstances. Cnsult yur BKD advisr befre acting n any matters cvered in these webinars

26 CPE CREDIT CPE credit may be awarded upn verificatin f participant attendance; hwever, credits may vary depending n state guidelines Fr questins, cncerns r cmments regarding CPE credit, please BKD Learning & Develpment Department at training@bkd.cm 51 26