If your organization is legally designated as a 501(c)(3) nonprofit organization, then, whether you like it or not, your nonprofit is closely tied to the Internal Revenue Service (IRS). This is in addition to the nonprofit’s reporting requirements at the Illinois State level for the Illinois Attorney General and the Illinois Secretary of State.
As we move further into 2017, and with nonprofit tax reporting requirements around the corner, it’s important to get accustomed to new IRS trends, requirements, and changes for 2017. This especially includes the 1023-EZ and 990-EZ, as well as changes in auditing procedures and more. When making sure that your nonprofit maintains continual compliance with updated laws and new trends, whether at the federal level or the Illinois State level, call Chicago IL non-profit attorney James C. Provenza today.
Please note that as attorneys, we don’t perform audits ourselves, but we can advise you of your rights and refer you to trusted area auditors. For more information, call us at (847) 729-3939.
Preparing for an IRS Audit in 2017
For a while, the amount of IRS audits concerning nonprofits in Illinois and around the United States dropped quite heavily, especially in the wake of the IRS EO Division’s scandal (2013 to 2015) regarding intentional discrimination against conservative, pro-life, and pro-Israel organizations. In 2016, audits seemed to be once again on the rise for 501(c)(3) nonprofits.
For 2017, some hot topics regarding nonprofit and 501(c)(3) audits include:
- Form 1099 reporting compliance
- Employee status and filings
- Contracts with for-profit entities
- Unreported unrelated business income
Nonprofits need to be extra diligent in these four areas, and should allocate the necessary resources to satisfy and maintain the IRS’s audit examination process. With the IRS’s priorities in mind, nonprofits in Illinois need to prepare for compliance.
Updated 990-EZ for 2017
Also new to 2017 is the updated Form 990-EZ, Short Form Return of Organization Exempt From Income Tax. This update is essentially designed to help small- to mid-sized, 501(c)(3) tax-exempt organizations avoid common mistakes when filing their annual returns, and reducing the chances of follow-up contact with the IRS.
The new Form 990-EZ contains 29 pop-ups that provide important pieces of information. These pop-ups help illuminate the necessary components for more thorough filing and to reduce mistakes, and they include links to various IRS publications for more in-depth discussions.
REMEMBER — The annual Form 990 filing for tax-exempt organizations is due no later than 4.5 months after the close of the organization’s tax year. For organizations with a December 31 year end, their Form 990 is due by May 15 unless the organization requests an extension.
Updated 1023-EZ for 2017
Emboldened charitable activity is a positive factor in Illinois communities, and to provide nonprofits with helpful tools, the IRS is trying to make it a key priority to streamlines processes. To make this possible, the IRS is lowering the user fee for organizations who want to apply for section 501(c)(3) status using Form 1023-EZ.
Additionally, nonprofits should pay attention to the new updates with the 1023-EZ. Back in February 2017, the IRS announced that publicly available information from approved applications for tax exemption using Form 1023-EZ, Streamlined Application for Recognition of Exemption, is now available electronically for the first time. Available in a spreadsheet format, this data includes information for approved applications beginning in mid-2014, when the 1023-EZ form was introduced, through 2016. This update is designed to help taxpayers more easily research information on 501(c)(3) and other tax-exempt organizations.
Contact James C. Provenza & Associates for a Chicago IL Nonprofit Attorney
Illinois nonprofits should keep a few things in mind for 2017 — Compliance, analyze, and document, document, document. Nonprofit organizations and their finances are currently under heightened scrutiny, and so it’s important to keep all of your documentation in check.
One of the best ways to prepare your nonprofit for 2017 is to call Chicago IL nonprofit attorney James C. Provenza as soon as possible. As a CPA and a lawyer with experience in helping nonprofits across northern Illinois, we at James C. Provenza & Associates provide comprehensive legal oversight regarding your nonprofit compliance, governance, and tax issues, and refer you to a trusted area auditor, if necessary.
Call our Illinois nonprofit law firm today at (847) 729-3939.
