Inspection of Applications for Exemption and Annual Returns
A public charity must make the following documents available for public inspection and copying upon request and without charge (except for a reasonable charge for copying). The IRS makes these documents available for public inspection and copying.
Application for Exemption
The Form 1023 or Application for Recognition of Exemption Under Section 501c3 of the Internal Revenue Code must be made public together with a few documents. These documents include all papers that are included in the Form 1023, those papers that are submitted as supporting documents for its tax-exempt applications as well as the exemption ruling letter for the IRS.
Annual Information Return
The Form 990 series or the Annual Information Return must be given to the IRS together with all supporting documents. But a company under non-profit law needs not to name its contributors or submit their Schedule B. There is still some information that can be excluded from being open to the public for the purposes of inspection. These documents may only be disclosed for a period of three years right after the due date of the tax return.
Rules on Form 990-T
Those whose tax returns were made after the date of August seventeen of the year 2006 should disclose their Form 990-T for the purposes f inspection. It should be your organization that should provide the Form 990-T.
It can be your organization’s discretion if you want to have certain rules on restrictions of some people, or the place of inspection. You may also choose to charge some fees for copying especially if the reason is valid. Organizations under the 501c3 can choose not to follow requests for copies of documents if there enough copies available or if the document can be viewed by the public. It is possible through a web page wherein the documents of the company of tax-exempt status can be viewed.
There is a rule for those organizations that put services that are obtained free from the government for sale. If your organization does this, you should do it in a manner that is easily recognizable and in an easily distinguished format. Failure to comply to these rules may end in penalties for your organization.
If your organization of that has tax-exemption status has donors from other charities, you must know about the important disclosure rules of these donors. This also includes foundations that obtain quid pro quo donations or contributions.
The rules indicate that a certain donor from a charity is not allowed to apply for tax-exemption for any contribution which is offered after the date of the 1st of January in the year 2007. However, it can be reversed if the donor keeps a detailed record of the contributions or offers they have made through a check or a form of communication or any receipt or such proof. These documents should include important details of the persons involved and other forms of information.
If a particular donor wants to obtain a tax deduction of two hundred and fifty dollars and above, he or she may do so if this person gets an acknowledgement form the public charity who received the contribution. If not, then the donor cannot apply for tax deduction.
If the donor were to give the said acknowledgement, it should contain the requirements needed. For instance, it must tell whether or not there were products or services given as payment for the contribution. Also, it should indicate the estimated value of these products or services if the corporation did give such things.
Each contribution must be about two hundred fifty or if it goes beyond it, the organization must provide another form of acknowledgment. This is the rule for organizations with donors of charity under 501c3.
Quid Pro Quo Contributions for Organizations of Tax-Exempt Status
When your organization receives contributions or offers, these are only tax deductible if these products and services were only gifts. For shows, tradeshows, and other events that involve ticket purchases and others of fundraising nature, these are not included as charitable offers. When a donor makes an offer or a contribution if the organization offers something in return, this is called the quid pro quo contribution. A tax deduction is only possible if the one giving the donation gives a contribution that goes beyond the value of the services that the organization gave as a payment in return for what they have received.
In nature of fundraising activities such as a drive, shows, and dinners for the benefit of the organization, the non-profit organization must give a written statement to the donors or contributors stating the value of the values that they have given as an exchange for the contributions and donations. Those products or things that are considered as token items or those of religious values are not included. This written statement must be made and given before the schedule of the event. The complete information about the estimated value of the event and all other values of the benefits that the donors gave must be included. This statement must be made by the time that the payment is obtained. This disclosure information is only applicable to events that receive contributions that do not exceed seventy five dollars. For any questions or details that you think are confusing, it always helps to hire the services of a non-profit attorney to help you go about with tax requirements for your organization.