Join my KIVA Team

Join my team - at Kiva   http://www.kiva.org/team/the_tax_translator

Kiva is a non-profit organization with a mission to connect people through lending to alleviate poverty. Leveraging the internet and a worldwide network of microfinance institutions, Kiva lets individuals lend as little as $25 to help create opportunity around the world.

Since Kiva was founded in 2005:

·         881,296 Kiva lenders

·         $397,485,225in loans

·         99.03% Repayment rate

·         In 69 different countries

·         With 450 volunteers around the world

CHANGE in location for the NACUBO UBIT Conference

CHANGE in location for the NACUBO UBIT Conference

I’ll be there and hope to see you there too but please note the change in NACUBO UBIT Conference location- it’s now at Gaylord Palms Resort & Conference Center and you can see their webpage at http://www.nacubo.org/Events_and_Programs/2013_Unrelated_Business_Income_Tax.html  

 

I’ll also be presenting at the International Association of Speakers Bureaus on the topic of Independent Contractors.  This is in Miami, Florida, April 19-21.  If you are in the area, please come see my presentation.  Independent Contractors is an area of taxation that is across all organizations.

UBTech Conference - i'm Presenting plus a discount

I’ll be speaking at the UBTECH Conference in Orlando, Florida  on  June 10th - 12th on ‘Tax and eCommerce and eProcurement for Colleges and Universities”.  UBTech is

            A National Summit on Higher Education Technology and Leadership

Higher education's most focused high-level conversation about technology's impact on every aspect of campus leadership and practice.

80+ Sessions and Record Number of Exhibits

• Campus Network and Infrastructure
• Facilities Planning and Design
• Teaching and Learning Technologies
• Marketing Your Institution
• Financial Services

 

UBTech has offered a 50% discount on registration with my promo code for presenting at their conference.   See their webpage at http://ubtechconference.com/  . 

 To receive the registration discount enter this discount code: ubtechspeaker50

Beginnings of the Credit Hour

Ever Wonder About The Beginnings of the Credit Hour

In the early 1900s,  Andrew Carnegie was concerned that professors made too little to save for retirement and he created a free pension system.  In order to participate in the system, colleges and universities had to adopt a standard unit for admissions that was loosely measured on time spent on a subject.  So course offerings were converted into time based units to determine workload thresholds for faculty to qualify for the free pensions.  The Carnegie Foundation is still around and is less concerned about the amount of time spent on a subject and more concerned with the results obtained  from the subject.  They are now suggesting it is time to consider a revised unit, based on competency rather than time.

Unrelated note:  in 1961, 14 percent of undergrad course grades were and ‘A’. today, more than 40% are ‘A’s’ - so the old timers may be telling us the truth:  They earned their grades and things were tougher back then.

Be Prepared for Increased ‘B’ Notices and Withholding in 2013

The B Notice applies to Forms 1099K also.   B Notices are sent  to payers who filed incorrect or incomplete forms including those with incorrect name and Taxpayer Identification Number data.  The IRS has estimated a large tax gap due to underreporting.  In 2006 the IRS issued 3.6 million ‘B’ Notices but by 2011, the IRS had sent 4.7 million notices and this year predicts send 5 million - an increase of 40% in just six years.  And the IRS has increased penalties associated with ‘B’ notices - from $50 to $100 per return and a max penalty of 1.5 million from $250,000.  The IRS received around 9 million 1099-Ks, but this was 44 million fewer than the IRS predicted in its 2011 forecasts.  And FATCA backup withholding adds another layer to the ‘B’ notices.  The best advice may be to take tax information reporting and backup withholding as seriously as the IRS does.

More on 1099Ks

1099-K Reporting Requirements for Payment Settlement Entities

IRS.gov has updated information on the 1099-K reporting requirements.  See this link for more info    http://www.irs.gov/Businesses/New-1099-K-Reporting-Requirements-for-Payment-Settlement-Entities

Appointment to IRS Information Reporting Program Advisory Committee

Congrats to my friend for her appointment to the IRS Information Reporting Program Advisory Committee!!

Julia E. Shanahan, JD, of Seattle, is Tax Director and Associate Director of Payroll at the University of Washington. She advises campus departments including the medical school, medical center and affiliated hospitals on tax and payroll matters. She is a member of the Tax Council of the National Association of College and University Business Officers, a member of the Washington State Bar Association, and a member and former Board Member of Washington Women Lawyers. She is a volunteer in the University of Washington Tax Clinic.

Modified Form 8283 on its way

A Modified Form on the way from the IRS

The IRS agreed to modify Form 8283, Noncash Charitable Contributions, in response to recommendations in a report by the Treasury Inspector General for Tax Administration (TIGTA) titled: Many Taxpayers Are Still Not Complying with Noncash Charitable Contributions Reporting Requirements, and is a follow-up to prior TIGTA audit recommendations, and presents the results of a TIGTA review of IRS actions to determine that taxpayers are complying with the reporting requirements for claiming noncash charitable contributions.

TIGTA findings

Based on a sample of 2010 tax returns claiming more than $5,000 in noncash charitable contributions, TIGTA found that the majority of the returns did not comply with the reporting requirements.

Taxpayers who donate motor vehicles generally are required to attach Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, to their tax returns. By matching Forms 1098-C filed by donors with those filed by charities, TIGTA found numerous instances in which no Form 1098-C was filed by the charity. In addition, TIGTA found numerous instances in which taxpayers claimed deductions for contributed motor vehicles in excess of the amount allowed.  To see the entire report - email me at Steve@TheTaxTranslator.com and request a copy of the Noncash Charitable Report. 

Recommendations:

The TIGTA report recommends that the IRS expand its procedures:

• To identify returns claiming noncash contributions that do not have Form 8283 or a qualified appraisal attached when required
• To develop processes for systematically verifying the accuracy of noncash charitable contributions

In addition, TIGTA recommended that the IRS revise Form 8283 and the related instructions, and develop procedures to match Forms 1098-C submitted by taxpayers to those filed by charities.

16 questions every CFO should be asking about tax operations at their school:

16 questions every CFO should be asking about tax operations at their school:

The IRS may be the largest vendor of your university.  Is your university paying the IRS correctly? 

Many universities literally files over 100K Forms with the IRS each year – Do you know who oversees all of these different forms?  Are they all being filed correctly and timely to avoid penalties and interest?

 Review these questions to build a good audit defense.  It all starts with you.

1.       Is an annual UBIT questionnaire/survey of the departments?

2.       How does your university identify new areas of sales tax?

3.       Do you have a Tax Calendar with dates and name of responsible persons for all tax filings

4.       Do you have an annual review process for tax policies?

5.       Are you advised of all correspondence from the IRS?

6.       Is there a Tax Committee that meets quarterly?

7.       Do you know who prepares and signs the IRS Employment Tax form?

8.       Do you know who makes payments to the IRS for the university and if they are done timely?

9.       Are you advised of all correspondence from the IRS?

10.   What training is made available to the Tax Manager to stay current?

11.   Do you know if your foreign students are having tax withheld correctly?

12.   Do you know what Research Activities might foster tax for the university?

13.   Do you know the other states your university might have a tax filing requirement?

14.   Does the Athletics Department create taxable income for the university?

15.   Do you know which political activities you can and cannot perform?

16.   Do you know the tax rules for Tuition Waivers provided to GA’s

I’d suggest a complete review and stimulated audit be preformed of your tax operations.   Contact me if interested in improving your operational efficiencies in the area of tax compliance.

Exempt Organiztion Work Plan for FY 2013 highlights

2013 Exempt Organizations Work Plan for 2013 FY

The FY 2013 work plan outlines the focus areas in which the Exempt Organizations division of the IRS is deploying resources over and above its ongoing work. Highlights include:

• Section 512(b)(13) study – In response to changes under the Pension Protection Act of 2006, Treasury asked EO to draft a report regarding payments between controlled entities under section 512(b)(13). In response, EO developed a check sheet to be used in examinations. During the last two years, revenue agents completed approximately 3,000 checksheets, and EO has begun the analysis process.
• International activities of charities – EO will shift its exam focus in FY 2013 to organizations with high amounts of foreign grant expenditures.
• Section 501(c)(4), (5), and (6) “self declarers” – EO will send a questionnaire to organizations that “self- declared” by filing Form 990 for tax year 2010 or 2011.
• Colleges and universities – EO anticipates completing the college and university report, which will include results from examinations as well as additional analysis of the data from questionnaire responses previously received from almost 400 institutions.
• Compliance: Using the Form 990 – Expanding on work conducted in FY 2012, EO will focus on
• (1) charitable spending of medium to large organizations, including organizations that report substantial income from fundraising but little or no fundraising expenses;
• (2) examinations of organizations that may be hiding compensation through related organizations;
• (3) continued examinations related to impermissible political activity or failure to accurately report political expenditures on Form 1120-POL; and
• (4) examining organizations reporting substantial gross UBI for three consecutive years but reporting no income tax due for any of those years.

 

Update to Automatice Revocation List

Update to the Automatic Revocation of Exemption List on the web

In March 2013, the IRS Exempt Organization division will begin providing more current information about automatic revocations by including organizations on the Automatic Revocation List within a month of their effective date of revocation.  Previously, organizations did not appear on the list until six months after revocation. Because of this change, the number of organizations added to the list in March 2013 will appear higher than in other months because it includes a catch-up period of about seven months.

The list may be viewed and searched on the Exempt Organizations Select Check feature on the IRS web site at this link: http://apps.irs.gov/app/eos/pub78Search.do?searchChoice=revoked&dispatchMethod=selectSearch

FSLG Newsletter for Jan 2013

Want to see the IRS FSLG Newsletter for Jan 2013?

FSLG stands for Federal, State and Local Governments and this newsletter is published by the FSLG Department of the Tax Exempt Organization of the IRS.  They have oversight of public higher educations’ colleges and universities.

Here are some of the topics in this issue:

·         FSLG Accomplishments in Fiscal Year 2012 and Plans for Fiscal Year 2013

·         Completing Form 1098-T, Tuition Statement

·         Form 8300 Requirements for Government Entities

·         Exclusion of Work-Related Disability Benefits Under Section 104

·         Proposed Regulations Issued on Additional Medicare Tax

Send me an email at Steve@TheTaxTranslator.com and I’ll be happy to get this to you by email

Chief Financial Officers - Roles and Duties

Also Available is a nice report on Chief Financial Officers Roles and Duties

Report on the Roles and Duties of a CFO -  Go to www.TheTaxTranslator.com , click on the ‘Tax Stuff for You’ tab,  and then ‘CFO Tax Guides’ to see this report titled ‘The Roles, Duties and Ethical Responsibilities of the Chief Financial Officer’.  Some of the duties are:

Truth Teller

Exemplary manager

Maximizer of Resources

Guardian of Resources

And two others Plus Some Specific Duties

Info for you on Taxable Fringe Benefits and Independent Contractors

Some Resources on Taxable Fringe Benefits and Independent Contractors Available to you

Want to see and download the Taxable Fringe Benefit Guide from the IRS - check out my webpage at www.TheTaxTranslator.com, click Employee Tax Guidance under the  ‘Tax Stuff For You’ tab, then “Fringe Benefits’.

Want to read the 20 factors used to determine Independent Contractor status complete with citations to Revenue Rulings?  Check out my website at www.TheTaxTranslator.com, click on IRS 20 Factor Test under Independent Tax Guidance, found in the ‘Tax Stuff for You’ tab.

New 2012 Form 990 Forms and instrns available

2012 tax year 990-series forms, schedules and instructions are available now on  IRS.GOV - see the changes!!  More to come on this in future editions of this Newsletter

IRS Exempt Org 2013 Work Plan Released

FY 2013 work plan

The FY 2013 work plan outlines the focus areas in which EO is deploying resources over and above its ongoing work. Highlights include:

 

• Section 512(b)(13) study – In response to changes under the Pension Protection Act of 2006, Treasury asked EO to draft a report regarding payments between controlled entities under section 512(b)(13). In response, EO developed a checksheet to be used in examinations. During the last two years, revenue agents completed approximately 3,000 checksheets, and EO has begun the analysis process.
• International activities of charities – EO will shift its exam focus in FY 2013 to organizations with high amounts of foreign grant expenditures.
• Section 501(c)(4), (5), and (6) “self declarers” – EO will send a questionnaire to organizations that “self- declared” by filing Form 990 for tax year 2010 or 2011.
• Colleges and universities – EO anticipates completing the college and university report, which will include results from examinations as well as additional analysis of the data from questionnaire responses previously received from almost 400 institutions.
• Compliance: Using the Form 990 – Expanding on work conducted in FY 2012, EO will focus on
• (1) charitable spending of medium to large organizations, including organizations that report substantial income from fundraising but little or no fundraising expenses;
• (2) examinations of organizations that may be hiding compensation through related organizations;
• (3) continued examinations related to impermissible political activity or failure to accurately report political expenditures on Form 1120-POL; and

(4) examining organizations reporting substantial gross UBI for three consecutive years but reporting no income tax due for any of those years

UBTech Conference - Discount for you!

I've been selected to present a topic at the UBTech Conference, June 10 - 12, 2013 in Orlando Florida.  UBTech is sponsored by University Business Magazine and is

A National Summit on Higher Education Technology and Leadership

Higher education's most focused high-level conversation about technology's impact on every aspect of campus leadership and practice.  80+ Sessions and Record Number of Exhibits

As a presenter, UBTech is permitting me to offer my friends and colleagues a 50% discount off the registration fee.  Simply go to  www.ubtechconference.com and include the code include the code ubtechspeaker50 during the registration process.

Hope to see you there - and at my presentation

Steve

Beginnings of the 'Credit Hour'

Beginnings of the Credit Hour

In the early 1900’s,  Andrew Carnegie was concerned that professors made too little to save for retirement and he created a free pension system.  In order to participate in the system, colleges and universities had to adopt a standard unit for admissions that was loosely measured on time spent on a subject.  So course offerings were converted into time based units to determine workload thresholds for faculty to qualify for the free pensions.  The Carnegie Foundation is still around and is less concerned about the amount of time spent on a subject and more concerned with the results obtained  from the subject.  They are now suggesting it is time to consider a revised unit, based on competency rather than time.

Unrelated note:  in 1961, 14 percent of undergrad course grades were and ‘A’. today, more than 40% are ‘A’s’ - so the old timers may be telling us the truth:  They earned their grades and things were tougher back then.

Read the fine print. - Carefully. It’s like the airline fees.

Read the fine print. - Carefully.  It’s like the airline fees.

I was quite surprised to see a conference for higher education will charge you for the materials - the handouts  - they are selling the content if you don't go to the conference. . The high cost of just attending the conference and the steep hotel room rate is bad enough.  This is sinful. 

You will never see a fee for materials at THE ™, The Higher Education Tax Conference.  And the price they are charging is the same if you get the binder, or the eBinder.  Seems to me like it should be less if it is electronic format.  There is even another option that can run $950.  I just couldn’t believe this.

Cavet emptor - Let the Buyer Beware.  Nuff said…….

Does your university offer a public transit benefit?

Does your university offer a public transit benefit?

Do they try to make it difficult on us on purpose?  Amended returns may be in order for this one….

Notice 2013-8 provides guidance which retroactively increased monthly transit benefit limit for 2012 from $125 per month to $240 per month. This notice provides a special correction procedure for employers who paid benefits in excess of $125 per month in 2012 and wish to make corrections on their fourth quarter Form 941.  For tax year 2013, the monthly limitation regarding the aggregate fringe benefit exclusion amount for transit passes and transportation in a commuter highway vehicle is $245, up from $240 for tax year 2012

Notice 2013-8 will be published in Internal Revenue Bulletin 2013-7 on February 11, 2013

This was extended - Whew!!! But only for two years

This was extended - Whew!!!  But only for two years

For 2006–2011, interest, rent, royalties, and annuities paid to a tax-exempt organization from a controlled entity were excluded from the unrelated business taxable income (UBTI) of the tax exempt organization.

Under pre-Act law, this exclusion didn’t apply to payments received or accrued after Dec. 31, 2011, and such payments were to be treated as UBTI to the extent that the payments reduce the “net unrelated income” of the controlled entity.

New Law. The 2012 Taxpayer Relief Act retroactively extends the special rule for two years so that it applies for payments received or accrued by a tax-exempt organization through Dec. 31, 2013

Grassley - again

Grassley - again

As I recall, it was the car donations that started the focus of the IRS on nonprofits and higher education.  This and the credit card counseling scams.  But, he believes the IRS is still not doing enough.  Politics or no?  You be the judge.  And then there is the recently released audit by the Inspector General Audit where it is estimated that more than 273,000 taxpayers claimed 3.8 billion in deductions without providing paperwork to prove the value of the items.  Given the tax rates, that’s more than 1 billion in lost tax revenue

I predict more attention on donations and contributions of non cash items by the IRS - hey, 1 billion dollars IS a lot of money - so make sure you have a clear understanding of the requirements of the university when accepting donations and contributions.

Sen. Charles Grassley, an Iowa Republican, raised questions about the amount of inflated claims by donors of cars and other goods nearly a decade ago, and in 2005 a law he drafted started to require taxpayers to prove the worth of items they donate.

After the audit was released, Sen. Grassley criticized the IRS for failing to enforce the 2005 law vigorously and also said President Obama should pay more attention to the issue.

Licensed Tax Preparers - Nice try

Hey, did you hear the one about the IRS…….

Attempting to license hundreds of thousands of tax preparers?

The licensing rules are invalid because the IRS stretched a law allowing it to regulate people who “advise and assist persons in presenting their cases” before the agency to cover tax preparers, U.S. District Judge James Boasberg in Washington wrote in a decision yesterday.

“Filing a tax return would never, in normal usage, be described as ‘presenting a case’,” Boasberg said.   The case is Loving v. Internal Revenue Service, 12-cv-00385, U.S. District Court, District of Columbia (Washington).

Who? Boustany Reappointed Head of House Nonprofit Oversight Panel

Who?  Boustany Reappointed Head of House Nonprofit Oversight Panel

I don’t thing Rep. Charles Boustany and Senator Grassley are related, but they sure do think alike on a lot of issues that impact higher education.  And with his reappointment to the chairman of the House Ways and Means oversight subcommittee, I think we can expect to see more sweeping changes in tax laws for higher education.

He held a hearing in July on charities with complicated operations like a profit-generating arm and in May on issues including oversight of universities and hospitals.

Mr. Boustany told The Chronicle last year he was concerned that the IRS had not been aggressive enough in monitoring charity abuses.

NOT to worry though…I’ll be watching the both of them very closely

Got a Mission Statement for your Tax Department? Do you need one?

Got a Mission Statement for your Tax Department?  Do you need one?

I used to think Mission Statements were overdone and only in response to someone higher up saying the Tax Department needed a Mission Statement.  I’ve changed my mind on this and now believe they help you and your customers - that’s right, your customers - know what the Tax Department does and how they can help the university.

Want a sample one?  Just send me an email at Steve@TheTaxTranslator.com  and I’ll get it to you