What are the most common non -profit tax problems?

In the United States, the most common non -profit tax issues focus on achieving tax exemption and on the rules for its maintenance. The non -profit company must have a certain structure and be charity, educational, scientific or literary nature. Entrepreneurship must go through the process of reviewing the internal income service (IRS) to achieve the position of the exempt, and it is necessary to follow the rules to maintain this position. For example, a non -profit organization cannot lobby for political candidates without following strict rules and maintaining a classification exempt from tax. He needs the Board of Directors who determine the policy of the organization as well as officers - such as president, treasurer and secretary - to supervise the company's operations. He also often has employees to do everyday work. However, non -profit Company cannot have shareholders because private individuals cannot get financial profits from one. There is no opportunity to share profits within a non -profit business becauseAny excess resources must be used for further mission of the organization. Excessive compensation of employees may actually be subject to excise tax .

Some other rules that have an impact on non -profit tax on dealing with the recognition of donors' contributions. If the non -profit organization requires gifts, any gift must be recognized in writing in writing. If the gift is requested and the donor's non-profit organization in return gives something, the value of what the organization gives is also written in writing. This is because such a shop can reduce the amount that the donor can deduct from his taxes.

Another non -profit tax problem is that the non -profit organization cannot earn considerable income from unrelated activities that are not central for organization's purposes. Example of this could be counseling services provided by experts within the non -profit organization. If the activity begins to resemble nEzisk business could endanger the position of tax exempt.

In addition, non -profit tax status could be influenced by individual state and local rules. Just because the organization is federally considered to be exempt from tax, it does not mean that it is automatically exempt from state or local taxes. It is important that the non -profit business is aware of regional rules that can affect its status.