Author Archives: Laila Mitchell

Are Churches required to obtain a tax determination letter?

An organization seeking exemption under section 501(c)(3) of the Code is required to apply for recognition of exemption on Form 1023. However, churches, their integrated auxiliaries, and conventions or associations of churches seeking section 501(c)(3) status are exempted from this application requirement. Churches that meet the requirements of section 501(c)(3) are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS.  However, it is noted that some Churches choose to obtain the tax-exempt status from the IRS to assure their members that any contributions made are indeed tax-exempt.    In addition, this exemption is only for types of organizations listed above.  Religious organizations, that wish to be tax-exempt and whose gross receipts exceed $5,000, must still apply to the IRS for the coveted status.

It is important to note what rules all 501(c)(3)’s (including churches ) must abide by to maintain their status:

  • Their net earnings may not be given to a private individual or shareholder.
  • Their substantial benefit cannot be to private interests.
  • The majority of their time cannot be devoted to attempting to influence legislations.
  • They cannot participate or intervene in any political campaign.
  • Their purpose and activities must be legal and not violate fundamental public policy.

In conclusion,  if you are unsure if you need to obtain an IRS determination letter, err on the side of caution and get one!

#nonprofit #determinationletter #taxexempt #irsfiling

COSO Cube – the Rubik’s Cube (TM) of Control

The Committee of Sponsoring Organizations of the Treadway Commission (popularly known as COSO) has updated their internal control framework from its original 1992 framework.

Here is the old framework, referred to as the “Original COSO Cube“:

And the new framework in the “New COSO Cube“:

According to the Journal of Accountancy, “The definitions of internal control and objectives of the framework have not changed. Internal control is defined as a process designed to assure three objectives—reasonable assurance of effectiveness and efficiency of operations, reliable reporting, and compliance with laws and regulations. The original five components of the framework—control environment, risk assessment, control activities, information and communications, and monitoring—also have remained the same. But the updated framework provides a total of 17 principles across those five components to build on the concepts that COSO contributors believe proved useful in the original version.”

COSO Chairman David L. Landsittell stated “this update should allow organizations to more effectively utilize the framework to develop and maintain systems of internal control in support of their long-term success.”   The exposure draft is open to comments through March 31st and can be found at

COSO believes this new Framework will bring significant benefits, including “increased confidence that controls mitigate risks to acceptable levels.” According to the Executive Summary, COSO’s goal was to focus on agility, confidence, and clarity by adding ways to evaluate effectiveness and help identify and analyze risks.

Postage Increase

Did you know – the price of first class mail has increased as of today from 44 cents to 45 cents?  Forever stamps will still work!  Refer to for additional fee increases and details.

GuideStar’s Nonprofit Economic Survey

GuideStar is an information service specializing in U.S. Nonprofit companies.  In December 2009 they published the results of their Eighth Annual Nonprofit Economic Survey.  The purpose of this survey was “to compare how charitable organizations fared during the first nine months of 2009 to previous years and to try and gauge the effect of the downturn in the economy on the American nonprofit sector.”     Overall, the economy has not yet completely rebounded and nonprofits are still struggling, however there were better indications for increased contributions.    Although organizations are not reporting the same levels of contributions they were seeing in 2007, they were up from 2008.  Click here to read a letter from the President and CEO of GuideStar and to review the results of the survey:

Letter from President and CEO:

 Results of survey:

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