Tag Archives: UBIT

EFT Payment Requirement Threshold Reduced to $5,000

The District of Columbia requires business taxpayers to make tax payments over a certain threshold by electronic funds transfer (“EFT”).  The most recent guidance issued by the D.C. Office of Tax and Revenue regarding EFT payments says that business taxpayers must pay EFT for all tax payments exceeding $10,000.  However, over the last couple of months the Office of Tax and Revenue have been issuing notices to business taxpayers informing them that the EFT requirement has been decreased to payments exceeding $5,000.  Although the Office of Tax and Revenue is authorized by statute to require EFT payments at this threshold, it has yet to issue a general notification to taxpayers or practitioners informing them of this new requirement. 

According to conversations we have had with the Office of Tax and Revenue, their system will generate the 10% non-compliance penalty when a payment is submitted by check over $5,000.  Although there is a reasonable cause waiver to the penalty that we think would obviously apply in these circumstances (i.e., no notice to taxpayers), the waiver requires a written request that could take some time in getting approved. 

Taxpayers that suspect that they will have upcoming payments over $5,000 should register for making EFT payments on the Office of Tax and Revenue’s Electronic Taxpayer Service Center (eTSC) well advance of the payment due date.  It can take 7-10 business days to receive the ID and password for the website, which are sent separately to taxpayers via regular mail.  Taxpayers can call the Office of Tax and Revenue to receive their ID earlier, but the ID still may not be available for up to 7 business days after the registration is submitted. 

Therefore, we would recommend completing the eTSC registration early if there is any chance that it will have an upcoming payment over $5,000.  Please contact Aronson’s tax department if you have any questions.

DC Sales Tax – a clarification for nonprofits

Henry Chiwaya, Aronson’s state tax specialist, recently researched some of the intricacies of the DC law on sales tax for nonprofits and concluded the following:

Nonprofits with physical presence in DC are subject to collecting sales tax and remitting them to the DC government for any tangible personal property items sold.

If you find that your organization may not be in compliance with this law, Henry can help by doing a “voluntary disclosure” to come clean with the DC government and mitigate the dollar amount of damage this could cause if the District finds it first.

Gaming and Exempt Organizations – IRS Announces Phone Forum

Sign up for a phone forum conducted by the specialists at the IRS on tax exempt organizations, to be held on July 18, 2012, at 2:00 p.m. EST, titled “Exempt Organizations and Gaming”.  Here is the link to register: http://www.irs.gov/charities/article/0,,id=258086,00.html

Topics to be covered:

  • Impact of gaming on tax-exempt status
  • Internal controls and record keeping
  • Form 990 filing requirements
  • Unrelated Business Income Tax
  • Filing requirements for Payments made to individuals
  • Wagering/excise taxes

Congressional Hearing of IRS Monitoring of Nonprofits

Representative Charles Boustany Jr. (R – LA) has called a hearing of the House Ways and Means Committee scheduled for next week to discuss tax-exempt organizations and concern that the IRS has not been aggressive enough in monitoring charity abuses.

Up for discussion are items outlined in Boustany’s letter to the IRS sent October 6, 2011 as follows:

  • How many tax-exempt organizations have been audited since 2008 and what issues were identified?
  • How has the redesigned Form 990 increased transparency and accountability?
  • Analysis of unrelated business income, revenues and the value of assets held by nonprofits for the years 2008 – 2010.
  • What is the process for following up on allegations of excessive political campaign activity?
  • Discussion of the level of charity care provided by all hospitals.

Click here to see the entire letter.

Per the Ways and Means Committee website, nonprofits are invited to submit their opinions on the topics by written statement. In order to submit your thoughts, go to the Committee homepage, http://waysandmeans.house.gov, select “Hearings.” Select the hearing for which you would like to submit, and click on the link entitled, “Click here to provide a submission for the record.” Once you have followed the online instructions, submit all requested information. ATTACH your submission as a Word document, in compliance with the formatting requirements listed below, by the close of business on Wednesday, May 30, 2012.The hearing will take place on Wednesday, May 16, 2012, in Room 1100 of the Longworth House Office Building, beginning at 10:00 A.M.

See specific formatting requirements for submissions and more details on the hearings here.

Additional Source: Chronicle of Philanthropy


Where Do My Tax Dollars Go? – There’s an App for That!

On the heels of tax season, you may be wondering where your tax dollars are going. The White House launched an online tool that lets people see just that.

As mentioned in the Hill blog, the White House’s Federal Tax Receipt tool allows taxpayers to enter their tax information and in return provides a breakdown of tax dollars received by general areas of the government.

A look at the site reveals a breakdown of the biggest use of American taxpayer dollars, begininng with 26 percent of federal tax dollars going to national defense spending.

Healthcare spending comes in second at 24 percent, and “job and family security” comes in third at almost 22 percent, which includes unemployment insurance, food assistance programs and housing assistance programs.

The next highest percentage of federal tax dollars spent is “education and job training,” which comes in at less than 5 percent.

Try out the app on the White House website.

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