With the changes in the industry and the recent scandals involving both for profit and not for profit entities, it is no wonder that the IRS is focusing heavily on executive compensation and other areas where excess benefits can occur. With its Compensation Initiative, the IRS sent letters to more than 2,000 charities during 2004 and 2005. These charities were selected based upon certain triggers on the Form 990, including unanswered or inadequately answered questions or large amounts of compensation.


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Electronic Filing Coming Soon!

Remember that beginning with tax year 2005 returns (tax years ending on or after December 31, 2005), organizations with total assets of $100 million or more that also file 250 or more returns with the IRS (income tax, excise tax, employment tax, and information returns) will be required to file the Form 990 electronically. For purposes of determining if 250 or more returns are filed, each Form W-2 and quarterly Form 941 and Form 1099 is considered a separate return.
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IRS Exempt Organizations Division Director Martha Sullivan has announced her retirement effective December 31, 2005. There is no word yet on a permanent replacement or acting director.
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The Senate passed the Tax Relief Act of 2005 on November 18. The Bill contained both charitable giving incentives and charitable section reforms, and will now go to the conference committee before it is presented back to the House and Senate for vote. Included in the bill are the following provisions (list not all inclusive):

  • Permits non-itemizers to take a deduction for cash contributions over $210 ($420 for joint filers). Itemizers are permitted to deduct the total of cash and noncash contributions over the $210/$420.
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