|
|
|
|
The Top Ten Reasons For Delays In Processing Exempt Organization Applications(Reprinted from April 1997 Ohio Key District EP/EO Update)Number 10. Is there enough financial data? Applications should include the income and expenses for the last three completed fiscal years, and a partial year for the year of application up to within 60 days of the application. If the organization has completed less than a full year, it should submit two years proposed budgets.Number 9. In what month does the annual accounting period end? Applications should indicate the end of their fiscal year. It is a good idea to check for consistency. Does the fiscal year ending date stated on the application agree with the fiscal year ending date stated in the by-laws, on the financial statements, and on any prior returns filed? Number 8. Did you provide the required information on the principal officers and board of directors? Applications should list the following information concerning the governing officials:
Number 7. Did you provide enough information on the activities to show us how your exempt purpose will be achieved? Please don't restate your purpose, but explain the specific activities you will carry on to achieve that purpose. You should consider a "who, what, when, where and why" approach. You should explain past, present, and planned activities. If you haven't started an activity yet, develop your plans well enough that we can have a clear understanding of how it will operate. Number 6. Did you complete all required schedules? You should check the line items on the financial statements. Some lines require supporting schedules. Number 5. Did you complete all required pages? To make a determination, the information contained on the pages and schedules of Form 1023 and Form 1024 is necessary. On Form 1023, there are various schedules and pages that must be filled out for churches, schools, hospitals, private operating foundations, scholarships, supporting organizations, and child care organizations. Number 4. Did a principal officer sign page one of Form 1023 or Form 1024? A principal officer such as the president, vice president, secretary, or treasurer should sign the application on page one. If anyone else signs the form, a completed Power of Attorney, Form 2848, should accompany the application. Number 3. Did you submit a copy of your by-laws? You need to send a copy of the by-laws, code of regulations, or any other document that sets out the organization's rules of operation. If the organization has not adopted such rules, you need to check the box on page one of the application, Form 1023 or Form 1024. Number 2. Did you attach a complete copy of your organizing document and all amendments? If the applicant is a corporation, this would be a copy of the articles of incorporation that shows it has been filed with and approved by the state. If the applicant is not incorporated, it should have a similar organizing document. This could be a constitution, articles of association, or by-laws. Whatever the document is called, it must at the minimum state: the legal name, the purposes, and the date of adoption. The document should be signed by at least two officers of the organization. A trust document must be signed by the trustees and show the date of formation. The Number 1 reason for delays in processing exempt organization applications is . . . INCORRECT OR NO USER FEE! The payment required for a determination of exemption is $150 or $500. (See Form 8718, User Fee for Exempt Organization Determination Letter Request.) If your gross receipts are not expected to exceed $10,000 annually, you can qualify for the lower user fee of $150, but you must complete the Certification on Form 8718 in addition to sending the payment. The financial information sent with applications is checked to verify that the organization's gross receipts, activities, and user fee payment are consistent. Now that you know the ten most common pitfalls in the EO application process, we hope you can avoid them. If your application is completed correctly initially, and sent with all required documents and schedules, there is a good chance your organization could be recognized as exempt with no further contact. If there is contact, the agent can address the technical issues that need to be resolved without taking up your time trying to just get a complete application |
|
Send mail to
Webmaster@txcpa.net with
questions or comments about this web site.
|
