USA SWIMMING...USA SWIMMING CLUB & LSC FINANCIAL MANAGEMENT Jill J. Goodwin, CPA Waugh & Goodwin, LLP (719) 590-9777 [email protected] FORM 990 • File Form 990, 990-EZ,

USA SWIMMINGCLUB & LSC FINANCIAL

MANAGEMENT

Jill J. Goodwin, CPAWaugh & Goodwin, LLP(719) [email protected]

TAX AND REPORTING ISSUES

FORM 990

• File Form 990, 990-EZ, or 990-N by the 15th day of the 5th

month following year end

• NOTE: There is now a 6 month extension option as opposed to two 3 month extensions

• Form 990-N, Electronic Notification for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ (e-Postcard), may be filed at www.irs.gov

• Any organization which fails to file 3 years in a row will automatically lose its exempt status and have to reapply to be recognized as an exempt organization

FORM 990 - CONTINUED

• 990-N may be filed for organizations with annual gross receipts normally are $50,000 or less

• If gross receipts are less than $200,000 and total assets are less than $500,000, the organization may file Form 990-EZ

• 990 must be filed for organizations with annual gross receipts equal or greater than $200,000 or assets equal or greater than $500,000

FORM 990 – CONTINUED

WHO USES FORM 990?

• Potential Board Members

• Contributors/Sponsors

• IRS


• In order for the return to be considered complete – all required schedules must be completed and attached

• All statements/comments should be referenced on Schedule O, not in additional attachments


Main form sections:

Part I – Overall Financial Summary

Part III – Mission and Program Descriptions

Part IV – Required Schedules

Part V – Other IRS Filings/Tax Compliance

Part VI – Governance

Part VII – Board List/Compensation

Parts VIII, IX, X & XI – Financial Statements

Part XII – Financial Statements & Reporting


Part III reporting:

• Detailed Mission• Communicate with the public what you do

• Detail of Programs • Communicate with the public what you have accomplished towards

your mission


Part IV reporting:

• Key to decide what additional schedules need to be prepared and submitted

Part V reporting:

• Shows compliance with IRS filings• Ie. 1099, W-2, FinCEN forms


Part VI reporting:

• Section A –• Number of Board Members

• Relationships between Board Members

• Significant diversion of the organization’s assets

• Minutes


• Section B: Governance, Management & Disclosure section• Does the organization have the following policies in place:

• Conflict of interest policy

• Written whistleblower policy

• Document retention & destruction policy

• Policies regarding the process for determining compensation, including review and approval process, of the CEO, Executive Director or top management official, other officers or key employees of the organization


Part VII reporting:

• Required section for all organizations filing form 990

• Compensation thresholds to report (calendar year basis):• Current officers, directors & trustees – any

• Current key employees - $150,000

• Current 5 highest compensated employees - $100,000

• Former officers, key employees & highest compensated employees -$100,000

• Former directors & trustees - $10,000


Officers always include the top management official & top financial officer

Key Employee: those employees, other than officers, directors & trustees who:

Had reportable compensation exceeding $150,000 for the year

Had or shared organization-wide control or influence similar to that of an officer, director or trustee, or managed or had authority or control over at least 10% of the organization’s activities, and

Were within the group of the organization’s top 20 highest paid employees for the year that satisfied both the previous two tests


Director or Trustee- Board Members, listed only if they have voting rights Current – anyone that served or was employed at any time during the

organization’s tax year

Former only if both apply –

Individual was listed (or should have been listed) as an officer, director, trustee or key employee in any one or more of the five prior years

Received reportable compensation from the organization or related organizations in the calendar year ending in the current tax year in excess of the thresholds for services rendered for past services


• Reportable compensation in Column D includes the greater of amounts in Form W-2, box 1 or 5, and/or Form 1099-MISC box 7.

• If amounts do not meet the 1099 reporting threshold, they still need to be reported on Form 990

• Reportable compensation from related organizations is reported in Column E

• Column F reports other compensation not currently required to be reported on Form W-2, box 1 or 5 or Form 1099-MISC box 7, including nontaxable benefits such as retirement plan contributions, health benefits, and other non-taxable fringe benefits & expense account allowances


A breakdown of Form 990:

The form includes 12 sections and 16 schedules. Some of the key sections are: Schedule A

Schedule B

Schedule D

Schedule J

Schedule L

Schedule M


• Schedule A

• Public Support Schedule

• Note any unusual grants/contributions

• Contributions & fees received from Board Members

• Investment income


• Schedule B• Use the same accounting method as Form 990• Contributors names & addresses are not open to public

inspection• Anonymous is only allowed if the NPO truly does not know

the donor’s identity• Cash and non-cash that total $5,000 for the tax year• Separate and independent gifts of less than $1,000 can be

disregarded


• Schedule D

• Used if you have fixed assets (buildings, equipment)

• Detail on investments, other assets/liabilities

• Reconciliation to audited statements if applicable


Schedule J

• Additional compensation disclosure

• Information regarding first class/charter travel

• Companion travel

• Health or social club dues/initiation fees

• Personal services

• Substantiation requirements for reimbursement

• Questions regarding how the organization determines compensation for the CEO/Executive Director


Schedule L

Reporting of transactions with interested persons (Interested person = Officer, Director, Key Employee or Substantial Contributor) Direct business relationships

Indirect business relationships through ownership of more than 35% in another entity

Family members with direct or indirect business relationships

Serve as an officer, director or key employee with a member of an entity doing business with the organization


• Schedule M• If more than $25,000 in non-cash contributions is received, this

schedule must be completed

• Details of the types of non-cash items received

• Includes number of contributors for each type of donation

• Revenues reported from these transactions

• Method of determining amounts recorded

FORM 990-T

• Unrelated Business Income Tax (UBIT)• Trade or business income

• Not substantially related to the organization’s exempt purpose

• Gross Income excess of $1,000

• Regularly carried on

• Taxed at corporate rates

Also filed to claim credits

Must be paper-filed

FORM 990-T - CONTINUED

Types of income which would constitute UBIT:

Sponsorship

Advertising in which a sponsor receives a substantial return benefit

Exclusive provider arrangement that limits the use of competitors product or service

Goods, facilities, services or other privileges

Exclusive or non-exclusive rights to use an intangible asset


Types of income which would constitute UBIT:

Debt-financed rental income

Mailing List sales, unless between charitable organizations

Sales of ‘city’ souvenirs


Types of income which would not constitute UBIT:

Sponsorship payments with no substantial return benefits

Passive income, such as interest & dividends

A trade or business in which substantially all the work is performed for the Organization by volunteers

Revenue from sources carried on for the convenience of its members

Items of related equipment or clothes and items normally sold through vending machines, snack bars, if the items are for the convenience of its members


Allowable deductions

Directly connected expenses

Must be directly connected with the carrying on of the activity

Must qualify as deductions allowed by IRS Code sections 162, 167 or other relevant provisions of the Code

Allocation of indirect costs Must bear a proximate and primary relationship to the conduct of

the activity

FORM 990 PENALTIES

$20 per day if gross receipts are less than $1,020,000

$100 per day if gross receipts are more than $1,020,000

If the organization is required to file electronically, but fails to do so, the return is deemed to have not been filed

Penalties begin on the due date for the return

If information is not furnished within the time the IRS allots, the person failing to comply will be charged a penalty of $10 per day

EMPLOYEES AND INDEPENDENT CONTRACTORS

Determination of classification based on:

Behavioral Control

Financial Control

Type of relationship

FORMS 1099 & W-2

Form 1099:Payments made to any person or eligible entity - $600 and

over per year Form W-9, Request for Taxpayer Identification Number and

Certification, should be requested from payees prior to disbursing funds to insure that you have the required information when it is time to prepare the 1099 forms

Distribute to the payee by January 31st each yearDue to the IRS by January 31st if you report any amount in

box 7New in 2016 - Check box 7 on Form 1096 if you have

reported any amounts in box 7

FORMS 1099 & W-2 - CONTINUED

• Form W-2• Report employee compensation and withholdings on

Form W-2 to employees and Social Security Administration (along with Form W-3) by January 31st

each year• Form W-4, Employee’s Withholding Allowance Certificate

and Form I-9, Employment Eligibility Verification, should be requested from employees upon hiring

• Other new-hire and quarterly reporting requirements apply

FORMS 1099 & W-2

Penalties apply for failure to prepare and send the returns to the IRS on a timely basis

$50 per form if filed within 30 days of due date

$100 per form after 30 days but by August 1st

$260 after August 1

$250 per form for intentional disregard

DISCLOSURE REQUIREMENTS

• Form 1023• USA Swimming’s form if under the group exemption

• Form 990 or 990-EZ

• Form 990-T

• Other information that is widely available, such as financial statements if they are posted on the organization’s website

DISCLOSURE REQUIREMENTS

• Must provide copies to individuals requesting either in writing or in person

• Usually must provide immediately if requested in person

• Within 30 days if requested in writing

• May charge reasonable copy charges and actual postage

• Penalties of $20 per day imposed against the person failing to provide the documents

OTHER TAX ISSUES

• Jeopardizing exemption -• A 501(c)(3) organization must not be organized or operated for the

benefit of private interests

• No part of the net earnings may inure to the benefit of any individual

• Refrain from participating in political campaigns of local, state or federal candidates

• Restrict lobbying activities

• Failure to satisfy annual filing requirements

TAX ISSUES- CONTINUED

• Health Care Reform• Possible credit for employer paid premiums for health coverage for

employees

• No more than 25 FTE employees

• Average annual compensation not greater than $52,000

• Purchased through the exchange

• Only available for 2 consecutive years

• https://www.councilofnonprofits.org/tools-resources/what-nonprofits-need-know-about-the-affordable-care-act

STATE REPORTING

• Nearly every state has enacted charitable solicitation statutes

• Some cities and counties also require registration

• Usually require organizations to register with the state before they solicit contributions

• Some exemptions – vary state by state

• Some states accept Form 990 – need to check specific state requirements

STATE REPORTING - CONTINUED

• Unified Registration Statement (URS)

• www.multistatefiling.org

• National Association of State Charity Officials website has links to state offices which regulate charitable organizations and charitable solicitations

• http://www.nasconet.org/resources/

CONTRIBUTION ACKNOWLEDGEMENTS

• Name of recipient NFP entity • Amount of cash or description (not estimated amount) of non-

cash contribution received • As applicable:

• A statement that the NFP did not provide any goods or services in return, if that was the case

• A description and good faith estimate of the value (not cost) of any goods or services the NFP provided in return (e.g., market value of an event ticket)

• A statement that the goods or services provided by the NFP in return for the contribution were entirely intangible religious benefits, if that was the case

CONTRIBUTION ACKNOWLEDGEMENTS

• Both hard-copy and electronic formats are acceptable as long as the donor receives the acknowledgement by the time they file their return or the time their return is due, whichever occurs first. However, acknowledgements are not submitted with donors’ tax returns; they should simply be retained to substantiate contributions.

Note: Contributions are not aggregated. Thus, multiple contributions of less than $250 individually made throughout the year to the same NFP that, in total, exceed $250 would not require substantiation.

ACCOUNTABLE EXPENSE REIMBURSEMENT PLAN

• The plan is an employer established plan• The plan reimburses expenses in addition to regular

compensation• There is a business connection for the amount to be

reimbursed• There is timely substantiation and adequate

accounting of the expense• The employer returns excess amounts within a

reasonable period of time

NON-PROFIT PUBLICATIONS

• Publication 557, Tax-Exempt Status for Your Organization

• Publication 598, Tax on Unrelated Business Income of Exempt Organizations

• Publication 1771, Charitable Contributions, Substantiation and Disclosure Requirements

• Lots of information at www.irs.gov

FINANCIAL ASSESSMENT PROGRAM

INTERNAL VS. EXTERNAL AUDITS

INTERNAL• Objectives determined by the

board

• Audit work is done by individuals associated with the Organization

• Concentrates on internal controls & procedures

• Issues a report on findings and recommendations

EXTERNAL• Audit work is done by a

Certified Public Accountant who is independent of the Organization

• Tests controls and risk factors

• Attests to whether the financial statements are in compliance with GAAP


• Why use the tool?• Designed to assist in reviewing key financial and internal control

areas to verify and document that the Organization is operating efficiently

• Provide assurance that assets are safeguarded,

• Provide assurance that the Organization is compliant with prescribed laws & policies

• Provide assurance regarding the economical & efficient use of resources

• Review the integrity of financial statements for reasonableness and accuracy


• What you should get out of an internal financial assessment:

• Documentation on what areas, if any, need improvement

• Self-regulation to determine if Policies & Procedures are being followed

• Suggestions for increased efficiency and accuracy


• What are the steps?• Planning

• Performing

• Documentation


• Planning step:• Who will be in charge of the financial

assessment process• Well defined objectives• Determine the scope• What criteria should be considered


• Performing the review:• No single ‘right’ or ‘wrong’ way to

accomplish the assessment• Look for opportunities to improve

processes• Look for best practices• Look for weaknesses in the system


• Documentation:• What to document:

• Scope & Criteria• What you are doing

• Objectives• Why you are doing it

• Findings• Results of audit work


• Report• Delivered to the Board of Directors

• Include the scope of work

• Results of the review

• Maintain confidentiality


• LSC Financial Assessment Program tool is available on the USA Swimming website

Documents

USA SWIMMING...USA SWIMMING CLUB & LSC FINANCIAL MANAGEMENT Jill J. Goodwin, CPA Waugh & Goodwin, LLP (719) 590-9777 [email protected] FORM 990 • File Form 990, 990-EZ,