It is a “taxing” time of year!!

Today’s column entries come thanks to De Pere Area Chamber member Hawkins, Ash, Baptie & Co..  I was reading their newsletter and the information was so good I wanted to share it with you!    If you are involved in a non-profit or have adult dependents (like I do!) on your personal tax return, you  will find great information below:

Non-Profit Reporting Requirements

Arien O’Heron, CPA

Non-profit organizations are required to file an informational return annually.  There are three informational returns that a non-profit can file: Form 990-N, Form 990-EZ, or Form 990.  There are exemptions, such as churches and integrated auxiliaries of churches, which are not required to file one of the Form 990 series return.

The Form 990-N was added to the 990 series when the Pension Protection Act of 2006 went into effect.  This electronic postcard is required for non-profit organizations with gross receipts under $25,000.

The Form 990-EZ for the 2009 tax year (to be filed in 2010) is for non-profit organizations having gross receipts less than $500,000 and total assets less than $1.25 million.  This threshold has been lowered from the 2008 tax year which was for gross receipts of less than $1 million and total assets of less than $2.5 million.  For 2010 year ends, the threshold reduces to and will remain at gross receipts less than $200,000 and total assets less than $500,000.

The Form 990 for the 2009 tax year (to be filed in 2010) is required if the non-profit organization has gross receipts greater than or equal to $500,000 and total assets greater than or equal to $1.25 million.

Private foundations are required to file Form 990-PF.

According to the Pension Protection Act of 2006, if a non-profit organization does not file the required informational return for three consecutive years, the organization will lose its Federal tax-exempt status and the organization will have to reapply to regain its tax-exempt status.  It has been three years since the Act went into effect and starting in 2010, the IRS will begin to revoke tax-exempt statuses.

The Form 990 series returns are due by the 15th of the 5th month after the organization’s tax year ends.

If you have questions regarding filing any of the Form 990 series, please consult your tax professional today.

Taxability of Adult Dependent Insurance Coverage

Matt Eckelberg, CPA

Under the provisions of the State of Wisconsin’s Budget Act of 2009 and effective  January 1, 2010, health insurers are now required to provide coverage for an adult child of an insured.  Under the new law to qualify for coverage under the parents’ policy the child must be:

• Over 17 but less than 27 years of age
• Unmarried and
• Not eligible for coverage under a group health benefit plan that is offered by the child’s employer and for which the amount of the child’s premium contribution is no greater than the premium amount for his or her coverage as a dependent.

Based on our review of the Internal Revenue Code and its related regulations, this additional insurance coverage for the adult child is a taxable benefit to the employee when health insurance coverage is provided to an adult child who is not a qualified dependent of the employee.  Under Code Section 105 of the Internal Revenue Code, the value of employee insurance paid for by an employer, including coverage for spouses and dependents is excluded from the employee’s gross income.  Employer-provided health insurance for an adult child of an employee is only excludable from the employee’s gross income when the adult child qualifies under federal law as a dependent of the employee.  Internal Revenue Code Section 152 states to qualify as a dependent on your federal income tax return, your child must be either your “qualifying child,” or your “qualifying relative.”

Generally, to be a “qualifying child,” your child must:

• Be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student, or (c) any age if permanently and totally disabled.
• Have lived with you more than half of the year.
• Not have provided more than half of his or her support for the year.

Therefore, if the adult child does not qualify as a dependent under federal income tax laws, the fair market value of adult child’s health insurance is a benefit taxable to the employee.  The fair market value of the insurance coverage is to be determined by the employer and the insurance provider.

The legislation mandating insurance coverage of non-qualifying dependents is also causing much confusion regarding Section 125 Flexible Spending Accounts and Health Reimbursement Accounts as well.  Section 125 plans can reimburse the employee for out of pocket medical expenses of his or her qualifying dependent(s).  A non-qualifying dependent’s medical expenses should not be reimbursed by the Section 125 Plan as the person does not meet the dependent requirement of Internal Revenue Code Section 152.   Furthermore, it is our opinion that any amounts paid for medical expenses of the non-qualifying dependent(s) are taxable benefits to the employee.  Further, if the employee is paying premiums pre-tax for a plan that covers non-qualifying dependent(s), the employer and insurance provider are to determine a value for the coverage provided for the non-qualifying dependent and the employee is to be taxed on that value.

The Internal Revenue Service has yet to provide any real guidance on the matter.  The IRS to date has taken a hands-off approach since it has not changed any part of its Code and Regulations in regards to this matter.  Further guidance from the Wisconsin Department of Revenue and the health insurance industry may be forthcoming.

What is a chamber of commerce anyway?

We get asked this question a lot in our day to day business.  I remember asking this question about 17 years ago when I was deciding if our construction company should join the Reno-Sparks Chamber.  We were already members of our local builder’s association, remodeler’s association and a few nationwide trade organizations; why should we join the chamber?  And, while I *heard* of chambers my whole life, but I really couldn’t come up with a real definition.

Today, ACCE (American Chamber of Commerce Executives) electronically rides to the rescue!  *drum roll*

I’ll put the most pertinent parts in this post and then link to the entire article at the end.  I hope you find that as interesting and informative as I did!

Chambers of Commerce: The Basics

Misconceptions abound regarding many brands, products and organizations.  When it comes to the term “chamber of commerce,” confusion and erroneous assumptions are even more likely, even though almost everyone has heard of the term.  The lack of understanding is in large part self-inflicted because chambers in various towns, cities, regions, states and even nations focus on different things and actually operate in different ways.  A chamber of commerce primer may be helpful.  What follows is a “living” document produced by the American Chamber of Commerce Executives staff.  It will be adapted based on input from chambers and others.  (Version IV, 10/21/09)

Definition

A chamber of commerce is an organization of businesses seeking to further their collective interests, while advancing their community, region, state or nation. Business owners in towns, cities and other territories voluntarily form these local societies/networks to advocate on behalf of the community at large, economic prosperity and business interests. Chambers have existed in the US for more than two centuries, with many having been established before the jurisdictions they represent. A business-led civic and economic advancement entity operating in a specific space may call itself any number of things – board of trade, business council, etc. – but for the purposes of this primer, they are all chambers of commerce.

Chamber missions vary, but they all tend to focus to some degree on five primary goals: Building communities (regions/states/nations) to which residents, visitors and investors are attracted; Promoting those communities; Striving to ensure future prosperity via a pro-business climate; Representing the unified voice of the employer community; and Reducing transactional friction through well-functioning networks. Chambers have other features in common. Most are led by private-sector employers, self-funded, organized around boards/committees of volunteers and independent. They share a common ambition for sustained prosperity of their community/region, built on thriving employers. Most are ardent proponents of the free market system, resisting attempts to overly burden private sector enterprise and investment.

Local businesses are voluntary paying members of a chamber (non-profits, quasi-public and even public sector employers also sometimes pay dues to belong). The membership, acting collectively, elects a board of directors and/or executive council to set policy for, and guide the workings of, the chamber. The board or executive committee then hires a chief executive (various titles), plus an appropriate and affordable number of staff to run the organization.

In the majority of countries, the use of the term “chamber of commerce” is regulated by statute, though this is not the case in the US. Only trademark, copyright and domain name rules protect a chamber’s identity – only state corporation law defines their existence and reason for being. While most chambers work closely with government, they are not part of government and many consider the process of appropriately influencing elected/appointed officials to be one of their most important functions.

Currently, there are about 13,000 chambers registered in the official Worldchambers Network registry. There are roughly 3,000 chambers of commerce in the US with at least one full-time staff person and thousands more established as strictly volunteer entities.

Membership

Under the private, volunteer membership model, which exists in the USA and many other nations, companies are not obligated to become chamber members. Membership rolls in a given North American chamber can range from a few dozen firms to more than 20,000, so there is no real “average” or typical chamber of commerce.

Chambers do not operate in the same manner as a Better Business Bureau or trade association, which can bind its members under a formal operations doctrine (and, thus, can remove them). Businesses and other employers pay dues to belong and expect to receive the benefits of membership as long as they continue to invest in the organization. They usually accept any reputable business as a member, though dues investment schedules can sometimes result in intended or unintended exclusivity.

Service Territory

The geography of any one chamber of commerce – often referred to as “service territory” – is seldom defined by any political or legal jurisdiction. More likely, the territory is defined by the catchment area of a chamber’s membership. The locations of the businesses that compose the membership tend to define the chamber’s footprint and “claim” to a territory. Adjoining organizations often establish formal or informal understandings about borders.

Why are there so many chambers? Historical circumstances, population fluctuations, differing ambitions and the needs of employers have all played a role in the formation of chambers. At the time many chambers were established geographic isolation underscored the need for separate organizations to represent local business and community issues. While developments in infrastructure, transportation and communications over the past century have better linked businesses with their peers in neighboring communities and even foreign countries, the chambers that represent those businesses have remained viable and vital institutions. Without a valid purpose, chamber’s boards, members and funders would have abandoned them long ago.

Link:  http://www.acce.org/Index_ektid1128.aspx