401(k) Plan Questionnaire Coming to 1,200 Employers – RESPONSE REQUIRED!

Last week the IRS Employee Plans Compliance Unit “EPCU” sent out a letter with instructions to 1,200 employers with 401(k) plans requiring them to complete the 401(k) Compliance Check Questionnaire. The questionnaire is accessed through a secure website and requests a wide range of information related to the Sponsor’s 401(k) plan. The questionnaire is very comprehensive as evidenced by the fact that it is 46 pages in length.

The announcement of this initiative http://www.irs.gov/pub/irs-tege/se0510.pdf, indicates that completion of the questionnaire is required and failure to do so will result in “further action or examination”.  It is not clear what “further action” is intended to mean, however it seems clear that participation is not voluntary. Furthermore, many questions are either compliance in nature or tie directly back to the Plan’s form 5500 filings. A respondent could mistakenly indicate a myriad of compliance violations or a disconnect with a previously filed form 5500.

 We advise completing this questionnaire with an advisor that is familiar with your plan and the strict rules governing qualified retirement plans.

Independent Contractor: Classification is the Elephant in the Room! Seminar

Worker classification is one of those tricky compliance issues that everybody knows about, but nobody wants to talk about. With more and more states passing legislation to penalize employers who misclassify workers, audits are a valid concern for all businesses. Don’t be intimidated by this important topic – instead, be informed! Join Aronson & Company and FosterThomas for an insightful event on June 17th at FosterThomas’ Corporate Office that addresses how your company can prepare for audits and reduce liability.

Did you know that:

The IRS has begun randomly selecting 2,000 taxpayers each year for the next three years for a comprehensive employment tax law compliance audit?

Independent contractor misclassification is now more likely than ever before to result in heavy fines and penalties?

Worker misclassification invites trouble with the IRS, Department of Labor, and state and local governments?

All companies are vulnerable, but construction and government contracting businesses are being targeted in particular?

Aronson & Company Officer Larry Rubin and FosterThomas Executive Vice President Patrick Hill will help you gain an understanding of the issue, the costs to your business of noncompliance, and steps you can take toward compliance. Seats are limited, so register today!

This see-and-be-seen event will fill up quickly, so be sure to register today!

When
June 17, 2010
7:30 AM – 8:00 AM: Continental Breakfast/Networking
8:00 AM – 10:00 AM: Presentation

Where
FosterThomas Corporate Office
1788 Forest Drive
Annapolis, Maryland 21401

CLICK TO REGISTER

MESSAGE TO SMALL NONPROFITS FROM IRS: FILE YOUR 990-N DESPITE DEADLINE PASSING

The IRS is encouraging small nonprofit organizations to continue trying to file the 990-N or “e-postcard” online even though the deadline of May 17, 2010 has passed.  IRS Commissioner Doug Shulman has issued a formal statement recognizing the vital role of small nonprofit organizations across the country, and vowing to help small nonprofits avoid losing their tax-exempt status even if they missed the May 17^th deadline.  Nonprofits are being urged to file the 990-N despite the passing of the deadline.

The link for filing a 990-N is:  http://www.irs.gov/charities/article/0,,id=217087,00.html 

The main information needed is for the filing is: Name, address, EIN#, and the principal officer’s name and address.

The L3C; A new business model for future innovation

A “for-profit with the nonprofit soul” quotes a Gammon & Grange article about the newest legal entity ‘L3C’ a low-profit limited liability company.   The L3C builds on the LLC model allowing it to enjoy liability protection as a corporation, but with the option to choose pass-through tax treatment for its members.  While the L3C is not a nonprofit, its organizing documents must limit its purposes to those that are primarily charitable and educational.  In the states that currently allow L3C status (Vermont, Illinois, Michigan, Utah, Wyoming, Oglala Sioux Nation, and the Crow Indian Nation) the following requirements have to be met to satisfy the L3C status:

1. The L3C must significantly further the accomplishment of one or more charitable or educational purposes; it may not be formed but for its relationship to the accomplishment of such purpose(s);
2.  No significant purpose of the L3C may be the production of income or the appreciation of property (though the company is permitted to earn a profit); and,
3. The L3C must not be organized to accomplish any political or legislative purposes.

L3C was designed to be the ideal structure for “program related investments” made by private foundations.  It was written to fit within the IRS regulations that apply to program related investments.  With it being a for-profit entity it allows for all types of investors to participate in its ownership.    It also allows the investors to generate income and receive a return on their investments.  There are hopes the L3C will be utilized to address social needs in a new way.  Allowing people to do good, but also while being able to generate a profit for themselves and the company.  The tax and legal questions are stilling in the construction phase, but the plans are there for a for-profit nonprofit hybrid of tomorrow today.

Deadline Pending for NonProfit Tax Exemption!

Many non-profit organizations are not aware that in 2006 legislation changed to require ALL non-profit entities to file tax forms starting in 2007. The Pension Protection Act of 2006 instructs the IRS to revoke tax exemptions of groups failing to file for three consecutive years which will be coming up fast this May 17, 2010. Revocation of non-profit status can be avoided by filing an extension before May 17th (the 15th is on a Saturday).

Previously, only organizations with revenues of $25,000 or more were required to file and many small charities are still functioning under that assumption. While this may represent a hardship for many small entities, it is part of an effort to provide more information to the donor community and tracking of non-profit entities in a more systematic manner. The IRS sent out approximately 665,000 letters to groups falling below the $25,000 threshold to notify them of the change in regulation and seem to be making an effort to help these groups reach compliance. No one involved is eager for a revocation en masse on May 18th!

Organizations with less than $25,000 in revenue can bring themselves into compliance by filing a simple e-postcard with the IRS.

Please keep this deadline in mind for any dormant groups, sub-organizations or affiliates and help get the word out. Go to the IRS website: http://www.irs.gov/charities/article/0,,id=217087,00.html for instructions on filing.

Additional information: http://www.nytimes.com/2010/04/23/us/23exempt.html