All posts by Pam Williams

IRS Unveils New Form for Organizations Applying for 501(c)(3) Tax-Exempt Status

by Taylor Elliott

On July 1, 2014, the Internal Revenue Service (IRS) released Form 1023-EZ as part of its efforts to streamline the application process for organizations seeking tax-exempt status.  The form is specifically designed for charities who wish to be classified as exempt under section 501(c)(3).  An organization must meet several criteria in order to be eligible to apply using the form, including a gross receipts test of $50,000 or less as well as an assets test of $250,000 or less. The form instructions outline additional criteria, including an eligibility worksheet that helps charities determine whether the form is right for them through a series of yes and no questions.

The IRS has indicated that the overall goal in developing Form 1023-EZ is to reduce the time and paperwork associated with providing a charity a determination as to its tax-exempt status. Previously, the IRS has been intensely criticized for a lengthy and cumbersome 1023 application process that includes an application backlog that is many months behind. Until now, all organizations, regardless of size, have been subject to the same 23-page form filled with a seemingly endless list of tedious questions, many of which are not relevant to smaller, simpler charities. After soliciting feedback from impacted parties, the IRS was able to whittle down to Form 1023-EZ, a three-page form containing only the most essential questions pertaining to determination of tax-exempt status of smaller organizations. According to IR-2014-77, as many as 70% of applicants are expected to be eligible to use this form, not only slashing the time spent by those charities in completing the application but also minimizing the time spent by the IRS in reviewing their files. The electronic filing requirement  is  also expected to increase the efficiency of the process. An application fee of $400 must be electronically submitted with the application as well.

For questions about this form or the tax-exempt application process in general, please contact our office.  We would love to discuss with you the ways that Langdon and Company LLP can help your organization obtain and maintain a tax-exempt status.

Taylor Elliott is a tax manager with Langdon & Company LLP. She specializes in tax compliance and planning, working with several not-for-profit organizations in the Triangle area.

Long Term Care Update

Nursing-homeby Rachel Owens

There is a proposed Medicare rate increase on the drawing board for skilled nursing facilities.  If the proposed rule (CMS-1605-P) is approved by CMS, there will be a market basket increase of 2% beginning 10/1/2014. This will result in an estimated economic impact on the country is $750 Million in FY 2015.  There are also wage index changes on the horizon.  These wage index reductions/increases vary by region.  In addition there are upcoming changes to the Medicare reimbursable bad debt percentages.  For fiscal year 2014, the reimbursable portion of non-dual bad debts has been reduced from 70% to 65%.  For dual eligible bad debts, only 76% – reduced even further for fiscal year 2015 to 65%.

On the Medicaid front, the FRV (Fair Rental Value) valuation will be changing to reflect renovations, bed additions and replacements (that were not adjusted with initial submission and now are included in the rates).  Also, NC’s Medicaid billing system has seen changes as well.  NC Tracks has been in the news for all the issues related to billing, and for good reason.  Beyond those problems, they have made the Medicaid application process a headache with extensive delays.

Many other changes continue to thwart our healthcare system.  Langdon & Company LLP continues to stay updated on the most recent issues.  Our professionals will be happy to help you sort through the details and understand the facts!

Rachel Owens is a Senior Accountant with Langdon & Company LLP.  She specializes in serving healthcare clients, including skilled nursing facilities and behavioral healthcare providers.

Net Investment Income Tax

Net Investment Income TaxStarting in 2013, individuals, estates and trusts may be subject to the Net Investment Income Tax (NIIT).  NIIT is surtax of 3.8% which is applied to the lesser of:

  • Modified Adjusted Gross Income (MAGI) above the threshold amount [Married filing jointly $250,000; Single/Head of Household $200,000; Married filing separately $125,000] or
  • Net Investment Income (NII).

The tax planning and compliance issues surrounding the NIIT are very complex.  The IRS has just recently updated its NIIT Frequently Asked Questions page.  It can be found at:  http://www.irs.gov/uac/Newsroom/Net-Investment-Income-Tax-FAQs. Continue reading Net Investment Income Tax

Are My Social Security Benefits Taxable?

Social SecurityToday many folks find themselves working into the Social Security years, whether by choice or necessity. Our Firm fields this question regularly. If Social Security was your only source of income in 2013, your benefits may not be taxable. You also may not need to file a federal income tax return. If you get income from other sources, then you may have to pay taxes on some of your benefits.

A quick and dirty rule of thumb is to add one-half of your Social Security benefits to all your other income, including any tax-exempt interest. Next, compare this total to the base amounts below. If your total is more than the base amount for your filing status, then some of your benefits may be taxable. The three base amounts are: Continue reading Are My Social Security Benefits Taxable?

Obama Administration Delays Part of Health Law’s Employer Mandate

More Delays to Obama Care Personal MandateThe U.S. Government announced an additional delay of the employer mandate associated with the Affordable Care Act (“ACA”) for certain medium sized employers. ACA is intended to extend health coverage to uninsured Americans, partly by imposing penalties on individuals and businesses not seeking coverage. Most individuals face a tax penalty for not having healthcare coverage in 2014. Continue reading Obama Administration Delays Part of Health Law’s Employer Mandate

Special Rules Regarding Gifts In Kind

Non ProfitThere are special IRS rules pertaining to gifts in kind for the recipient nonprofit and the donor.

The  recipient nonprofit organization can only acknowledge the date of receipt, description of the property, and its standing as a public charity eligible to receive donations from the public.  The assertion of the value of the property rests entirely on the donor.

The donor claiming a charitable deduction must comply with several steps. For any property donated with a purported value > $5,000, certain formalities must be followed in order to support the claiming of the charitable deduction by the donor.  These formalities fall to the donor to ensure full compliance and are summarized in the following steps: Continue reading Special Rules Regarding Gifts In Kind

Common Considerations for IRA Rollover

Common Considerations for a IRAIf you’ve been thinking about rolling over your traditional IRA from one financial institution to another, there are a number of things you should think about when doing so. There are a number of mistakes that occur here, which can incur unnecessary taxes and penalties, that you will definitely want to avoid. Check out some of the most important things to know about IRA rollovers, below. Continue reading Common Considerations for IRA Rollover

IRS decreases standard deductions for vehicle

Standard Deductions 2014The IRS is reducing the standard per mile deduction for travel in connection with business, medical care, and moving. The new allowance for business travel is 0.56¢ per mile, which is down from 0.565¢ per mile. The deductions for medical care and moving travel fall from 0.24¢ per mile to 0.235¢ per mile. The standard deduction for driving for charitable purposes is set separately and remains unchanged at 0.14¢ per mile. Continue reading IRS decreases standard deductions for vehicle