I think men are getting the short end of the best friend stick. After all, if girls get diamonds as Marilyn Monroe claims, it doesn’t seem fair for men to get dogs. I know what girls will say: (use condescending tone) “but men are like dogs in so many ways–both are smelly, easily distracted by simple games and can’t put the toilet seat down.” But my complaint is about the genre: if it is an animal for men–dog may be fine–then it should be an animal for girls. I vote for cats–like girls they are proud, self-absorbed and mean (my wife punched me after reading that). If the genre is showy, expensive things that you don’t really need (like diamonds), then I think men should get HD TVs. Regardless of whether you agree with me or agree with Marilyn,

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On May 5, the IRS released its Exempt Organization Newsletter, Issue Number 2011-8.  Topics include the following:

1. Treasury, IRS Seek Public Input on Certain Employer Provisions of the Affordable Care Act
2. Register Now for Denver Workshops for Small and Medium-Sized 501(c)(3) Organizations
3. Providing Disaster Relief to Recent Storm Victims through Charitable Organizations
4. Taxpayer Advocate Service
5. FSLG to Offer Webinar on Payments to Foreign Persons
6. Employee Plans Presents Webinar on International Issues
7. IRS Begins Enforcement of New Preparer Rules
8. Register Early to Save Money on National Tax Forums Registration

Click here to review IRS Newsletter Issue 2011-6.

The IRS recently warned that charities should be cautious to examine their new activities, especially income-producing activities, to confirm (a) the activities fit within the charity’s exempt mission, and (b) whether such activities constitute unrelated business income subject to tax. IRS officials stressed that good board oversight and governance is crucial to properly vetting issues related to new activities. This is sound advice – we would also add that it is important to vet new and old activities with your trusted tax adviser. 

  Is it time to put your charity’s activities under the microscope? 

The IRS recently announced that fringe benefits top the list of violations of the so-called “excess benefit transaction” rules.  A violation of these rules results in the imposition of an excise tax on the charity executive that received the fringe benefit and potentially an excise tax on charity board members who approved the compensation.

Many fringe benefits must be included in wages, such as an executive’s personal use of an employer provided vehicle.   Other benefits are included in wages if the charity and executive do not follow the “accountable plan” rules; for example, the reimbursement of an executive’s travel expenses must be included in wages if the executive fails to follow the accountable plan rules (including to properly document and account for the expenses).  Finally, lavish or extravagant reimbursements must also be included in taxable compensation.  Failure to include any taxable benefits in compensation (including inadvertent or unintentional failures) may result in an “automatic” excess benefit transaction.

 (my dream employer provided vehicle)

Therefore, it is important that a charity follows the accountable plan rules.  To qualify as an accountable plan: (1) the expenses covered by the plan must be reasonable business expenses, deductible under I.R.C. § 162; (2) the officer or employee must adequately account to the charity for such expenses within a reasonable time; and (3) the officer or employee must return any amount of excess allowance or reimbursement within a reasonable time. It is imperative that the charity’s and executives understand these rules and follow these rules closely.