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Responsibilities of the Nonprofit Board of Directors
Every organization, including churches and other faith-based entities, are generally incorporated within their state of operation and have received special exemptions that allow them to operate without having to pay income tax on their annual earnings. Being recognized as a tax-exempt organization is a privilege however that comes with certain responsibilities. Consequently, a failure to fulfill these responsibilities can lead to serious consequences for the nonprofit. (read more)
CA Supreme Court Decides How to PayOvertime on Flat-Sum Bonus
For employers who give their employees flat-sum bonuses, the California Supreme Court recently clarified exactly how to calculate overtime pay for those workers.
In California, overtime pay is based on the employee's "regular rate of pay" - a rate that may not solely consist of an employee's normal hourly wage, as it must include almost all forms of pay the employee receives. But how do you calculate the regular rate of pay when an employee receives both an hourly wage(s) and a flat-sum bonus - such as an extra $15 for working a weekend shift? (read more)
Notifying the IRS and State Agencies
When Restructuring your Organization
Most nonprofits that have received an exemption from income tax understand that the basis on which the IRS determination was made were the facts and circumstances included in the original application submitted to the IRS for review and approval. Logically, it would seem that most organizations would understand that if the basis upon which the exemption was granted changed the exemption could no longer be relied upon. And they would be correct. (read more)
Unrelated Business Income Tax (UBIT)
Generally, organizations exempt from income tax under section 501(a) of the tax code do not pay federal income tax on their excess support and revenue over expenses (e.g. profits). However, Internal Revenue Code (IRC) Section 511 does impose a tax on the revenue generating activities of the otherwise exempt entity that are unrelated to their exempt purpose. A common misconception of many nonprofits is that if the revenue generated from activities is used for exempt purposes... (read more)
Identifying, Shaping &
Meeting Team IT Needs
A church IT forum discussion came up recently that is worth thinking through. The original post asked for input on how to keep team members from connecting their personal devices to the password-protected staff WiFi. The discussion that followed was a little like Mr. Toad's Wild Ride! Lots of ideas being tossed around, most of which uncomfortably avoided the most important questions.
Appeal Process Begins in Minister's Housing Allowance Case
A Wisconsin federal district court ruled in October 2017 that the housing exclusion for minister-provided housing is unconstitutional, a ruling that could ultimately strike down the allowance nationwide. Now an appeal to the Seventh Circuit Court of Appeals has been filed by a group of Chicago-area pastors (filed in early February 2018) in an attempt to overturn the ruling. (read more)
Exempt Employee Classifications in California
California law presumes that all employees are non-exempt employees, meaning that they are not exempt from the Labor Code requirements, such as overtime pay, meal and rest breaks, and minimum wage. On the other hand, my experience with most church and faith-based employers is that they tend to want to presume that most employees are exempt from the overtime rules and that by simply classifying the position as "exempt" they can effectively avoid having to pay overtime. (read more)
This information is provided with the understanding that CMA is not rendering tax, accounting, legal, or other professional advice. Professional advice on specific issues should be sought from a qualified CPA, attorney, or other professional.