The Pension Protection Act of 2006 has been signed into law for over a year now - we take this opportunity to remind non-profit organizations of some of the provisions that continue to have an impact or became effective for years that started after 2006.

* New provisions require organizations that don’t meet the $25,000 filing requirement to electronically file an annual notice containing basic contact and financial information. (Effective for tax years beginning after 2006)
* Property (non-cash) given to a non-profit to further its exempt purpose is not a charitable deduction to the donor if the property is not actually used for the exempt purpose. Non-profits should provide their non-cash donors with an affirmation (could be added to acknowledgement letter) regarding the use of property for exempt purposes.
* Deductions for contributions of clothing and household items must be in at least “good used condition.” It has always been unclear how this would be enforced – speculation is that taxpayers should photograph the items donated in order to properly substantiate the deduction.
* Cash contributions under $250 used to be able to be documented by a contemporaneous written record. Now all contributions require a donor receipt or bank record to substantiate.
* 990-T is now part of the public disclosure requirements, along with form 990, 1023 and an organizations determination letter.
* A change in the definition of net investment income now includes capital gains from appreciation, annuities and exempt purpose assets for some private foundations. This may result in a substantial increase in these entities excise tax.
* Several provisions have tightened up the requirements, and imposed stiffer penalties for grants, loans and compensation between related parties.

We encourage non-profit organizations to become familiar with the various IRS rules and regulations that are ever increasingly effecting how they do business. Minimize your organizations risk, and your donors. Please contact TLB if we can help. Posted by Rich Bienvenue