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Taxes and Sustainable Community Building

This page will continuously develop to share the details of sustainable community building tax-related processes and the details of One Community’s tax process specifics. In includes what we annually file for our for-profit and nonprofit entities as well as other sustainable community tax-related resources.

We discuss these areas with the following sections:

NOTE: THIS PAGE IS STILL UNDER CONSTRUCTION

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CONSULTANTS ON THIS TAX GUIDE

Binru Chen: Accountant Specializing in Audit and Financial Reporting
Lucy Lu: Accountant Specializing in Financial Reporting and Managerial Accounting

 

WHAT IS ONE COMMUNITY’S TAX PROCESS

One Community operates a for-profit and nonprofit to open source and build duplicable teacher/demonstration communities, villages, and cities. Here are our tax processes for both.

 

NONPROFIT ANNUAL TAX PROCESS

Highest Good for-profit businessHere is One Community’s annual nonprofit tax responsibilities and process:

  1. Pay registered agent service ($49 through online service) and File Annual Report
    1. Wait for email confirmation
    2. Log into registered agent and download the Annual Report/Renewal Notice
    3. File Annual Report with the state. Click here for a resource showing when this is needed for each state.
      1. Visit state division of corporations and use a credit card to renew business (Due 3/31 for us) – paying $10 (+$3 fraud protection) to process your renewal using the Entity # and Renewal ID # found on the notice downloaded in #2
      2. Save a screenshot of your payment confirmation (you will also (immediately) receive an email confirmation)
  2. File Form 990-N if gross receipts are under $50,000 (The e-Postcard is due every year by the 15th day of the 5th month after the close of your tax year – May 15 for us because our tax year closes Dec 31st.)
    1. If you’ve logged in before, no need to create a new account
    2. Once you fill out the information, take a screenshot of your completion confirmation that will say: Congratulations, your Form 990-N (e-Postcard) has been submitted to the IRS. Once the IRS receives and processes your e-Postcard (usually within 30 minutes), you will receive an email indicating whether your e-Postcard was accepted or rejected. If accepted, you are done for the year. If rejected, the e-filing receipt email will contain instructions on how to correct the problem.

 

FOR-PROFIT ANNUAL TAX PROCESS

Highest Good for-profit businessOne Community’s annual for-profit tax responsibilities and process:

CLICK HERE TO LEARN HOW TO FILE AN EXTENSION IF MORE TIME IS NEEDED

NOTE: These may be needed for non-profit also.

  1. File Statement of Information with the state ($25 – due 5/31 for us)
  2. File quarterly payroll tax returns (Due: 4/30, 7/31, 10/31, and 1/31)
  3. Pay S-Corp fee with CA Form 100-ES to the (CA) Franchise Tax Board: $800 (Due April 15th)
  4. Request and print year-end summary(s) for company CC
    1. Use a spreadsheet to sort expenses into these categories:
      1. Supplies
      2. Salary
      3. Payroll Taxes
      4. Auto
      5. Bank Charges
      6. Consultant Fees
      7. Donations
      8. Dues and Subscriptions
      9. Education
      10. Insurance
      11. Internet
      12. Meals & Entertainment
      13. Office Supplies
      14. Office Equipment
      15. Outside Service
      16. Postage
      17. Printing
      18. Professional Fees
      19. Promotions
      20. Rent
      21. Supplies
      22. Telephone
      23. Travel
      24. Depreciation
      25. Penalty
      26. Taxes/Licenses
      27. Use Tax
      28. Franchise Tax Board Tax
  5. Print year-end summary for company bank account
    1. Highlight all checks paid
    2. Research and label who all the payees were
    3. Send 1099 forms (www.irs.gov/form1099misc) to all who were paid over $600 during the year (Due 1/31)
      1. File top 1099 form (Copy A) with Form 1096 (www.irs.gov/form1096) – address to mail to is on this form
      2. Mail 3rd 1099 form (Copy C) to recipients
      3. File all other forms in a “Taxes 20xx” File
      4. Itemize all income
  6. Pay state and federal income taxes (Due March 15th)
    1. Pay estimated taxes if filing an extension (Taxes then due September 15)

 

WHY OPEN SOURCE ONE COMMUNITY’S
TAX PROCESS

Open sourcing both our for-profit and nonprofit tax processes is purposed to teach people exactly what this process entails for us so they can make more educated decisions about what kind(s) of entity(s) they wish to set up themselves. It is also purposed to meet our goals of complete transparency.

 

TAXES AND COMMUNITY BUILDING

Taxes should be considered when beginning any community building project. Early consideration is important because taxes are different in different countries, different states, and different counties. This page is focused on the US (for now), and purposed to help people find the information they need as part of their US development process and/or their state and county selection process.

The following areas are discussed:

  • Tax Considerations State by State
  • Tax Considerations Community by Community
  • Tax Considerations of Nonprofit vs. For-profit

 

TAX CONSIDERATIONS STATE BY STATE

The best way to understand taxes for a specific area is to talk to a tax specialist within that area. There are resources though that can help you to have a basic understanding of the tax differences for various areas. Here are a few examples showing these tax differences between different states and counties. How important these differences are will differ greatly based on the goals and financial structure of your own community.

STATE TAXATION COMPARISONS

Income BusinessCorporate  LocalTax

County by County Average Property Tax Comparison - Click Image for Interactive Tool

County by County Average Property Tax Comparison – Click Image for Interactive Tool

DEPARTMENT OF TAXATION WEB PAGES

To review the most current details for each state and access the state-specific tax documents, here are links to each state’s government tax page.


Alabama tax information, Alabama tax forms, Alabama government tax info, Alabama income tax rates and forms, Alabama business tax rates and forms, Alabama sales tax information, Alabama state corporate income tax rates and forms, Alabama property tax information, Alabama Internal Revenue Service, Alabama charity taxation information, Alabama tax exemption information, Alabama website for tax information, Alabama taxation information, Alabama not for profit, NFP, 501(c)(3), charity, Alabama tax exemption, Alabama internal revenue service, Alabama premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesAlaska tax information, Alaska tax forms, Alaska government tax info, Alaska income tax rates and forms, Alaska business tax rates and forms, Alaska sales tax information, Alaska state corporate income tax rates and forms, Alaska property tax information, Alaska Internal Revenue Service, Alaska charity taxation information, Alaska tax exemption information, Alaska website for tax information, Alaska taxation information, Alaska not for profit, NFP, 501(c)(3), charity, Alaska tax exemption, Alaska internal revenue service, Alaska premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesArizona tax information, Arizona tax forms, Arizona government tax info, Arizona income tax rates and forms, Arizona business tax rates and forms, Arizona sales tax information, Arizona state corporate income tax rates and forms, Arizona property tax information, Arizona Internal Revenue Service, Arizona charity taxation information, Arizona tax exemption information, Arizona website for tax information, Arizona taxation information, Arizona not for profit, NFP, 501(c)(3), charity, Arizona tax exemption, Arizona internal revenue service, Arizona premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesArkansas tax information, Arkansas tax forms, Arkansas government tax info, Arkansas income tax rates and forms, Arkansas business tax rates and forms, Arkansas sales tax information, Arkansas state corporate income tax rates and forms, Arkansas property tax information, Arkansas Internal Revenue Service, Arkansas charity taxation information, Arkansas tax exemption information, Arkansas website for tax information, Arkansas taxation information, Arkansas not for profit, NFP, 501(c)(3), charity, Arkansas tax exemption, Arkansas internal revenue service, Arkansas premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesCalifornia tax information, California tax forms, California government tax info, California income tax rates and forms, California business tax rates and forms, California sales tax information, California state corporate income tax rates and forms, California property tax information, California Internal Revenue Service, California charity taxation information, California tax exemption information, California website for tax information, California taxation information, California not for profit, NFP, 501(c)(3), charity, California tax exemption, California internal revenue service, California premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesColorado tax information, Colorado tax forms, Colorado government tax info, Colorado income tax rates and forms, Colorado business tax rates and forms, Colorado sales tax information, Colorado state corporate income tax rates and forms, Colorado property tax information, Colorado Internal Revenue Service, Colorado charity taxation information, Colorado tax exemption information, Colorado website for tax information, Colorado taxation information, Colorado not for profit, NFP, 501(c)(3), charity, Colorado tax exemption, Colorado internal revenue service, Colorado premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesConnecticut tax information, Connecticut tax forms, Connecticut government tax info, Connecticut income tax rates and forms, Connecticut business tax rates and forms, Connecticut sales tax information, Connecticut state corporate income tax rates and forms, Connecticut property tax information, Connecticut Internal Revenue Service, Connecticut charity taxation information, Connecticut tax exemption information, Connecticut website for tax information, Connecticut taxation information, Connecticut not for profit, NFP, 501(c)(3), charity, Connecticut tax exemption, Connecticut internal revenue service, Connecticut premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesDelaware tax information, Delaware tax forms, Delaware government tax info, Delaware income tax rates and forms, Delaware business tax rates and forms, Delaware sales tax information, Delaware state corporate income tax rates and forms, Delaware property tax information, Delaware Internal Revenue Service, Delaware charity taxation information, Delaware tax exemption information, Delaware website for tax information, Delaware taxation information, Delaware not for profit, NFP, 501(c)(3), charity, Delaware tax exemption, Delaware internal revenue service, Delaware premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesFlorida tax information, Florida tax forms, Florida government tax info, Florida income tax rates and forms, Florida business tax rates and forms, Florida sales tax information, Florida state corporate income tax rates and forms, Florida property tax information, Florida Internal Revenue Service, Florida charity taxation information, Florida tax exemption information, Florida website for tax information, Florida taxation information, Florida not for profit, NFP, 501(c)(3), charity, Florida tax exemption, Florida internal revenue service, Florida premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states Georgia tax information, Georgia tax forms, Georgia government tax info, Georgia income tax rates and forms, Georgia business tax rates and forms, Georgia sales tax information, Georgia state corporate income tax rates and forms, Georgia property tax information, Georgia Internal Revenue Service, Georgia charity taxation information, Georgia tax exemption information, Georgia website for tax information, Georgia taxation information, Georgia not for profit, NFP, 501(c)(3), charity, Georgia tax exemption, Georgia internal revenue service, Georgia premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states Hawaii tax information, Hawaii tax forms, Hawaii government tax info, Hawaii income tax rates and forms, Hawaii business tax rates and forms, Hawaii sales tax information, Hawaii state corporate income tax rates and forms, Hawaii property tax information, Hawaii Internal Revenue Service, Hawaii charity taxation information, Hawaii tax exemption information, Hawaii website for tax information, Hawaii taxation information, Hawaii not for profit, NFP, 501(c)(3), charity, Hawaii tax exemption, Hawaii internal revenue service, Hawaii premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesIdaho tax information, Idaho tax forms, Idaho government tax info, Idaho income tax rates and forms, Idaho business tax rates and forms, Idaho sales tax information, Idaho state corporate income tax rates and forms, Idaho property tax information, Idaho Internal Revenue Service, Idaho charity taxation information, Idaho tax exemption information, Idaho website for tax information, Idaho taxation information, Idaho not for profit, NFP, 501(c)(3), charity, Idaho tax exemption, Idaho internal revenue service, Idaho premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesIllinois tax information, Illinois tax forms, Illinois government tax info, Illinois income tax rates and forms, Illinois business tax rates and forms, Illinois sales tax information, Illinois state corporate income tax rates and forms, Illinois property tax information, Illinois Internal Revenue Service, Illinois charity taxation information, Illinois tax exemption information, Illinois website for tax information, Illinois taxation information, Illinois not for profit, NFP, 501(c)(3), charity, Illinois tax exemption, Illinois internal revenue service, Illinois premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states Indiana tax information, Indiana tax forms, Indiana government tax info, Indiana income tax rates and forms, Indiana business tax rates and forms, Indiana sales tax information, Indiana state corporate income tax rates and forms, Indiana property tax information, Indiana Internal Revenue Service, Indiana charity taxation information, Indiana tax exemption information, Indiana website for tax information, Indiana taxation information, Indiana not for profit, NFP, 501(c)(3), charity, Indiana tax exemption, Indiana internal revenue service, Indiana premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states Iowa tax information, Iowa tax forms, Iowa government tax info, Iowa income tax rates and forms, Iowa business tax rates and forms, Iowa sales tax information, Iowa state corporate income tax rates and forms, Iowa property tax information, Iowa Internal Revenue Service, Iowa charity taxation information, Iowa tax exemption information, Iowa website for tax information, Iowa taxation information, Iowa not for profit, NFP, 501(c)(3), charity, Iowa tax exemption, Iowa internal revenue service, Iowa premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states Kansas tax information, Kansas tax forms, Kansas government tax info, Kansas income tax rates and forms, Kansas business tax rates and forms, Kansas sales tax information, Kansas state corporate income tax rates and forms, Kansas property tax information, Kansas Internal Revenue Service, Kansas charity taxation information, Kansas tax exemption information, Kansas website for tax information, Kansas taxation information, Kansas not for profit, NFP, 501(c)(3), charity, Kansas tax exemption, Kansas internal revenue service, Kansas premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesKentucky tax information, Kentucky tax forms, Kentucky government tax info, Kentucky income tax rates and forms, Kentucky business tax rates and forms, Kentucky sales tax information, Kentucky state corporate income tax rates and forms, Kentucky property tax information, Kentucky Internal Revenue Service, Kentucky charity taxation information, Kentucky tax exemption information, Kentucky website for tax information, Kentucky taxation information, Kentucky not for profit, NFP, 501(c)(3), charity, Kentucky tax exemption, Kentucky internal revenue service, Kentucky premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states Louisiana tax information, Louisiana tax forms, Louisiana government tax info, Louisiana income tax rates and forms, Louisiana business tax rates and forms, Louisiana sales tax information, Louisiana state corporate income tax rates and forms, Louisiana property tax information, Louisiana Internal Revenue Service, Louisiana charity taxation information, Louisiana tax exemption information, Louisiana website for tax information, Louisiana taxation information, Louisiana not for profit, NFP, 501(c)(3), charity, Louisiana tax exemption, Louisiana internal revenue service, Louisiana premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states Maine tax information, Maine tax forms, Maine government tax info, Maine income tax rates and forms, Maine business tax rates and forms, Maine sales tax information, Maine state corporate income tax rates and forms, Maine property tax information, Maine Internal Revenue Service, Maine charity taxation information, Maine tax exemption information, Maine website for tax information, Maine taxation information, Maine not for profit, NFP, 501(c)(3), charity, Maine tax exemption, Maine internal revenue service, Maine premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesMaryland tax information, Maryland tax forms, Maryland government tax info, Maryland income tax rates and forms, Maryland business tax rates and forms, Maryland sales tax information, Maryland state corporate income tax rates and forms, Maryland property tax information, Maryland Internal Revenue Service, Maryland charity taxation information, Maryland tax exemption information, Maryland website for tax information, Maryland taxation information, Maryland not for profit, NFP, 501(c)(3), charity, Maryland tax exemption, Maryland internal revenue service, Maryland premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesMassachusetts tax information, Massachusetts tax forms, Massachusetts government tax info, Massachusetts income tax rates and forms, Massachusetts business tax rates and forms, Massachusetts sales tax information, Massachusetts state corporate income tax rates and forms, Massachusetts property tax information, Massachusetts Internal Revenue Service, Massachusetts charity taxation information, Massachusetts tax exemption information, Massachusetts website for tax information, Massachusetts taxation information, Massachusetts not for profit, NFP, 501(c)(3), charity, Massachusetts tax exemption, Massachusetts internal revenue service, Massachusetts premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states Michigan tax information, Michigan tax forms, Michigan government tax info, Michigan income tax rates and forms, Michigan business tax rates and forms, Michigan sales tax information, Michigan state corporate income tax rates and forms, Michigan property tax information, Michigan Internal Revenue Service, Michigan charity taxation information, Michigan tax exemption information, Michigan website for tax information, Michigan taxation information, Michigan not for profit, NFP, 501(c)(3), charity, Michigan tax exemption, Michigan internal revenue service, Michigan premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesMinnesota tax information, Minnesota tax forms, Minnesota government tax info, Minnesota income tax rates and forms, Minnesota business tax rates and forms, Minnesota sales tax information, Minnesota state corporate income tax rates and forms, Minnesota property tax information, Minnesota Internal Revenue Service, Minnesota charity taxation information, Minnesota tax exemption information, Minnesota website for tax information, Minnesota taxation information, Minnesota not for profit, NFP, 501(c)(3), charity, Minnesota tax exemption, Minnesota internal revenue service, Minnesota premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states  Mississippi tax information, Mississippi tax forms, Mississippi government tax info, Mississippi income tax rates and forms, Mississippi business tax rates and forms, Mississippi sales tax information, Mississippi state corporate income tax rates and forms, Mississippi property tax information, Mississippi Internal Revenue Service, Mississippi charity taxation information, Mississippi tax exemption information, Mississippi website for tax information, Mississippi taxation information, Mississippi not for profit, NFP, 501(c)(3), charity, Mississippi tax exemption, Mississippi internal revenue service, Mississippi premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesMissouri tax information, Missouri tax forms, Missouri government tax info, Missouri income tax rates and forms, Missouri business tax rates and forms, Missouri sales tax information, Missouri state corporate income tax rates and forms, Missouri property tax information, Missouri Internal Revenue Service, Missouri charity taxation information, Missouri tax exemption information, Missouri website for tax information, Missouri taxation information, Missouri not for profit, NFP, 501(c)(3), charity, Missouri tax exemption, Missouri internal revenue service, Missouri premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesMontana tax information, Montana tax forms, Montana government tax info, Montana income tax rates and forms, Montana business tax rates and forms, Montana sales tax information, Montana state corporate income tax rates and forms, Montana property tax information, Montana Internal Revenue Service, Montana charity taxation information, Montana tax exemption information, Montana website for tax information, Montana taxation information, Montana not for profit, NFP, 501(c)(3), charity, Montana tax exemption, Montana internal revenue service, Montana premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states Nebraska tax information, Nebraska tax forms, Nebraska government tax info, Nebraska income tax rates and forms, Nebraska business tax rates and forms, Nebraska sales tax information, Nebraska state corporate income tax rates and forms, Nebraska property tax information, Nebraska Internal Revenue Service, Nebraska charity taxation information, Nebraska tax exemption information, Nebraska website for tax information, Nebraska taxation information, Nebraska not for profit, NFP, 501(c)(3), charity, Nebraska tax exemption, Nebraska internal revenue service, Nebraska premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states Nevada tax information, Nevada tax forms, Nevada government tax info, Nevada income tax rates and forms, Nevada business tax rates and forms, Nevada sales tax information, Nevada state corporate income tax rates and forms, Nevada property tax information, Nevada Internal Revenue Service, Nevada charity taxation information, Nevada tax exemption information, Nevada website for tax information, Nevada taxation information, Nevada not for profit, NFP, 501(c)(3), charity, Nevada tax exemption, Nevada internal revenue service, Nevada premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesNew Hampshire tax information, New Hampshire tax forms, New Hampshire government tax info, New Hampshire income tax rates and forms, New Hampshire business tax rates and forms, New Hampshire sales tax information, New Hampshire state corporate income tax rates and forms, New Hampshire property tax information, New Hampshire Internal Revenue Service, New Hampshire charity taxation information, New Hampshire tax exemption information, New Hampshire website for tax information, New Hampshire taxation information, New Hampshire not for profit, NFP, 501(c)(3), charity, New Hampshire tax exemption, New Hampshire internal revenue service, New Hampshire premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states New Jersey tax information, New Jersey tax forms, New Jersey government tax info, New Jersey income tax rates and forms, New Jersey business tax rates and forms, New Jersey sales tax information, New Jersey state corporate income tax rates and forms, New Jersey property tax information, New Jersey Internal Revenue Service, New Jersey charity taxation information, New Jersey tax exemption information, New Jersey website for tax information, New Jersey taxation information, New Jersey not for profit, NFP, 501(c)(3), charity, New Jersey tax exemption, New Jersey internal revenue service, New Jersey premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states New Mexico tax information, New Mexico tax forms, New Mexico government tax info, New Mexico income tax rates and forms, New Mexico business tax rates and forms, New Mexico sales tax information, New Mexico state corporate income tax rates and forms, New Mexico property tax information, New Mexico Internal Revenue Service, New Mexico charity taxation information, New Mexico tax exemption information, New Mexico website for tax information, New Mexico taxation information, New Mexico not for profit, NFP, 501(c)(3), charity, New Mexico tax exemption, New Mexico internal revenue service, New Mexico premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all states New York tax information, New York tax forms, New York government tax info, New York income tax rates and forms, New York business tax rates and forms, New York sales tax information, New York state corporate income tax rates and forms, New York property tax information, New York Internal Revenue Service, New York charity taxation information, New York tax exemption information, New York website for tax information, New York taxation information, New York not for profit, NFP, 501(c)(3), charity, New York tax exemption, New York internal revenue service, New York premises liability, federal tax, US Departments of Taxation, State-by-State Taxation Information, US State, Government Tax Pages, Where to Get State Tax Information, State Tax Resources for Starting a Non-profit, State Websites for Tax Information, All State IRS Pages, Tax Exemption Information for All States, Charity formation in any state, Internal revenue sources for all statesNorth Carolina tax information, North Carolina tax forms, North Carolina government tax info, North Carolina income tax rates and forms, North Carolina business tax rates and forms, North Carolina sales tax information, North Carolina state corporate income tax rates and forms, North Carolina property tax information, North Carolina Internal Revenue Service, North Carolina charity taxation information, North Carolina tax exemption information, 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TAX CONSIDERATIONS COMMUNITY BY COMMUNITY

So, what are the tax concerns that you need to be aware of if you are starting a community? To answer this question, it is helpful to think of your community as a business because “businesses” are what the tax code was written for. With this in mind, many aspects of a business influence the amount of tax due, and even the slightest change of the daily operation can result in hundreds of dollars in tax saving or wasting. This number can balloon to thousands, tens of thousands, or even more if your business/community becomes large enough.

Here are some factors that you might want to be aware of during tax planning:

  • Business Mission: The mission of the business is what determines whether the company is a for-profit (FP) or not-for-profit (NFP) organization. FP company’s mission is to increase shareholders’ equity, and NFP business’ mission is to improve the wellbeing of the society, which is usually the responsibility of the government. Because of this, local governments grant tax benefits to NFP organizations.
  • Property: The purpose, owner, or the market value of the property also influences the tax due. Actual rate varies among states, usually between 0% to 4% of the property value. When an organization uses the property, either owned by the organization or leased from a third party, for specific NFP reasons, such as education, charity, hospital, etc. they can take a full or partial property tax exemption. If the entire property is used for NFP reason, they will receive full exemption, and if only a portion of it is used for the above purposes, they will receive partial exemption. Companies can apply the tax benefit by submitting the Tax Exemption Application to State Tax Commission.
    Click here for the step by step tutorial

 

TAX CONSIDERATIONS OF NONPROFIT VERSUS FOR-PROFIT

Another consideration when forming any collaborative community is whether to operate as a for-profit, nonprofit, neither, or both. There are significant differences between the taxation of for-profit and non-profit entities. Operating as “neither” would mean that the community is just group of people living together and not having any specific entity structure.

Here is a side-by-side comparison of the taxation rule differences between a nonprofit (NFP) organization and a for-profit (FP) business:

Items Not-for-profit organization with tax exemption status For-profit business
Property tax Full or partial exemption No exemption, around 4%
Sales tax Exemption No exemption, 0-12%
Income tax Exemption No exemption, 0-20%
Employee tax Social Security tax: 6.2% * first $118,500 of wages
Medicare tax: 1.45% * full wages
(for employee and employer respectively, 2015 tax year)
PROPERTY

Property tax consideration includes location, purpose, and market value. A NFP organization might be exempt from the property tax if the whole property is used for qualified purposes. The insurance expense and coverage on the property varies. If the property is owned and managed by the company, the insurance can cover both the building and the office content. But if the property is leased from a third party, the insurance can only cover the office content.

SALES AND INCOME TAX

NFP organization who received tax exempt status will not be subject to sales tax and income tax, which can be a huge saving for the company. However, the sales tax exempt is only valid on purchases of necessities used in qualified activities. For example, when hospitals make purchases of medicines, it will qualify as a necessary product and will be sales tax free, but if they buy shavers to sell in the pharmacy store, this purchase will be considered unnecessary thus will not receive the tax benefit. Similar rule applies to income tax exemption, only the portion of income that is directly related to the qualified activities will be tax free.

EMPLOYEE

Employee taxes include Social Security tax and Medicare tax. The tax rate changes every year and it is calculated by multiplying a certain percentage to the employee wages. The employee tax rates are the same for NFP and FP companies. For organizations that hire unpaid volunteers, the employee taxes will be greatly reduced because the wages are considerably lower than for-profit businesses.

Click here for everything One Community filed to receive our 501(c)3 nonprofit status

 

OUR JOURNEY TO CLASSIFYING
ALL ONE COMMUNITY VENTURES AS NONPROFIT

Initially, One Community thought that some aspects of One Community’s revenue generating ventures like eco-tourism, sale of products, etc. would only be able to be operated as for-profit. Thanks to the help of our tax and accounting consultants, we’ve now come to believe that all aspects of One Community can be part of our nonprofit. Any that aren’t will be covered with complete details on our for-profit page.

For organizations like ours that are seeking to operate as 100% nonprofit, here are the key areas we’ve researched and consider essential to understand:

 

NOT-FOR-PROFIT ORGANIZATION EXEMPTION CRITERIA

Highest Good for-profit businessClassifying any revenue generating venture as not-for profit has several important criteria that it must meet:

  1. Exclusively for exempt purposes set forth in 501(c)(3). Distribution Constraint: Surplus income cannot be distributed to organizational Directors (or equivalent) as dividends
  2. Member serving or community serving: The venture should benefit a particular group of people (ex: credit unions or sports clubs) or provide services to the community in general (ex: educational service or medical research) or both.
  3. 501(c)(3) organizations requirement: (click here for the IRS page about this)
    1. Exclusively for exempt purposes set forth in 501(c)(3)
    2. May not be an “action organization” (attempt to influence legislation or participate in campaign activities for or against political candidates, etc.)
    3. Must not be for private interests, and no part of the earning may inure to any private shareholders or individual.

 

HOW TO APPLY FOR TAX EXEMPTION STATUS

Highest Good for-profit businessHere is how to apply for tax exemption status. You can also click here for copies of everything we filed when we applied for our nonprofit status.

  1. Determine the right category
    Private Foundation: has a single major source of funding, it is the default category for most organizations
    Public Charity: receive funding from multiple sources, including the general public
  2. Request an Employer Identification Number (EIN), even if the organization does not have any employees. Application form SS-4: http://www.irs.gov/pub/irs-pdf/fss4.pdf
  3. Submit the application (Form 1023-series) for exempt status under section 501(c)(3).
  4. User fees for exempt organizations
    The amount of user fees varies, please use below link to find one that matches your organization:
    http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Exempt-Organizations-User-Fees-2014
  5. Step by step review to ensure you have everything ready
    http://www.irs.gov/Charities-&-Non-Profits/Application-Process
  6. Submit the complete application portfolio to Internal Revenue Service (IRS)
  7. Public inspection after receiving the tax exemption
    The organization needs to have its approved application with all supporting documents and last three annual reports ready for public inspection.
    P.S. Must notify Internal Revenue Service within 27 month from the date of formation to be treated as 501(c)(3) from the date formed.

The organization needs to have its approved application with all supporting documents and last three annual reports ready for public inspection.
P.S. Must notify Internal Revenue Service within 27 months from the date of formation to be treated as a 501(c)(3) from the date formed.

 

HOW TO SET YOURSELF UP TO BE TRANSPARENT

Highest Good for-profit businessIf the intent is to operate non-traditional nonprofit ventures, transparency to prove these ventures as nonprofit is essential. Here are the foundations for accomplishing this.

DISCLOSURE

Disclose quarter/semiannual/annual financial statements online and the proof of the contribution to One Community, if no distribution is made to the shareholders, the total revenue received from visitors minus the total expense (program service, utility, depreciation, marketing, taxes, etc.) should equal the amount of contribution to One Community. This will ensure and prove to the public the State Tax Department and Internal Revenue Service that the resort is a 501(c)(3) organization which should receive tax exemptions.

BUSINESS MISSION

To provide the living experience in a totally sustainable environment in the eco-tourism resort. Educational experience with volunteer tutors explaining the sustainable system and how the community functions.

FINANCIAL REPORTING

A certified financial statement should include two years audited Balance sheet and three years audited Income statement. Below examples show only one year format. We are illustrating the income statement format for both the for-profit business and the not-for-profit organization.

NFP organizations account for their resource in funds, and each of the funds is a separate accounting entity, meaning the record of each funds is separate but there might be transfers between funds. According to Financial Accounting Standards Board (FASB), NFP must classify the net assets into three categories: unrestricted, temporarily restricted, and permanently restricted. The classification is based on donors’ will, which means the person or corporation who made the contribution will decide the nature of the asset.

Generally, permanently restricted net assets are the endowments with a principal that can never be used, but the income from the principal is available for expenditure. Temporarily restricted net assets are mainly the resources that are to be used for specific purposes in a set period of time. The net assets that do not fall into the two categories are unrestricted net assets.

Contribution of services are the costs would otherwise occur for the NFP if it is not performed by the unpaid volunteers. Two criteria need to be met for the NFP to recognize the contribution:

1. The services create or enhance non-financial assets.
2. The services require specialized skills and would likely need to be purchased if not donated.

According to FASB, the services are those provided by accountants, carpenters, doctors, electricians, lawyers, nurses, plumbers, teachers, and other professionals.
Journal entry on service contribution recognition:

Debit Credit
Expenses $xxx
Revenue from contributed services $xxx

Though GAAP allows organizations to recognize services revenue if above two criteria are met, in real world it is sometimes difficult to justify.

Individuals cannot deduct the value of your time or services, so organizations should not issue receipts of donations for the services.

 

IncomeStatement-1

 

BalanceSheet-2

FinancialPosition-1

StatementActivities-1

Each FP business or NFP organization would have differences in financial reporting depending on the nature of the activities. Above information is for illustration only, it does not cover all aspects of a business or NFP operations.

General comparison between NFP compare to FP

NFP compare to FP

When volunteers leave the property, they might want to let One Community manage the house during their leave and earn income from renting it out. When the volunteer (house owner) needs One Community to manage the house during their leave, the house owner will be charged for the expense cost and receive profit if the house is rented out. In the same time, One Community will also earn revenue from providing the management service. We think this will be a win-win situation for both house owner and One Community. Below we have the tutorial on how to record expenses and revenues in this case.

  1. Calculate the daily expense to maintain one house, including cleaning cost, toiletries expenses, utilities expenses, etc. For example, the total expense is $20 per day.
  2. When such expenses occur, debit the total amount to accounts receivable, credit cash / payable. One Community would not record expenses because the house is not owned or leased by One Community and the house owner is responsible for the maintaining cost of the house.
    Accounts receivable (from house owner) $20.00  Cash/accounts payable $20.00
  3. If the house is not rented out during the house owner’s leave, no revenue is recognized. If the house is rented out, we would debit cash (or accounts receivable if customer pay by credit) and credit accounts payable to house owner. For example, daily charge for one room is $120 per day.
    Cash/accounts receivable $120.00
    Service revenue (for providing management service) $30.00
    Accounts payable (collected on behalf of house owner) 90.00
  4.  Make the net payment ($90-$20=$70) to the house owners when they return. If the house owner wants to make further contribution to One Community, then we will recognize contribution revenue and the donor may be able to deduct the amount.
    Accounts payable $90.00
    Accounts receivable $20.00
    Cash 70.00

Possible accounts to the Statement of Activities:

StatmentActivities
The financial statement in excel is constructed with the accounts that will likely be used in the eco-tourism resort. For organizations with other products or services, the accounts needed can be very different. Here are some additional accounts and the accounts with definitions that could vary dramatically for different organizations:
Revenue:

  • special events,
  • special event incentives,
  • legacies and bequests,
  • allocated by federated fundraising organizations,
  • grants from other organizations,
  • other program fees (e.g. student tuitions, patient care charges, church service charges),
  • sale of necessary products (e.g. educational materials, prescribed medicines),
  • perpetual trust revenue,
  • realized and unrealized gain on investment or properties,
  • gain on investment transactions, and etc.

Expenses:

  • program services (e.g. employee salaries and benefits, research, public health education, professional training, inventories cost, scholarships to students),
  • supporting services (depreciation on buildings and equipment, investment management fees, change from retirement obligations, gains from discontinued operations),
  • allocations to other charity organizations, and etc.

The above accounts and classifications may vary based on specific organizations. For example, investment income might be within program services (the main function of an NFP organization) for a charity foundation, but supporting services for a hospital or college. It is important that organizations consult with a professional accountant who knows about your organization before setting up these accounts for yourself.

Possible accounts to the Statement of Financial position
Assets:

  • charity gift annuity
  • beneficial interest in perpetual trust
  • contribution receivable from charitable remainder trust
  • notes receivable
  • leasehold improvements
  • deferred charges

Liabilities:

  • accrued expenses
  • funds held for others
  • deposits
  • liabilities under interest-split agreement
  • bonds payable
  • government loan advances

RESOURCES

CHARITIES AND OTHER NOT-FOR-PROFIT ORGANIZATION

Many charities and not-for-profit organizations can be tax exempted by IRS.

Tax exemption requirement by IRS

Charities and not-for-profit organization can apply tax exemption under Section 501(c)(3) and 501(a) of the Internal Revenue Code.

Section 501(c)(3) focuses on the tax exemption of charitable, religious and educational organizations. To apply for tax exemption under Section 501(c)(3), an organization must qualify the standards below:

  • Organized and operated exclusively for exempt purposes set forth in Section 501(c)(3), such as charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.
    • None of its earnings inure to any private shareholder or individual.
    • May not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or political candidates.

If an organization fulfills the standards above, it can file Form 1023 to IRS to apply for recognition of exemption under Section 501(c)(3).

Section 501(a) focuses on other nonprofit or tax-exempt organizations. The qualified organizations under Section 501(a) can file Form 1024 to IRS to apply for recognition of exemption.

Annual Reporting and Filing for Tax Exempt Organizations

IRS requires general tax exempt organizations to file annual returns. (There are some exceptions, details)

  • The forms to be filed as annual return depends on their financial activities.
  • File Form 990-N for organizations whose gross receipts normally < $50,000. (Most small tax-exempt organizations whose annual gross receipts are normally $50,000 or less are required to electronically submit Form 990-N, also known as the e-Postcard, unless they choose to file a complete Form 990 or Form 990-EZ instead).
  • File Form 990-EZ or Form 990 for organizations whose gross receipts <$200,000 and total assets <$500,000.
  • File Form 990 for organizations whose gross receipts >$20,000, or total assets >$500,00.
  • File Form 990-PF for private foundation, regardless of financial status.

Due dates for Tax Exempt Organizations Annual Returns

The initial return date is the 15th day of the fifth month after the organization’s ending date of tax year, the first extended due date is the 15th day of the eighth month after the organization’s ending date of tax year, and the second extended due date is the 15th day of the eleventh month after the organization’s ending date of tax year.

For example, an organization’s ending date of tax year is December 31, its initial return date May 15th, first extended return date is Aug. 15th, and second extended return date is November 15th.

If a due date is not a business day, the due date is delayed until the next business day.

Punishment for Failure to File Annual Return

According to section 6033(j) of the Internal Revenue Code, organizations that do not file for three consecutive years automatically lose their exempt status. An automatic revocation is effective on the original filing due date of the third annual return or notice.

IRS posts the list of organizations which fail to file annual return for three consecutive years. These organizations are no longer exempt from federal income tax. Consequently, they may be required to file Form 1120 or Form 1041 and pay applicable income taxes. Furthermore, these organizations are not eligible to receive tax-deductible contributions and will be removed from the cumulative list of tax0exempt organizations by IRS.

However, these organizations have opportunities to reinstate their tax-exempt status in four different ways. (http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Automatic-Revocation-How-to-Have-Your-Tax-Exempt-Status-Retroactively-Reinstated)

Taxes Non-profits Still Have to Pay

  1. Employment tax

If the non-profit organization have employees, they must hold employment taxes from their employee’s wages. The employment taxes include federal income tax withholding (FITW), social security and Medicare taxes (FICA), and federal unemployment taxes (FUTA).

In general, the organization (employer) must deposit federal income tax withheld, and both the employer and employee social security and Medicare taxes. The organization has to decide which deposit schedule to use, monthly or semiweekly, before each calendar year.  Reviewing Publication15 for Forms 941, 944 and 945, or Publication 51 for Form 943 can help the organization determine the payment schedule. A maximum penalty is up to 15% if the organization doesn’t make a timely deposit.

There is a base limitation for Social Security tax, which means the organizations withhold their employee’s gross wages until they reach an annual base limit, and employee’s wages above the limit are not subject to social security tax.

However, all wages are subject to the Medicare taxes.

To report employer’s quarterly federal tax return, use Form 941.

FUTA is only paid by the organizations, and employee don’t have to pay for it.

An organization that is exempt from income tax under section 501(c)(3) of the Internal Revenue Code is also exempt from FUTA.  An organization that is not a section 501(c)(3) organization is not exempt from paying FUTA tax.

To report employer’s annual federal unemployment (FUTA) tax return, use Form 940.

Besides, if a person services a non-profit organization as an independent contractor, the organization does not generally have to withhold or pay any taxes on payments to him/she.

To differentiate employee and independent contractor, you can find more information in this link http://www.irs.gov/pub/irs-pdf/p15a.pdf.

Employment tax forms related 

Form I-9 Employment Eligibility Verification
Form SS-4 Application for Employer Identification Number
Form SS-8 Determination of Worker Status
Form W-2 Wage and Tax Statement
Form W-2C Corrected Wage and Tax Statement
Form W-3 Transmittal of Wage and Tax Statements
Form W-3C Transmittal of Corrected Wage and Tax Statements
Form W-4 Employee’s Withholding Allowance Certificate
Form W-4P Withholding Certificate for Pension or Annuity Payments
Form 940 Employer’s Annual Federal Unemployment Tax Return
Form 941 Employer’s Quarterly Federal Tax Return
Form 941 Schedule B, Employer’s Record of Federal Tax Liability
Form 941-X Adjusted Employer’s QUARTERLY Federal Tax Return or Claim for Refund
Form 943 Employer’s Annual Tax Return for Agricultural Employees
Form 944 Employer’s Annual Federal Tax Return
Form 945 Annual Return of Withheld Federal Income Tax
Form 1040ES Estimated Tax for Individuals
Form 1040 Schedule H, Household Employment Taxes
Form 1042 Annual Withholding Tax Return for U.S. Source Income of Foreign Persons
Form 1099-MISC Miscellaneous Income
Form 1099-R Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRA, Insurance Contracts
Form 1120 U.S. Corporation Income Tax Return
Form 4137 Social Security and Medicare Tax on Unreported Tip Income
Form 8027 Employer’s Annual Information Return of Tip Income and Allocated Tips

2. Unrelated Business Tax (UBIT)

3. Property taxes

4. Miscellaneous

Unrelated Business Income Tax (UBIT)

Step One: determine if your organization engages in unrelated business activities.

Tax exempt non-profit organizations maybe engage in trade or business activities. If these trade or business activities are regularly carried on and are not substantial related to organization’s’ tax-exempt purpose, income produced by these business activities is subject to Unrelated Business Income Tax (UBIT).

Step Two: determine if your organization’s business activities fall into the categories below.

Unrelated business activities include sale of merchandise and publications, advertising, gaming, rental income, parking lots, and debt management plan service.

  • Sale of merchandise and publications. If a non-profit organization sells merchandise, publications or any other things not related to the exempt purpose of the organization, the income from business activities above will subject to tax.
  • Advertising. This may include the sale of advertising space in bulletins, magazines, and journals, or on the organization’s website.
  • Gaming. Most of forms of gaming, if regularly carried on, are included in trade or business activities. Such as Beano, raffles, lotteries, pull-tabs, scratch-offs, pari-mutuel betting, Calcutta wagering, pickle jars, punchboards, tip boards, and so on. However, bingo is an exception.
  • Rental Income. Rental income coming from renting out property on which there is a debt outstanding, may constitute unrelated debt-financed income. Or, income coming from personal services rendered in connection with the rental may be unrelated business taxable income.
  • Parking lots. If an organization operates a parking lot that is used by the general public, the parking fees would be taxable. And, if an organization enters into a lease with a third party who operates the organization’s parking lot, which the organization has a mortgage on, the renting fees paid to the organization are taxable.

Step Three: Determine the exceptions

There are some exceptions that not subject to unrelated business income tax.

  • Activities Conducted by Volunteers. If the trade or business activities are conducted for an organization by volunteers, the income produced is not subject to unrelated business income tax.
  • Convenience. If trade or business activities are carried on by either a 501(c)(3) organization or a state college or university primarily for the convenience of its members, students, patients, officers, or employees, the income produced is not subject to unrelated business income tax.
  • Sale of Donated Merchandise. The income from selling merchandise that substantially are received as gifts or contributions is not subject to unrelated business income tax.
  • Distribution of Low-Cost Articles. The activities that conducted by 501(c)(3) organizations and veterans’ organizations that involve the distribution of low-cost items in conjunction with the solicitation of charitable contributions, are not unrelated business activities.
  • Convention or Trade Show. If one of the purposes of sponsoring activities, such as convention, annual meeting, or trade show, by a section 501(c)(3), (4), (5), or (6) organization is to promote the products or services of an industry or educate attendees of new industry developments, products, and services, and the organization regularly conducts such trade shows as one of its exempt purposes, this kind of activities are not included in unrelated business activities.
  • Sponsorship Payments. If a person pay an exempt organization only for the use or acknowledgement of the payer’s name, logo, or services or goods of insubstantial value. This is not included income from unrelated business activities.

Step Four: Filing for Unrelated Business Income Tax (UBIT)

If a tax-exempt organization has gross unrelated business income more than $1,000 for any tax year, this exempt organization must file Form 990-T, in addition to the requirement to file Form 990, 990-EZ, 990-N, or 990-PF.

Form 990-T is due the 15th day of the 5th month following the end of the organization’s accounting period (tax year). However, an automatic 6-month extension of time to file can be requested by filing Form 8868.

Failing to pay Unrelated Business Income tax on time will lead to interest and penalty charges by IRS.

Forms can be used to file UBIT

Form 990-T Exempt Organization Business Income Tax Return
Form 990-W Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations
Form 1120 U.S. Corporation Income Tax Return
Form 8868 Application for Extension of Time to File Exempt Organization

Return

More information can be found in Publication 598, Tax on Unrelated Business Income of Exempt Organizations.

Property tax exemption for nonprofit organizations

The qualification and application for property tax exemption varies in different states. Here we take the situation in the state of California for instance.

Step 1: Determine the eligibility of property tax exemption”

In State of California, to apply the property tax exemption, a nonprofit organization must qualify the tax-exempt regulations under the Internal Revenue Service 501(c)(3) or California Franchise Tax Board 23701(d).

In addition, to be eligible to apply property tax exemption in State of California, the nonprofit organizations must be organized for one or more following tax exempt purposes: religious, hospital, scientific or charitable. What’s more, the property claimed for tax exemption must be used exclusively for qualified exempt activity.

The property used by other organizations tax exempt organization (under Internal Revenue Code 501(c)(3) or 501(c)(4) or Franchise Tax Board 23701(d)), incidentally for exempt purposes only can be tax exemption.

Step 2: apply for the property tax exemption

Firstly, the nonprofit organizations should submit their formative documents, including 1) current Articles of Incorporation filed with the Secretary of State, 2) tax Letter from Internal Revenue Service or Franchise Tax Board, 3) annual financial statements, 4) documentation supporting exempt activity, to the Board of Equalization. If a nonprofit organization is eligible for property tax exemption, The Board of Equalization will issue an Organizational Clearance Certificate.

Secondly, the organization should apply local county assessor for reviewing their property for qualifying use and issues the exemption.

Step 3: filing

A retroactive filing is available for eligible organizations for up to 4 prior years, and maximum late-filing penalty for retroactive filing is $250 per year, per property

Links related

Claim for Organizational Clearance Certificate www.boe.ca.gov/proptaxes/pdf/boe277.pdf
Claim for Supplemental Clearance Certificate www.boe.ca.gov/proptaxes/pdf/boe277l1.pdf
Assessors’ Handbook: AH267: Welfare, Church and Religious Exemptions www.boe.ca.gov/proptaxes/pdf/ah267.pdf
County assessors and contact Information www.boe.ca.gov/proptaxes/assessors.htm
Irrevocable Dedication and Dissolution language

(Property Tax Rule 143)

www.boe.ca.gov/proptaxes/pdf/143Adopted.pdf
Publication 149 – Property Tax Welfare Exemption www.boe.ca.gov/proptaxes/pdf/pub149.pdf
Welfare Exemption Claim forms and assessor

information

www.boe.ca.gov/proptaxes/assessors.htm

Forms related

BOE-262-AH Church Exemption
BOE-263 Lessors’ Exemption Claim
BOE-267-S Religious Exemption Claim
BOE-267-SNT Religious Exemption Change in Eligibility or Termination Notice
BOE-277 Claim for Organizational Clearance Certificate – Welfare Exemption
BOE-277-LLC Claim for Organizational Clearance Certificate – Welfare Exemption – Limited Liability Company
BOE-278-OCC Verification for Continued Eligibility of Organizational Clearance Certificate – Welfare Exemption or Veterans’ Organization Exemption
BOE-267 Claim for Welfare Exemption (First Filing)
BOE-267-A Claim for Welfare Exemption (Annual Filing)
BOE-267-H Welfare Exemption Supplemental Affidavit, Housing – Elderly or Handicapped Families
BOE-267-L Welfare Exemption Supplemental Affidavit, Housing – Lower-Income Households
BOE-267-R Welfare Exemption Supplemental Affidavit, Rehabilitation – Living Quarters
BOE-277-F1 Welfare or Veterans’ Organization Exemption Organizational Clearance Certificate
BOE-277-F2 Welfare or Veterans’ Organization Exemption Organizational Clearance Certificate

Property tax exemption for nonprofit in the State of Utah

Basic Rules

In the State of Utah, property owned by a nonprofit organization which is used exclusively for religious, charitable and educational purpose, is exempt.

A partial exemption is granted only where a separately identifiable portion of a property is exclusively used for qualified purposes. For example, when part of a building is devoted to charitable purposes and part is rented out to individual private concerns for substantial consideration, only the part of the property that is used for charitable purposes is exempt from taxation, not the part of the building rented out for revenue. [Parker v. Quinn, (23 Utah 332)(64P 961), 1901] [Odd Fellows’ Bldg. Ass’n v. Naylor, 53 Utah 111, 177 P. 214 (1918)]

When a nonprofit entity acquires property after the lien date and that property is to be used exclusively for religious, charitable, or educational purposes, it must collect and pay proportional property taxes from January 1st to the date of acquisition. (Section 59-2-1101)

If a property that is allowed the exclusive use exemption ceases to qualify for the exemption because of a change in ownership, the new owner is to pay a proportional tax based on the period of time beginning on the day that the new owner acquired the property and ending on the last day of the calendar year in which the property was acquired. [Section 59-2-1101 (4)]

When the property ceased to qualify for the exclusive use exemption because of an ownership change, the new owner and previous owner of the property are required to report the acquisition of the property to the county assessor within 30 days from the day that the new owner acquired the property. [Section 59-2-1101 (4)]

Application for property tax exemption

A written application for exemption must filed to the board of equalization as well as documents below:

  • Description of the property;
  • Internal Revenue Service 501(c)(3) not-for-profit authorization;
  • Federal income tax returns for previous years;
  • All financial statements that reflect the use of the property, the source of all funds and the way they were expended including a list of all paid staff, how they are paid, and the nature of their services;
  • A description of use including percentage of time the property is used for various purposes and the degree that such purposes are carried out by volunteer staff;
  • Copies of leases or rental agreements for the property and descriptions of how the rents are determined;
  • A copy of the Articles of Incorporation, by-laws and other organizational information;

Application documents for exemption must be filed by March 1. When a person acquires property on or after January 1 that qualifies for an exclusive use exemption, that person may apply for the exclusive use exemption on or before the later of: (1) March 1st or (2) 30 days after the day in which the property is acquired. [Section 59-2-1102 (10)]

Annual Signed Statement Filing

The owner of certain tax-exempt property is required to file a signed statement, no later than March 1st each year, certifying the use of the property during the past year.

Forms related

PT-020 Application for Property Tax Exemption
PT-020A Application for Exemption Schedule A – Real Property
PT-020B Application for Exemption Schedule B – Personal Property
PT-020C Application for Exemption Schedule C – Benefactors
PT-021 Annual Application and Statement for Continued Property Tax Exemption
PT-022 Active Duty Armed Forces Property Tax Exemption Application
PT-023 Application for Residential Property Exemption


More forms information can be found by the link below:

http://propertytax.utah.gov/index.php/centrally-assessed-property

SUMMARY

Creating sustainable and duplicable financial successTourism revenue has been identified as the revenue stream most capable of accomplishing our global transformation goals by further supporting and sharing One Community as a teacher/demonstration community, village, and city. We will use a combination of the visitability of our location, educational classes, and non-stop creation of open source blueprints to market and share this option with the world. Sustainable infrastructure combined with an all volunteer labor force will keep operational expenses low while we share the fulfilled living and enriching environment as a marketable eco-tourism option. This will allow us to offer significantly more value, for a lower price, with an endless and free open source sharing marketing engine that benefits us and the world. In short, the more (and higher quality) our open source sharing, and the more fun our environment is, the more successful we will be; all of which will help to fuel our secondary revenue streams as well.

FREQUENTLY ANSWERED QUESTIONS

Q: Is anyone (directors, consultants, etc.) paid as part of One Community?

No, we are a 100% unpaid volunteer organization.

Q: How would individuals who want to make money as part of One Community do so?

Please see our entrepreneurial model page.

Q: Are you basing these concepts on an existing model? In other words, how confident are you they will work?

These concepts are based on the foundations of intelligent business in almost any industry: providing value, low cost to profit ratio, and a quality marketing engine. The successful (and growing) model to compare what we are creating with would be the affordable tourism industry. Affordable tourism continues to gain market share and sustainability as an industry and an interest continue to grow also. Visiting a property like One Community’s, an environment like One Community’s, and hands on experience with all of One Community’s open source blueprints and creations all add to our desirability and marketability. Further add to this that the entire “staff” of One Community are non-profit volunteer residents not doing a “job,” but rather operating the Highest Good society model that is the core of One Community, makes it a fun place to be and visit, and an exciting and world changing organization to maintain.

Combining all these things produces a place people want to visit, that will offer much more interesting and fun things to do, at a lower price, with a higher profit margin, staffed by people who are (instead of “workers”) equal and full shareholders in the experience. On top of this, we are changing the world for the better and the more fun and beautiful residents make One Community, the more they individually benefit, the more visitors benefit, and the more it benefits One Community’s global transformation goals.

For these reasons, we are very confident in the financial viability of One Community.

Q: What about duplicability, how will this be duplicable for others? 

The marketing engine of One Community is growing to specifically support and coordinate with other teacher/demonstration communities, villages, and cities too. When other teacher/demonstration hubs contribute to the global open source archive, we will help them promote their work through our engine. We will operate this like a franchise where inclusion is based on open source contributions to positive and permanent global transformation. This means future models will have a significantly easier time implementing this same model. We will are also open source free-sharing the complete for-profitnon-profit, and entrepreneurial models and details of One Community so others will be able to duplicate them with our without  association with One Community.

Q: Why do you have a for-profit component, why not be 100% non-profit?

There are two primary reasons for this:

First, in essence One Community is establishing itself to place maximum profits into our non-profit and global goals. However, there are elements of One Community that will not legally fall under the umbrella of a non-profit and these areas will need to be classified and taxed as for-profit ventures operated under a separate legal entity. We also see it as a positive thing for both One Community and Visitors so long as we offer enough value that people feel good about the investment in the for-profit elements of One Community. In this way we hope to demonstrate and spread Highest Good economics as part of our model too.

Second is our goal to demonstrate and open source share a model that is A) sustainable and B) can meet the needs of as many people as possible. In the case of the model being sustainable, we do not consider any model that operates 100% on donations as a sustainable and duplicable solution because donated resources are limited. Revenue is also necessary to purchase everything that cannot be produced effectively internally like machinery, appliances, technology, clothing, some food items, vehicles, etc. These items will differ for different people in different locations and an effective revenue stream addresses this.

In the case of meeting the needs of as many people as possible, One Community is also taking into account those who have debt, those seeking only to invest, and the reality that there will be many who will try a model like this and then change their mind and want to leave and/or do something else. The for-profit element of One Community is purposed to provide duplicable revenue streams that help all three of these group while also helping share and spread teacher/demonstration communities, villages, and cities by demonstrating them as a progressive and profitable opportunity.

Q: If you are a team of people without debt, how do you intend to teach people with debt how to become free of debt?

Our goal is to clearly define as many of the variables as possible for creating a financially viable teacher/demonstration hub with a diversity of options for implementation to suit different demographics and budgets. The more One Community grows and expands, the more open source blueprints, tools, tutorials, and resources we will provide for others to duplicate our efforts. This is why we are focused on people joining the Pioneer Team that are financially stable, so we can focus 100% of our energy on open source creation for those that aren’t in such a fortunate position. This is also one of the reasons why we won’t move onto the property with any debt as an organization.

Q: If you are a non-profit organization, how do you intend to operate for-profit businesses too?

Any activities of One Community deemed by tax code and federal law to not be operable under our 501(c)3 status will be operated under a separate for-profit corporate entity.

Q: Will One Community ever pay any of its members?

One Community’s #1 financial priority is expansion and our global goals. If we are accomplishing expansion and these goals successfully, and a 100% consensus of the membership agrees that distribution of funds is warranted and will not in any way compromise these goals, then distributions can be made.

Q: What about property liability and ownership by individuals versus a foundation, corporation, etc.?

Premise Liability: (click here for a resource about this)

The property owners or non-owner residents, are responsible for maintaining a relatively safe environment. When people enter the property and hurt themselves because the environment is not safe, they may sue the property owners or residents unless they are intoxicated or are trespasser. The residents are treated in the same manner as the property owner.

Insurance on premise liability:
Business owner policy includes property coverage and general liability coverage.
Property: Building, officer contents
General liability: Property damage or bodily injury suffered by a third party (not owned or employed by the business) accidentally caused by normal business operation.
If the owner also occupies the property, the owner can insure the office building and the office contents of the building on the same policy; most insurance companies can only insure the office contents in a leased space.
http://www.wallacesig.com/office-property-premises-liability

If the property manager is an employee of the property owner, the owner usually will continue to be liable for the injuries caused by negligence because employers are responsible for the action of their employees and agents.
http://www.chicagolawyer.com/premises-liability/property-managers-premises-liability/

How to identify whose responsibility:
http://injury.findlaw.com/torts-and-personal-injuries/slip-and-fall-accidents-overview.html

Conclusion:
The ownership form does not increase or decrease the total amount of liabilities taken by the owner or the manager, but it does influence the insurance coverage of the property. Only when the manager is also the owner of the property, can they insure the building and the office contents, otherwise the manager can only insure the office contents.

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