Internal:Audit/Key tax information

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Main issues for us to be aware of

  • Our Template:Tax deductibility says: "Tax Deductibility: Wikimedia District of Columbia is a public charity under Section 501(c)(3) of the Internal Revenue Code. Your donation is tax deductible to the extent allowed by law. Please reference tax ID number 45-2106571 when reporting your donation."
  • Two of the types of 501(c)(3) nonprofits are public charities and private foundations. WikiDC is and should remain a public charity if possible but its revenue sources would need to satisfy some distributional statements. Finding: It's okay if in SOME years, they don't, as long as on average over 5 years, they do. We've checked and thru 2020 at least we satisfy the "public charity" requirement.
  • An IRS web site shows which organizations are public charities. Info about charities is systematically kept in a public searchable database at causeiq. We may want to create an account there, but only if we do these searches a lot: https://www.causeiq.com/search/organizations/?view=list. Our entry is here: https://www.causeiq.com/organizations/wiki-society-of-washington-dc,452106571/
  • For more on compliance for such organizations, see IRS publication 4221-PC, Compliance Guide for 501(c)(3) Public Charities (2018)
  • The 990-EZ form needs you to know whether your org has filed Form 5768. We HAVE, and we "made the election", meaning that our lobbying activities are judged strictly by expenses, which are generally zero per year. James and John said so, and Peter found the digital form, filled out but not yet signed. See w:501(h) election. (Fun fact: John S wrote that article, for us, by us!)
  • Form 990 expects that you know if the organization (WikiDC) is a "supporting organization" or a "supported organization" or neither. We are neither -- it takes study, but the categories are discussed here. The key fact is that Wiki DC doesn't have loans from, loans to, or interlocking management or interlocking directorships with WMF or any other partner organization. This means we can skip some of the Form 990 questions.
  • When the individual "responsible" for WikiDC changes, we must file a Form 8822-B. That individual was KL, now it's PBM, who filed this form circa March 2022. We don't see whether the IRS has recognized and recorded it yet, but we can share the form with banks etc.
  • We qualify to file the 990-EZ not the full 990 when our annual revenues are under $200K, and the 990-EZ is preferable for our purposes
  • In EZ part IV we are expected to put hours/week devoted to the position. The other numbers can be zero. We do not need to list a "key employee" because this category is for high-paid employees.
  • In EZ part III we can generally draw our "program service accomplishments" from our Annual Reports on this web site. It is not clear how to efficiently offer Expenses figures here; presumably estimates are acceptable, but do should they include labor cost?
  • On Schedule A, we can check box 7 and leave the rest of the page blank the rest, as our peer orgs do. It's odd, but we are to check only one box; the need here is not to provide information, but to state why we are not a "private foundation" in the tax law context.
  • Part II: It appears we just put total revenues in column (e), and 100% in rows 14 and 15.
  • Schedule A Parts III and IV can just be left blank. That seems odd, but it's what our kinds of organizations do. We "qualify under Part II", meaning we have shown or stated that we are a "public charity" not a "private foundation," so Part III is irrelevant. Part IV is for "supporting organizations," meaning those more tightly integrated than we are into another parent organization. We aren't a "supporting organization"; there's no need to check that again. We don't share management or directors or officers with the WMF or any other organization. Again, it is strange to leave several pages basically blank, but that's what we are to do. The form seems not quite right; I think many organizations are leaving these blank, so they should be on some other schedule not the main EZ form.
  • Are we supposed to fill in Schedule A part V? I think not; the grammar is difficult but I think this section is for supporting organizations. We are leaving it blank for the 2017 990-EZ
  • Note that the year listed, e.g. 2017 990-EZ, is for the FIRST year in cases where the fiscal year bridges two years. I found this confusing, since the document generally could not be completed until the full fiscal year was over, and one usually refers to the fiscal year by the later calendar year. But analogously, an individual files the 2020 Form 1040 only in 2021.
  • Schedule C seems unnecessary for us in principle but we should fill it out. It's not difficult. Expenses are normally 0. The reasons numbers appear on the form is that there's a cap, computed as 20% of our expenses. (That confused me for a while; the figure seems like it came from some real expense, but it's just an imagined ceiling.)
  • Our program expenses listed on 990-EZ Part III SHOULD include activities for which we were the fiscal sponsor. It is not necessary to go into great detail about them.
  • Accounting periods and methods: Our fiscal year ends Sept 30 each year, and I think it always did back to our founding in 2011. The relevant tax form is the for the year with the Oct-Dec quarter; the 2021 form is for the Oct2021-Sep2022 year. We use the "accrual" method, not the "cash" method, and always have; this seems to be more compatible with state forms; I don't know the difference really. To change these methods or periods we would need to file Forms to do it; see e.g. Pub 538 and Forms 1128 and 3115.

Reinstatement issues

  • Key IRS statements on reinstatement: [1]
  • I think a Form 1023 was filed to get our original approval as a 501c3. See File:Wikimedia DC Determination Letter.pdf for some of our documentation on this. It was filed Dec 22 2014, and the chapter became a 501(c)(3) retroactively to that date, approved in Feb 2015. Until and including 2014 it looks like we filed Form 990-N's e.g. [2], and not Form 990-EZ.
  • Form 1023 and 1024 and variants on those numbers are also the formal requests for reinstatement. Sometimes there are fees for this. I am not aware that we paid any such fees for reinstatement.
  • Form 911 is a request to speed up the evaluation of a reinstatement. We did file one. We think we filed a 1023 also.
  • It is not clear why we haven't heard back -- but the IRS may simply not have gotten to ours yet. A more central issue is that we need to be sending the recent sequence of 990-EZs. We've started. They are similar to one another so we'll get better at it.
  • We have filed for extensions, I think, but so far as I can tell never amended any return.
  • According to the 990-Z instructions (2017, p5-6), failure to file and filing late are reasons for the IRS to charge a financial penalty, unless a "reasonable cause" is given for filing late. We don't have great rhetoric there but hopefully they treat our "cause" for being late as "reasonable", and if not we owe fees and penalties.

Background, comparisons, and side issues

  • How EINs are assigned
  • Internal:Public_Policy/Taking positions on public policy and nonprofit-charity status
  • Must "File an 1120" if have to pay taxes
  • A 990-T form is for "business income", and required if we had more than $1000/yr of it; we don't have any such income
  • After filing, we can expect our Schedule B (the list of major grantors and donors) to be private. For some other orgs it would be made public, or partly public, notably for a 527 (political) org. I didn't see where the line and nuances were drawn for other 501(c)s.
  • There are a spectrum of categories of 501(c) organizations, which de facto includes some in IRS regs sections 501(d,e,f,j,k, and n). The list of categories is so extensive and detailed that it seems too long to even show here. We are a 501(c)(3) public charity with under $200K in revenue and no business income and near-zero lobbying expenses; if we get outside those limits we would have to learn more.
  • We are a public charity, which means we aren't a 4947(a)(1) nonexempt charitable trust and we aren't a private foundation.
  • An org may be required to file the completed Form 990-EZ with state governments; don't know if we are required to or if we ever did (ASK)
  • A Form 990-N is filed if an org does not have to file a 990-EZ or other return. That never applies to us.
  • WMNY has this EIN: 27-0520584 and has filed Form 990-Ns (per [3])
  • Our chapter is NOT a controlling org, a controlled or, a supporting org, or a supported org. (section 509(a)(3)) Basically we aren't closely enough aligned or managed with other orgs for this to be even a close call. I am looking for an example to clarify what those categories are, but anyway we aren't in those categories.
  • Dollar amounts should be rounded on the 990 forms. Round $.50 up to $1.00. Do sums with the pennies then round the totals. Don't report negative numbers; look for a way to say 0 instead unless instructions seem to allow a negative amount.
  • Do answer with 0$ rather than leaving items blank unless the question was conditional and doesn't apply.
  • It is okay and normal to explain answers on Schedule O if the filers think it's necessary.
  • We don't have "joint ventures", legal "partnerships", "disregarded entities", "investments", or "passive investments" so far as I can tell.
  • We are expected to file (we think): Form 990-EZ (showing main activities), Schedule A (establishing "public charity" status), Schedule B (listing contributors), Schedule C (political campaign/lobbying, but maybe not Parts I and II), and Schedule O (Supplemental info). It seems clear that we don't have to file any other form with the 990-EZ.
  • Charity Navigator doesn't list us but does list the WMF
  • ProPublica and Guidestar and EIN Tax Id have basic info from IRS filings about us.
  • "The National Taxonomy of Exempt Entities (NTEE) system is used by the IRS and NCCS to classify nonprofit organizations" mainly by their activities, or services produced (that is, their "industry").[1][2][3] The NTEE maps into the standard North American industry classification, NAICS. Propublica shows WikiDC's industry/classification as "Educational Services and Schools - Other (Educational Institutions and Related Activities)" That suggests we are classified in NAICS 6116 or 6117.
  • Info on WMNY is online: [4]; EIN is 27-0520584
  • A small org CAN start an endowment. That's not relevant in the short run but it may in the long run allow us to invest our money to get a higher return.[4]

References