Information on Two New Tax Credits

Within the last several weeks, Congress has enacted two tax incentives that apply to nonprofits, one to reward hiring of new staff and another to help smaller organizations pay for health insurance.

Hiring Incentive Tax Credit
The first new law allows nonprofits of all sizes and other employers to keep the 6.2 percent payroll taxes they typically would pay on certain new hires. The incentive is only available for a short time, and it applies to only certain newly hired workers. Learn more about the HIRE Act and its impact on nonprofits http://www.councilofnonprofits.org/public-policy/federal-policy-issues/economic-recovery/jobs/hiring-incentive-now-available  This payroll tax forgiveness provision expires at the end of the year, so you will save more the sooner you hire eligible unemployed workers.

Small Employer Health Credit
The new health care reform law lets smaller nonprofits claim up to a 25 percent tax credit when they pay for at least half of the health insurance premiums for their employees. To claim the credit, the nonprofit must have 25 or fewer full time employees who earn less than $50,000 in average wages and the nonprofit must pay at least 50% of the insurance premium cost for employees. Eligible nonprofits can start claiming the credit as early as when they file their second quarter payroll tax returns. Your organization may have received a postcard from the Internal Revenue Service providing information about the small employer credit. To learn more, go to  http://www.councilofnonprofits.org/public-policy/federal-policy-issues/health-care-reform/small-employer-health-credit or www.irs.gov for nonprofit-specific information.

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SB 1070 – Oklahoma Solicitation of Charitable Contributions Act
On the state level, the House and Senate both passed, and the Governor signed SB 1070. This law is designed to:  Promote integrity and accountability in the nonprofit sector; Increase transparency regarding charitable solicitation activities; Minimize fraud in the charitable sector.  Key measures include: Nonprofits who raise funds for charitable purposes must file with the Secretary of State, explain how they raise funds and how they use charitable contributions; Professional fundraisers and those they hire are required to file with the Secretary of State, disclose for whom they are working and what their contracts entail; Members of the public will be able to search an online database to find out more about a nonprofit's charitable contribution activities.  It will go into effect July 1, 2011.

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IRS epostcard or 990n
Are you a small organization (under $25,000 in gross receipts) which has failed to file the IRS epostcard?  If so, your organization is at possible risk of revocation of your exempt status by the IRS.  The deadline to file was May 17, 2010.  The IRS has determined if a small non-profit has not filed a 990 or 990n (postcard) for three years will lose their tax exempt status. Below is a link to a search page where you can look and determine if your organization is in danger:
To find out if your organization is on the list, go to: http://nccsdataweb.urban.org/PubApps/statePicker.php?prog=epostcard&display=state
Ifyou are on the list, please file the electronic postcard.  It is a very simple process.
NOTICE: The IRS Commissioner in a statement released May 18th "urges small organizations that missed the May 17th deadline to go ahead and file -- even though the deadline has passed...The IRS will do what it can to help them avoid losing their tax-exempt status."  To read more from the IRS website, go to: http://www.irs.gov/charities/article/0,,id=217087,00.html

 Thank you to the Oklahoma Center for Nonprofits for providing some of this information.