The final assignment for our Non-Profit Management 6110 course is a case study on a married couple that has recently started their own non-profit. The fact pattern is centered around the married couple, John and Jill and their dreams of creating their own nonprofit influenced by their passion for music. It is the with the assistance of friends and family; that John and Jill create the nonprofit of their dreams; named the Family Musical Tree non-profit. Throughout the process of growing their organization; the personal interests of the couple set their organization up for failure. The couple repeatedly violates Internal Revenue Service’s (IRS) charitable tax exempt regulations; by running the organization to only serve their own personal interest.
…show more content…
Jill created a bank account for the Family Musical Tree without consulting the IRS banking regulations for charitable tax-exempt organizations. Incorrectly, Jill, creates a basic checking account for their non-profit organization using her own social security number instead of the organization’s taxpayer identification number (TIN). It is imperative that all non-profits are created with the TIN instead of the owner / manager social security number to avoid the implication of fraud. It would be easy to implicate Jill of tax fraud because she has created a basic checking account under her own name; that holds the tax-exempt funds of the Family Musical Tree. If the Family Musical Tree was to ever undergo an audit by the IRS she wouldn’t be able to provide documentation proving the funds don’t belong to her but the Family Musical Tree …show more content…
It could be implied that Jill was under the impression that a simple request is all that is needed to receive state tax exempt status and it would explain her one phone call to her lawyer about applying for the state tax exemption. However, the state tax exemption thorough process is evident after the state’s denial of tax exempt status for the Family Musical Tree.
It is my hope that after receiving their tax-exempt denial from the state that John and Jill seek proper advisement before resubmitting. A proper advisor would explain the IRS strict regulations and the thorough process of becoming a tax-exempt charitable organization. It would be advised that the Family Musical Tree doesn’t immediately resubmit for state tax exempt status until reconciling the damage done with their constant violations of the IRS tax exempt regulations, such as their unrelated business income and political
Jill created a bank account for the Family Musical Tree without consulting the IRS banking regulations for charitable tax-exempt organizations. Incorrectly, Jill, creates a basic checking account for their non-profit organization using her own social security number instead of the organization’s taxpayer identification number (TIN). It is imperative that all non-profits are created with the TIN instead of the owner / manager social security number to avoid the implication of fraud. It would be easy to implicate Jill of tax fraud because she has created a basic checking account under her own name; that holds the tax-exempt funds of the Family Musical Tree. If the Family Musical Tree was to ever undergo an audit by the IRS she wouldn’t be able to provide documentation proving the funds don’t belong to her but the Family Musical Tree …show more content…
It could be implied that Jill was under the impression that a simple request is all that is needed to receive state tax exempt status and it would explain her one phone call to her lawyer about applying for the state tax exemption. However, the state tax exemption thorough process is evident after the state’s denial of tax exempt status for the Family Musical Tree.
It is my hope that after receiving their tax-exempt denial from the state that John and Jill seek proper advisement before resubmitting. A proper advisor would explain the IRS strict regulations and the thorough process of becoming a tax-exempt charitable organization. It would be advised that the Family Musical Tree doesn’t immediately resubmit for state tax exempt status until reconciling the damage done with their constant violations of the IRS tax exempt regulations, such as their unrelated business income and political