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Assignment 1: Analysis Of 501 (C) IRS Regulations

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Analysis of 501(c)(3) IRS Regulations
Federal and state laws require 501(c)(3) organizations to comply with regulatory guidelines set forth by either the Internal Revenue Service (IRS) or state regulations to obtain tax-exempt status. The complexity of compliance is determined by the organizations demographics, such as gross receipts, expenses, and assets. Despite the size of the organization’s income, the organization must adhere to the IRS publication 557 for filing requirements and required disclosures. Failure to abide by the IRS rules places an organization at risk for losing its 501(c)(3) status.
Required Disclosures for 501(c)(3) Organization
According to the IRS publication 557, certain organizations must disclose to both the IRS and the public regarding information about their activities (Publication 557, tax-exempt status for your organization, 2016). For example, form 990, is an annual report that must be filed with the IRS. Form 990 provides a detailed overview of the organization’s activities that include governance and management disclosure, compensation of key personnel, identity of source receipts, assets, and other financial statements (Instructions for form 990 return of organization exempt from income tax, 2015). In addition to form 990, there are a number of other disclosures requirements forms, …show more content…

For instance, organizations who fail to submit form 990 for three consecutive years will face automatic revocation of the tax-exempt status and daily monetary penalties (Publication 557, Tax-exempt status for your organization, 2016. p.18). Additionally, there are five separate monetary penalties for the failure to allow public inspections of particular documents required and set forth in publication 557. An example of applicable IRS penalties for failure to comply with inspections includes annual returns and exemption

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