Contents

• Could Your Organization or Employee Benefit Plan Have a Foreign Reporting Obligation?
• Contact SC&H Tax & Advisory Services

Not-for-Profit Services

We specialize in providing not-for-profit organizations a variety of comprehensive solutions for their accounting and consulting needs.

At SC&H, we know that not-for-profit organizations are unlike any other type of business. From uncertain budgets and lean accounting staff, to board relations and unusual tax issues, your goals and challenges are unique. Only a service provider with a complete grasp of these issues and a strong commitment to serving not-for-profit organizations can provide the responsiveness and quality of services that will exceed your expectations.

Many of our partners and managers are active on not-for-profit boards, which provide us with a first hand understanding of your needs. This understanding is why SC&H has become the CPA and management consulting firm of choice for many not-for-profit entities including educational and healthcare institutions, associations, religious organizations and foundations.

Services include:

• Financial statement audits and reviews
• A-133 audits
• Employee benefit audits and consultation
• Internal auditing
• Evaluation of internal controls
• Tax compliance
• UBIT studies and FIN 48 analysis
• Strategic planning
• Change management
• Organizational development

Testimonials

"SC&H has the breadth of a national firm while providing personalized local service in an efficient and customer friendly manner. I highly recommend this firm." - CFO of a not-for-profit organization

"I am pleased to share my thoughts regarding my association with SC&H. They have provided tax preparation and advisory services to my organization for over ten years. I find the professionals at SC&H to be very knowledgeable of the issues facing not-for-profit organizations. I highly recommend this firm." - CFO of a not-for-profit organization

Could Your Organization or Employee Benefit Plan Have a Foreign Reporting Obligation?

In today's increasingly global market, organizations are doing work abroad, holding investments, directly or indirectly, in foreign entities and establishing bank accounts to fund charitable work being performed in foreign countries. Such activities may result in the need to file various information returns with the Internal Revenue Service. Failure to file these forms can result in very large penalties. Here are some of the forms required as well as the penalties for failing to file the required forms:

• Form 926 - Return by a U.S Transferor of Property to a Foreign Corporation. This form is required if your organization transferred $100,000 of cash or property directly or through a partnership, such as an investment partnership, to a foreign corporation during a 12-month period or the transfer results in at least a 10% ownership in the foreign corporation. The penalty for failing to file this form is 10% of the value of the transferred property and generally is limited to $100,000.
• Form 5471 - Information Return of U.S. Persons with Respect to Certain Foreign Corporations. This form is required if your organization owns, directly or indirectly, a 10% interest in a foreign corporation or disposes of at least a 10% interest during the year. The penalty for failing to file this form can be as much as $60,000 per form depending on the Organization's ownership and the composition of the foreign corporation's ownership.
• Form 8621 - Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund. This form is required if your organization directly or indirectly holds an investment in a passive foreign investment company. Organizations generally indirectly hold these investments through an alternative investment such as a hedge fund. A passive foreign investment company is a company that generates significant passive income and holds significant passive assets. Significant passive income is defined as 75% or more of the gross income of the company. Significant passive assets are defined as holding greater than 50% of the company's assets in assets that produce passive income or are held for the production of passive income. Penalties are temporarily suspended until this form is revised.
• Form 8865 - Return of U.S. Persons with Respect to Certain Foreign Partnerships. This form is required if your organization owns at least a 10% interest in a foreign partnership that is controlled by U.S. persons, owns at least a 50% interest in a foreign partnership or acquires or disposes of a 10% or greater interest in a foreign partnership. The penalty for to file this form can be as much as $60,000 per form.
• TD 90-22.1 - Report of Foreign Bank and Financial Accounts ("FBAR"). This form is required by your organization and by anyone in your organization that has either a financial interest in or signature authority over a foreign bank account that exceeded $10,000 for even one day in the calendar year. Financial accounts include bank accounts, shares in a mutual fund and insurance policies with cash surrender values. It does not include interests in foreign commingled funds. The penalty for failure to file is $10,000. Additional penalties can be the greater of $100,000 or 50% of the account balances if the failure to file is willful.
  

Foreign information reporting continues to evolve and expand. Organizations are required to report their foreign activities and foreign investments on Schedule F of Form 990. The Foreign Account Tax Compliance Act ("FATCA") was originally scheduled to be effective for tax years beginning after March 18, 2010. Reporting under FATCA has been delayed until the related regulations and forms have been finalized. Under FATCA, organizations will be required to report foreign accounts and foreign assets over $50,000. The definitions under FATCA are broader than the definitions under FBAR.

For further information or if SC&H can assist your organization, contact Lori Burghauser at (410) 403-1616.

For More Information

For more information about not-for-profit services offered by SC&H Tax & Advisory Services, LLC, contact Michael Young or Lori Burghauser.

Michael Young
Audit Director
(410) 403-1513

Lori Burghauser
Tax Principal
(410) 403-1616

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