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How To Handle Federal and State Legal Issues
- Easy Way to Apply for Sales and Use Tax Exemption
- Electronic Voting by Nonprofit Boards in Virginia
- Need Help Understanding the Sarbanes-Oxley Law?
- Sarbanes-Oxley and Beyond
- Raffle Laws
- More Legal Resources
Easy Way to Apply for Sales and Use Tax Exemption
The Virginia Department of Taxation now offers “Nonprofit Online”, a quick, efficient and secure way for organizations to apply for and print out a Virginia sales and use tax exemption certificate. In addition, organizations will be able to edit certain information as it changes and reprint lost certificates, should they become lost, without having to contact the Department of Taxation.
Use this website to:
- Apply for a Sales & Use Tax Certificate of Exemption
- Send your questions to a TAX Representative and receive a response in a secure environment
- Print a copy of the Exemption Certificate.
For security purposes, each application will require the creation of a user name and password. Additional information required includes
- Federal Identification Number (FEIN)
- Proof of compliance with Chapter 5 of Title 57 of the Code of Virginia
- Organization's annual gross revenue, fundraising and administrative expenses
- Financial Audit maybe required
- Federal form 990 or 990EZ, if required by the Internal Revenue Service (IRS)
- Federal nonprofit designation 501(c)(3) or (c)(4)
- Estimate of total purchases of tangible personal property
Check out Nonprofit Online at: https://www.npo.tax.virginia.gov/NPOLogin.jhtml
Electronic Voting by Nonprofit Boards in Virginia
Although it has only limited legal implications for nonprofits, this Act is here to stay and needs to be understood by any organization striving for accountability. BoardSource and Independent Sector created a document on the implications of the law for nonprofits, which has recently been updated. It’s worth sharing with both staff and Board members.
Need Help Understanding the Sarbanes-Oxley Law?
Although it has only limited legal implications for nonprofits, this Act is here to stay and needs to be understood by any organization striving for accountability. BoardSource and Independent Sector created a document on the implications of the law for nonprofits, which has recently been updated. It’s worth sharing with both staff and Board members.
Download the Report (76kb, PDF)
(Source: BoardSource; www.boardsource.org)
Sarbanes-Oxley and Beyond
Currently, two provisions of the Sarbanes-Oxley Act - the whistle-blowing protection and destruction of documents - apply to the nonprofit sector, but many believe that nonprofits will face additional reform. The report "Strengthening Transparency, Governance and Accountability of Charitable Organizations" was issued to Congress in June 2005 by the Panel on the Nonprofit Sector.
The Report proposes several Sarbanes-Oxley-like recommendations, including:
Financial Audits and Reviews – Congress should require charitable organizations with at least $1 million or more in annual revenues to conduct an audit and attach audited financial statements to their Form 990 series returns, and those with annual revenues between $250,000 and $1 million to have their financial statements reviewed by an independent public accountant.
Structure, Size, and Composition of Governing Boards – To qualify for recognition as a 501(c) (3) tax-exempt organization, an organization should generally be required to have a minimum of three members on its governing board. Further, to qualify as a public charity (rather than a private foundation), at least one-third of the members of the organization's governing board should be independent. All boards should establish strong and effective mechanisms to ensure that the board carries out its oversight functions and that board members are aware of their legal and ethical responsibilities in ensuring that the organization is governed properly.
Audit Committees – Every charitable organization that has its financial statements independently audited, whether legally required or not, should consider establishing a separate audit committee of the board having members with financial literacy.
Conflict of Interest and Misconduct – As a matter of recommended practice, charitable organizations should adopt and enforce a conflict of interest policy consistent with its state laws and organizational needs.
Disclosure of Performance Data – Every charitable organization should, as a recommended practice, provide more detailed information about its operations, including methods it uses to evaluate the outcomes of programs, to the public through its annual report, website, and other means.
(Source: Posted on Connect-Richmond listserv on January 3, 2006 by J. David Faulders, xecutive Counsel, PLC, General Counsels Representing Business, www.exec-counsel.com)
Raffle Laws
In the United States laws regarding raffles are decided upon by state governments just as other types of games of chance. Some states define charitable raffles as equal to lotteries and therefore have deemed them illegal. Other states allow raffles for charities but do not have lotteries.
Raffle License or Application: The application for the raffle license may be required by the state, county or city government. Sometimes organizations must file with the state and local government so it is always wise to contact all government agencies. Most applications require a fee.
Raffle Requirements: Each state also has different requirements about the organizations that are allowed to hold a raffle and the manner in which it is conducted.
For specific information on Virginia’s raffle laws, contact the VA Department of Charitable Gaming at http://www.dcg.virginia.gov/.
Advance Planning for Raffles: Not for profit organizations should also keep in mind that some registering agencies require that permits be applied for in advance. For example in Iowa the department requests that applicants allow up to 30 days for processing the application.
Related Resources:
(Source: Sandra Sims, Fundraising Coach, http://stepbystepfundraising.com/)
Resources
Nonprofit Risk Management Center
provides legal advice, technical assistance, training and publications regarding issues affecting nonprofits and volunteer organizations. www.nonprofitrisk.org or call202-785-3891. Sign up to receive their free catalogue.
Life Cycle of a Public Charity (www.irs.gov/charities/charitable/article/0,,id=122670,00.html) outlines a nonprofit’s primary interactions with the Internal Revenue Service. This site covers everything from filing an application for recognition of tax-exempt status to filing required annual returns to making changes to an organization’s mission and purpose. You will find explanations, guides, forms, and publications on these subjects and more provided by the IRS.
Independent Sector (www.independentsector.org) offers two excellent publications providing details about how the recent Sarbanes-Oxley legislation affects nonprofits:
- Learning from Sarbanes-Oxley: A Checklist for Nonprofits and Foundations (PDF)
- The Sarbanes-Oxley Act and Implications for Nonprofit Organizations (PDF)
Both are easy to understand and available as free downloads.
Pro Bono Clearinghouse sponsored by the Greater Richmond Bar Foundation responds to requests from non-profits for legal advice in areas such as:
- Preparing and amending organization documents
- Contracts
- Tax/charitable giving
- Employment/labor law
- Corporate authorization of transactions
- Finance
- Buying and selling property
- Leasing/rental matters
- Insurance
- Franchise/affiliation issues
- Land use/permitting
- Intellectual property
- Mergers
Contact the Clearinghouse at 804-780-2600 or visit www.grbf.org
Nonprofit Legal Support Program sponsored by the Fairfax Bar Association (www.fairfaxbar.org) provides corporate and transactional attorneys to represent community-based nonprofit corporations in matters such as incorporation, contracts, employment, finance, and personnel issues.