Recent Alerts
From 990 Deadline is May 17 for Some Independent Christian Schools
May 17 is an important date for some independent Christian Schools. If the school's fiscal year ends on December 31, then May 17 is the deadline for filing the IRS Form 990. The Form 990 is only required for schools that are not church-sponsored. If the Form 990 is not filed, the school will lose its tax-exempt statuse on May 17.
The Pension Protection Act of 2006 requires the IRS to revoke the federal tax exemption of any organization that has failed to file three consecutive annual returns (Form 990-N, 990-EZ, 990, or 990-PF). Nonprofits that wish to have their exemptions reinstated will be required to re-apply to the IRS for tax-exempt status. This process can take several months.
The IRS will begin revoking exemptions on May 17, 2010, but will wait until 2011 to send revocation notices. A large number of these organizations are smaller nonprofits that previously were not required to file an annual return because their gross revenues were $25,000 or less. These nonprofits now must file Form 990-N, which the IRS created in response to the Pension Protection Act.
If the school's fiscal year ends on June 30th, then the filing deadline is November 15. The Form 990 is due five and a half months after the close of the fiscal year. More information on the Form 990 can be found here.
Special Payroll Tax Exemption for Now Available for New Hires 4.22.2010
The Internal Revenue Service recently released a new form that will help employers claim the special payroll tax exemption that applies to many newly-hired workers during 2010, created by the Hiring Incentives to Restore Employment (HIRE) Act signed by President Obama on March 18.
New Form W-11, Hiring Incentives to Restore Employment (HIRE) Act Employee Affidavit, is now posted on the IRS website, along with answers to frequently-asked questions about the payroll tax exemption and the related new hire retention credit. The new law requires that employers get a statement from each eligible new hire, certifying under penalties of perjury, that he or she was unemployed during the 60 days before beginning work or, alternatively, worked fewer than a total of 40 hours for anyone during the 60-day period. Employers can use Form W-11 to meet this requirement.
Most eligible employers then use Form 941, Employer’s Quarterly Federal Tax Return, to claim the payroll tax exemption for eligible new hires. This form, revised for use beginning with the second calendar quarter of 2010, is currently posted as a draft form on IRS.gov and will be released next month as a final along with the form’s instructions.
Though employers need this certification to claim both the payroll tax exemption and the new hire retention credit, they do not file these statements with the IRS. Instead, they must retain them along with other payroll and income tax records.
The HIRE Act created two new tax benefits designed to encourage employers to hire and retain new workers. As a result, employers who hire unemployed workers this year (after Feb. 3, 2010, and before Jan. 1, 2011) may qualify for a 6.2-percent payroll tax incentive, in effect exempting them from the employer’s share of social security tax on wages paid to these workers after March 18. This reduction will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2-percent share of Social Security taxes, as well as income taxes. In addition, for each unemployed worker retained for at least a year, businesses may claim a new hire retention credit of up to $1,000 per worker when they file their 2011 income tax returns.
These two tax benefits are especially helpful to employers who are adding positions to their payrolls. New hires filling existing positions also qualify but only if the workers they are replacing left voluntarily or for cause. Family members and other relatives do not qualify for either of these tax incentives.
Businesses, agricultural employers, tax-exempt organizations, tribal governments and public colleges and universities all qualify to claim the payroll tax exemption for eligible newly-hired employees. Household employers and federal, state and local government employers, other than public colleges and universities, are not eligible. IRS.gov has more details.
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The New Health Care Bill and the Christian School
This document seeks to explain the impact of the new health care bill on the Christian School. It also includes dates when each section of the reform will take place.
New Health Care Bill and the Christian School
The Department of Labor has posted on its website the following information regarding coverage of adult children under the new Health Care Bill.
Dependent Child Coverage Regulations
Dependent Child Coverage Fact Sheet
Dependent Child Coverage FAQ
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Cobra Subsidy Again Extended Through May 31, 2010
On Thursday, April 15, 2010, President Obama signed H.R. 4851, the Continuing Extension Act of 2010. Final passage of the bill guaranteed several extensions to government programs, including the Consolidated Omnibus Budget Reconciliation Act (COBRA) health care insurance benefits and emergency unemployment benefits.
The bill includes an extension on the eligibility for the COBRA health insurance 65% subsidy for people who have lost their jobs through May 31, 2010. The bill also provides transition relief for individuals who lost their jobs between March 31, 2010 and the date of enactment.
The DOL has posted a COBRA Premium Reduction Fact Sheet that is now available.
For more information, see article below.
Cobra Subsidy Extended Through March 31, 2010
On March 2, 2010, President Obama signed into law the Temporary Extension Act of 2010 (H.R. 4691), which amends the American Recovery and Reinvestment Act of 2009 (ARRA). Among other things, the Act extends eligibility for the 65%, 15-month COBRA premium subsidy to individuals who have been involuntarily terminated through March 31, 2010. Without the extension, employees laid off after February 28th would have been ineligible for the subsidy. The law is retroactive, so individuals who were involuntarily terminated on March 1st and 2nd are eligible for the subsidy.
Background
The ARRA, as amended on December 19, 2009 by the Department of Defense Appropriations Act, 2010 (2010 DOD Act) provides for COBRA premium reductions. Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. To qualify, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee's employment. The premium reduction applies to periods of health coverage that began on or after February 17, 2009 and lasts for up to 15 months.
What You Should Do Now
Employers and other health plan sponsors should revise their COBRA notices to reflect the new March 31, 2010 subsidy eligibility expiration date. For more detailed information about COBRA and the COBRA subsidy go to the ACSI Legal Reference Page then look under Employment.
The Department of Labor's Employee Benefits Security Administration has updated the introduction on the COBRA webpage to reflect the Temporary Extension Act of 2010 and has added a link to the law. EBSA is updating the fact sheet, FAQs and other materials on the COBRA webpage.
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New Law Requires Small Christian Schools and Preschools to File Form 990-N
Congress amended the tax code in 2006 to add a return filing requirement for small tax exempt organizations: those with average gross income (contributions and all other sources) less than $25,000 (for the 2010 and later filing years, this threshold becomes $50,000). Before the law change, small exempt organizations had no filing obligation, simply because they were small.
The law now requires small organizations to file Form 990-N, which is done at the IRS website. The form is filed here. This applies to small independent Christian Schools or Preschools.
If a small organization is exempt from filing as a church or integrated auxiliary of a church, it is not required to file because of this law. Church-sponsored Christian Schools and Preschools are exempt from filing the 990.
A small organization subject to this filing obligation which does not file "for three consecutive tax years will automatically lose its tax-exempt status." (IRS website) It can get its exemption back, but it must re-apply, paying the fee and preparing the application form. 2009 was the third year since passage of the law, so organizations required to file and which have not filed, will be the subject of enforcement action by the IRS starting later this year.
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Federal Legislation Alert—H.R. 4247
This bill passed the House on March 3. We now wait to see what will happen in the Senate.
H.R. 4247, authored by Congressman George Miller (Chairman of the Education and Labor Committee), addresses the use of physical restraint and seclusion in schools. In the bill's current form, its provisions are applicable to any school enrolling students who receive support in any form from funds (direct or indirect) appropriated by the U.S. Department of Education. Any private school enrolling but a single student receiving Title services would, thus, be subject to the provisions of the proposed law.
The bill proposes limitations which may be counterproductive to students' safety, while mandating staff training and imposing reporting requirements most private schools will likely find objectionable.
Below, you will find the following two documents:
- A copy of the bill. HR 4247
- A copy of a letter to the House Committee on Education and Labor penned by CAPE Executive Director Joe McTighe, which I urge you to read. HR 4247 CAPE Letter 2-3-10
In its current form, the bill would establish a highly undesirable precedent by using pupil participation in federally funded programs as a trigger for the imposition of completely unrelated regulations. Keep in mind that private schools are not considered recipients of direct federal financial assistance if their students and teachers participate in federally funded programs. However, this legislation covers all schools that accept direct or indirect federal funding.
ACSI is a member of CAPE and supports its efforts in Washington DC through our office there.
Here are talking points for calls or emails to your Congressmen.
- HR 4247 is a bill addressing issues related to the physical restraint and seclusion of students, authored by Congressman George Miller.
- I strongly agree with the intent of the bill, which is to safeguard the well being of our school children.
- Nevertheless, this bill contains provisions that could have exactly the opposite effect. For example:
- A teacher might be reluctant to break up a playground scuffle between two students.
- A school staff member might think twice before grabbing a child who is about to run into a carpool land during after school pick-up.
- The bill subjects private schools to unfunded training, monitoring and reporting requirements on the basis of student’s participation in federally funded programs such as Title I - even though private schools have never been considered to be recipients of federal financial assistance in such instances.
Thank you for your attention to this important matter.
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Congress Expands FMLA for Military Families
On October 28, 2009, President Obama signed into law the Fiscal Year 2010 National Defense Authorization Act (H.R. 2647. This new law included an expansion of the recently-enacted exigency and caregiver leave provisions for military families under the Family and Medical Leave Act of 1993 (FMLA).
Current Law: Exigency leave—up to 12 weeks of leave for urgent needs related to a reservist family member’s (spouse, son, daughter, or parent) call to active service.
H.R. 2647 expands the exigency leave benefits to include family members of active duty service members. Under current law, only family members of National Guard and Reservists are eligible for “exigency leave.
Current Law: Caregiver leave—up to 26 weeks of unpaid leave to an employee to care for a family member (spouse, son, daughter, parent, or next of kin) who is injured while serving on active military duty.
H.R. 2647 expands the caregiver leave provision to include veterans who are undergoing medical treatment, recuperation or therapy for serious injury or illness that occurred any time during the five years preceding the date of treatment.
H.R. 2647 also revises the definition of "serious injury or illness" for active duty members and provides a slightly different definition for veterans. Both are now defined to include an injury or illness that existed before the beginning of the member's active duty and was aggravated by service in the line of duty on active duty in the Armed Forces. And, for veterans, the definition further adds that the injury or illness may manifest itself before or after the member became a veteran.
To be eligible for the leave, employees must work in organizations of 50 or more employees and work at least 1,250 hours in a 12-month period. This law goes into effect immediately!
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U.S. Department of Education Updates State Regulation of Private Schools Report
The U.S. Department of Education’s Office of Non-Public Education (ONPE) has updated the report, State Regulation of Private Schools, which provides
brief descriptions of state requirements that apply to K–12 private schools. The intent of the report is to serve as a reference for public and nonpublic school officials, state policy-makers, researchers, and others. This report is an update of the 2000 publications, which in turn was an update of the 1993 publication, The Regulation of Private Schools in America: A State by State Analysis.
Topics Included in the Report
- Accreditation/Registration/Licensing/Approval
- Teacher Certification
- Length of School Year/Days
- Curriculum
- Recordkeeping/Reports
- Health and Safety Requirements
- Transportation
- Textbooks
- Testing
- Special Education
- Nursing and Health
- Technology
- Professional Development
- Reimbursement for Performing State/Local Functions
- Tax Exemption
- Public Aid for Private Education
- Homeschooling
- Information Resources
In addition, charts summarizing key information from the report are included at the end of the report.
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