Module 5 E-commerce and Internet Reporting Convery 20131
Identify the issues a NPO should be aware of when soliciting contributions over the Internet What are the components of e-commerce? Describe how and why an NPO should post their Form 990s on a Web site Explain why and how IRS Form Form 990s are posted on the Internet Describe the tax implications of selling products or services over the Internet Convery 20132
Internet Web sites may be used for commerce, advocacy, and fundraising NPO may have to register under charitable solicitation laws in other states whose residents can access your website (e.g., check PA). ◦ See the URS Uniform Reporting System (Multi-State Filer Project), a joint effort by the National Association of Attorneys General and National Association of State Charity Officials – see Convery 20133
FASB’s EITF Emerging Issues Task Force has several pronouncements that may affect NPOs (see Examples from the past are: ◦ Barter transactions, Web site development costs, complex equity instruments/transactions, gross vs. net presentation of revenue and expense, purchase rebates, shipping and handling Convery 20134
Advertise and educate through a website Sell products and services (Business to Customer), e.g., online registration for courses. Note: NPO serves as a tax collecting intermediary for sale of taxable merchandise Purchase products for resale (Business to Business) Compliance reporting, such as electronic filing Solicit charitable contributions – online donations of cash and in-kind Convery 20135
UBIT = unrelated business income tax at the corporate tax rate E-commerce revenues are subject to the same UBIT rules as other business-like activities (watch for payments for banner-ads and links and revenue between for-profit and nonprofit sites) Convery 20136
An NPO may be exempt from paying sales tax on purchases for tangible personal property used or consumed primarily in carrying out the exempt purposes of the organization. Purchases of property used in fund-raising activities, such as bingo and raffles (including items raffled off) are subject to sales tax. Vehicles purchased primarily for the personal use of a director are subject to sales tax. For the MI Sales and Use Tax Certificate of Exemption, see then Treasury, then Revenue Administrative Bulletinswww.michigan.gov Convery 20137
See Public Disclosure rules (IRS Announcement 99-62, effective June 8, 1999 and IRC Sec. 6104, 6652, 6685) are satisfied if an NPO’s Form 990 is widely available on a Web site and if the format exactly replicates the form, e.g., PDF Convery 20138
State regulations require collection of sales tax for items sold, even across state lines Note: there is a federal moratorium on the direct taxation of Internet activities while a blue-ribbon commission works on the issue Convery 20139