Re: [alpacapolitics] Re: [AlpacaTalk] UBIT taxes and non profit status-from the IRS website
I am addressing everyone who replied on this topic.
1. Thanks Connie. I know what a benefactor is. None of you explanations were new news to me!
2. Libby, I confused you with Amy. She said that AOBA is now having to pay higher taxes than before. I believe it was on a post from 12/29 on AlpacaPolitics.
3. Guess what guys! UBIT taxes have been around since 1950. This is not brand new. Libby, maybe I am speaking out of turn, but your husband has a law AND finance degree and has been Treasurer of AOBA for many years. I would think that he would have a clue about what needs to be paid without waiting for an audit. Besides, all you have to do is Google "non profit IRS" and it will take you to the page on the IRS website that tells how a non profit is supposed to work. It refers to UBIT tax plain as day and gives links to nearly everything else related to non profits.
4. The magazine and mailing lists used to be much more affordable to your average member. AOBA changed the rules stariting 2006 and decided to make people pay a premium for these benefits that should be available to all since this is supposed to be a marketing organization. By establishing the Benefactor status, AOBA is now benefiting certain members of the group over others, which is a violation of the requirements of a non-profit. It is in violation because only certain members have access to information that other members do not. If there are a few more Benefactors that are not board members or judges, I am sorry to have excluded you. Still, the majority is made up of the above. So, numbers 1&2 of what constitutes a no profit are not being adhered to.
Lets use Public Television as an example. I donate $5000 to PBS and I am now a Benefactor. I get my name on the screen and am praised for being a business partner and PBS tells the world how great I am. What it does not do is give me a mailing list of every PBS member so I can mail or email advertising to them.
It's slightly different than what AOBA does.
Does AOBA allow members to opt out of the spam?
5.QUID PRO QUO. Since everyone here seems to think that they are donating to AOBA as a benefactor (you are paying for a service of getting a mailing list) or to purchase a female at the AOBA auction, here is some info you might want to know. When you donate, say, $5000 (and everything over $250), AOBA needs to provide you with statement of donation to file with your tax returns. Also, for that Benefactor status, AOBA must provide to you the ACTUAL value of the benefit. You are ONLY allowed to write off the actual amount of the benefit received--not the whole $5000, since we know the benefit is not really worth $5000 in cash.
It seems that people really need to start doing some research. Also, AOBA really needs to get some tax people that know what they are doing.
6. What about the $1million + worth of CD's in the bank?
7. Why did AOBA pay $34k as of June 2007 (only 6 mos commission) to someone for commission for advertising sales in Alpacas Magazine? Is there a lot of cold calling? Seems that most AOBA members that advertise don't need to be sold on it. Neither do the regular vendors that advertise. Also, I am sure that they would like to have reduced rates instead of paying someone commission or get some of that money back.
8. Does setting up the Alpaca Livestock Company allow the BOARD MEMBERS to get paid for their services from now on? I realize that AOBA BOD would still be volunteer without pay since it is now separate.
Lots of questions!
Stephanie
libby@alpacafarm.
Hello Stephanie,
1. I don't recall saying that AOBA paid taxes all along. Please don't put
words in my mouth.
2. If the accountants said that AOBA didn't have to pay taxes in the past
(all 15 to 20 years), then that is probably who the Board, acting in good
faith listened to as they should have done. This didn't just happen with
this Board...it was this Board's accountant who figured it out! Every
Board since AOBA was incorporated under the premise that the income wasn't
taxable. It sounds to me like the interpretation of the rules by the new
accountant is different than the old accountant.
3. Who says that all benefactors are large breeders? All current and past
Board members and Judges are rich? That's news to me. The marketing
committee (made up of mostly small breeders over the years) had the
responsibility to raise money for marketing. Marketing dollars are spent
for the benefit of all members. The funds raised pays for the national
marketing program which helps all farms sell their alpacas. These
volunteers recommended setting up levels of sponsorship to try to capture
more income from fewer people so that most members don't have to pay as
much (such as you). If these people don't give more, then you will have to
give a lot more.
4. It is because of this non-for-profit law that Board members can't be
paid a salary.
5. The new subsidiary makes it possible for AOBA to still do the program
(for profit) and save the members taxes. The concept is, Stephanie, that
the for profit CAN do these things but we have to pay taxes on the income
now, that's all.
6. Stephanie, under your scenario, a for profit CAN DO the benefactor
program. I do not see where any laws are broken nor do I see any conflict
of interest. Lawyers and accountants are reviewing and working with the
Board on this. It's still under the control of the duly-elected Board.
Libby
Libby Forstner
Magical Farms
The marketing committee (by the way, mostly small breeders) had to figure
out a way to raise money for member marketing. They decided to offer
benefactor program. I wasn't aware that all benefactors were big breeders.
Stardust Alpacas
<stardustalpacas@
yahoo.com> To
Sent by: alpacapolitics@
AlpacaTalk@yahoog alpacatalk@yahoogro
roups.com cc
Subject
01/01/2008 04:31 [AlpacaTalk] UBIT taxes and non
PM profit status-from the IRS website
Please respond to
AlpacaTalk@yahoog
roups.com
I have been reading up on the IRS website about non profits and UBIT taxes.
Here is what I learned. I am sure that there are holes since this is not
the complete tax law, so please consider that before you ridicule me for
leaving something out!
There are 2 requirements to be listed as a non profit.
1. That no one person or select few people can directly benefit from the
organization (more than the group as a whole).
2.The objects of the organization must be the betterment of conditions of
those engaged in the pursuits of labor, agriculture, and horticulture, the
improvement of the grade of their products, and the development of a higher
degree of efficiency in their respective occupations.
So, because AOBA is a non-profit, they are tax exempt. However, when you
gross over $1000 a year in unrelated business income tax (UBIT 501(c)(3),
you will have to pay tax on all that income. UBIT was established in 1950,
so AOBA should have been paying this all along since it is not a new tax
requirement and is listed right there on the non profit IRS page. UBIT tax
returns as well as non profit (990 form) are PUBLIC RECORD for all to view.
Unrelated Business Income Tax
For most organizations, an activity is an unrelated (and subject to
unrelated business income tax) if it meets three requirements:
1. It is a trade or business.
2. It is regularly carried on.
3. It is not substantially related to furthering the exempt purpose of the
organization.
1.Libby said that AOBA paid taxes all along, so if this UBIT tax is new to
AOBA, what taxes have been paid?
2. Also, an even better question is since all you need is to file the UBIT
forms for all gross income over $1000, WHY was there a need to start a new
for profit company?
3. If a non profit is NOT to benefit specific members of the organization,
why does AOBA have the BENEFACTOR designation set up to cater to large
breeders who can afford the prices such as AOBA BOARD MEMBERS and AOBA
JUDGES? Isn't this not only a conflict of interest but it is in violation
of the rules of a non profit organization.
Anyone have answers to these questions?
Stephanie
Stardust Alpacas
Creswell, OR
------------
Looking for last minute shopping deals? Find them fast with Yahoo! Search.
[Non-text portions of this message have been removed]
[Non-text portions of this message have been removed]
------------
Never miss a thing. Make Yahoo your homepage.
[Non-text portions of this message have been removed]
Earn your degree in as few as 2 years - Advance your career with an AS, BS, MS degree - College-Finder.net.
Change settings via the Web (Yahoo! ID required)
Change settings via email: Switch delivery to Daily Digest | Switch format to Traditional
Visit Your Group | Yahoo! Groups Terms of Use | Unsubscribe
__,_._,___
posted by Chaddo at 4:59 PM
0 Comments:
Post a Comment
<< Home