Helping Ukrainians – Practical U.S. Federal Tax Compliance Considerations for Foreign Grantmaking

Many nonprofits and churches are quickly pivoting from their regular charitable and religious activities to assist with the humanitarian crisis caused by the Russian invasion of Ukraine. If this type of giving falls outside of the organization’s normal activity, it is important to maintain legal compliance with U.S. federal tax law and Department of the Treasury sanctions governing international grantmaking activities for public charities and private foundations.

We are pleased to share an extremely pertinent article by Mike Batts, CPA, of BMWL, Batts Morrison Wales & Lee Certified Public Accountants, with their permission.

What - Another Tax? Nonprofits’ State “Franchise” Taxes and Related State Tax Compliance

It is indeed a joyful day when a nonprofit receives the anticipated IRS determination letter, recognizing its tax-exempt status. But note: such status is under federal law and only for income tax liability generally. What state tax considerations exist?  A minority of states impose additional legal compliance steps for state “franchise” or income tax exemptions. Additional taxes may be owed such as on a nonprofit’s purchases, sales, employment activities, real estate ownership, and specific types of revenues. This article focuses on state franchise or income tax obligations and related legal compliance aspects.