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May 11, 2018


Global Accounting Standards Gain Greater Acceptance

(Accounting Today) May 4, 2018 – A new study by the International Federation of Accountants has found high rates of adoption of international accounting standards in areas such as auditing and ethics.

IFAC surveyed 104 of its member organizations in 80 jurisdictions around the world for its International Standards: 2017 Global Status Report. It found 79 percent of the jurisdictions (that is, 63) have adopted International Standards on Auditing for all mandatory audits, while 61 percent (49 jurisdictions) have fully adopted the 2009 or more recent Code of Ethics for Professional Accountants, and 91 percent (72 jurisdictions) have adopted International Financial Reporting Standards for all or most public entities.

In addition, 100 percent of the 80 jurisdictions have incorporated some requirements of the 2010 International Education Standards, with 20 percent of them (that is, 16) fully adopting all IES for all professional accountants. Meanwhile, 55 percent (44 jurisdictions) have made strides in the adoption of International Public Sector Accounting Standards, with 9 percent (7 jurisdictions) fully adopting all IPSAS for all public sector entities.

More accounting organizations around the world are also imposing continuing professional education requirements. “I’ve been doing this for over 10 years now,” said Joseph Bryson, director of quality and development at IFAC. “When I first got into this work, I was actually in Latin America and very few companies had adopted international standards at that time. In terms of education in particular, there was very little CPE. It was a foreign concept, and now if you look at Latin America there is wide-scale adoption of international standards. All the countries are using the international standards pretty much. CPE is at least offered in every single one of the Latin American countries. That’s a significant leap over the last decade.”

The U.S. has many of its own standards for accounting, auditing and assurance from the Financial Accounting Standards Board, the Public Company Accounting Oversight Board, and the American Institute of CPAs, but IFAC works closely with the AICPA, which is one of its member organizations, on some of the standards for private companies, Bryson noted.

There are many challenges facing professional accounting organizations, the study pointed out. They include challenges related to legislative delays, lack of stakeholder buy-in or collaboration among regulators, and lack of technical and other human and financial resources. The challenges are often associated with underlying issues in other membership criteria—governance, operational capacity, and financial viability—and can have a significant impact on a member organization’s ability to adopt and support implementation of international standards, according to the report.

“The biggest learning point for us and also for the international standard-setting boards has been really understanding that while the professional organizations, the IFAC member organizations, play a crucial role in adopting, it doesn’t fully depend on them even in the areas of ethics and education, and investigation and discipline, areas where we previously thought that the profession had more influence or more direct control or authority,” said Bryson. “The real learning point for us is that it is very much a multi-stakeholder process, and the professional organizations are real champions of influencing, advocating and supporting progress to achieve international benchmarks for competency, quality and credibility in financial information. Accountants are doing a great deal to coordinate and collaborate with government and their counterparts, regulators and stakeholder institutions to progress adoption and implementation, and the majority of their challenges lie therein.”

IFAC has also been facing some challenges of its own with a recent effort by the Monitoring Group, a group of financial and auditing regulators from various countries, to assert more control over auditing and ethics standards internationally (see IFAC concerned about losing separate standard-setting boards for auditing and ethics). The Monitoring Group sent out a consultation paper last year asking for views about the current makeup of the standard-setting boards and whether they were sufficiently representative. In response, IFAC recently commissioned Gibson Dunn to conduct a separate survey of investors, standard setters, government auditors, regulators, researchers, individuals, accounting firms and professional accounting organizations from a wide range of geographies. The respondents to the IFAC survey generally criticized the premise of the consultation paper, disputing the notion that there are major concerns with the current standard-setting process. They expressed concern that a Public Interest Framework to evaluate change hasn’t yet been issued and agreed. The respondents to the IFAC survey also generally expressed skepticism about the broader governance changes proposed by the Monitoring Group’s consultation paper. However, they also voiced significant support for some of the operational changes proposed in the consultation paper.

They agree with the Monitoring Group's concept of having multi-stakeholder composition of both the standards boards and their oversight bodies, with a framework that provides an umbrella within which all significant proposals can be evaluated and agreed as an integrated package by key stakeholders. But they believe any steps taken shouldn’t jeopardize the existing widespread adoption of standards from the International Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants, their acknowledged high quality, or the standard boards’ current work plans.






How Criminals Steal $37 Billion a Year from America’s Elderly

(Bloomberg) May 3, 2018 – Marjorie Jones trusted the man who called to tell her she’d won a sweepstakes prize, saying she could collect the winnings once she paid the taxes and fees. After she wired the first payment, he and other callers kept adding conditions to convince her to send more money.

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As the scheme progressed, Jones, who was legally blind and lived alone in a two-story house in Moss Bluff, Louisiana, depleted her savings, took out a reverse mortgage and cashed in a life insurance policy. She didn’t tell her family, not even the sister who lived next door. Scammers often push victims to keep promised winnings a secret, says an investigator who helped unravel this sinister effort to exploit an 82-year-old woman.

Her family didn’t realize something was wrong until she started asking to borrow money, a first for a woman they admired for her financial independence. But by then it was too late, says Angela Stancik, one of Jones’s granddaughters. Jones had lost all of her life savings — hundreds of thousands of dollars.

About one week after calling Stancik at the family business in Ganado, Texas, to borrow $6,000, Jones committed suicide.

That was May 4, 2010. When family members went to her home, they found a caller-ID filled with numbers they didn’t recognize and three bags of wire transfer receipts in her closet. Jones had $69 left in her bank account.

Some 5 million older Americans are financially exploited every year by scammers like the ones who targeted Jones. The elderly are also suffering at the hands of greedy, desperate or drug addicted relatives and friends, among others. The total number of victims is increasing as baby boomers retire and their ability to manage trillions of dollars in personal assets diminishes. One financial services firm estimates seniors lose as much as $36.5 billion a year. But assessments like that are “grossly underestimated,” according to a 2016 study by New York State’s Office of Children and Family Services. For every case reported to authorities, as many as 44 are not. The study found losses in New York alone could be as high as $1.5 billion.

The U.S. Centers for Disease Control and Prevention drew attention to elder exploitation as a public health problem in a 2016 report, citing groundbreaking research two decades earlier by Mark Lachs. Now co-chief of the Division of Geriatrics and Palliative Medicine at Weill Cornell Medicine and New York-Presbyterian Hospital, Lachs says elder abuse victims — including those who suffer financial exploitation — die at a rate three times faster than those who haven’t been abused. It’s a “public health crisis,” he warns.

“I knew these crimes were killing people,” says Elizabeth Loewy, who directed the elder abuse unit at the Manhattan District Attorney’s Office. As her exploitation cases steadily rose to hundreds per year, she says, “so many family members told me, ‘I can’t prove it, but this killed him.’”

Bente Kongsore, a retired accountant in Creswell, Oregon, says her parents’ mental and physical decline accelerated after an assistant manager at a local bank, Susan Paiz, befriended the octogenarians and subsequently stole $100,000 from them in 2014. To hide the theft, Paiz pretended Kongsore’s father, who had been diagnosed with Alzheimer’s at age 85, gave her the money. The lie soured the last two years the couple had together, as Kongsore’s father questioned himself and his wife questioned him. “It was a total violation of the type of feelings we would want to share with each other at the end of their lives,” Kongsore says.

By 2016, her mother had become bedridden, eventually dying in June of that year. Kongsore’s father died in December 2017, just weeks before Paiz was sentenced to 10 months in jail. Paiz was caught and convicted thanks to a dogged detective in Bellevue and the King County prosecutor’s office in Seattle, which had established an elder abuse unit in 2001. When Kongsore saw Paiz in the courtroom, she says she thought to herself, “How could you do that to older people who could not protect themselves?”

Adding insult to injury, the bank where Paiz worked, Union Bank in Bellevue, didn’t return the money until Kongsore scanned and emailed a bank investigator an incriminating letter Paiz wrote her parents, Kongsore says. She adds that the bank still hasn’t formally apologized. Union Bank didn’t immediately respond to requests for comment. Paiz couldn’t be immediately reached.

Financial exploitation is “a huge problem in the sense that it’s so profoundly destructive,” says Page Ulrey, a senior deputy prosecutor who became the Seattle unit’s first member. The bulk of her cases are financial, involving victims who rarely get their money back. “They’re usually emotionally devastated as a result of having been betrayed,” she says.

In many cases, it may appear the victim gave consent, but it’s often based on manipulation or deception. Like Kongsore’s father, victims often “have some level of cognitive impairment, which makes it really difficult for them to figure out the truth of what’s going on,” Ulrey says.

As a result, many of her cases hinge on showing incapacity. “Obviously, you have the right to give your money to who you want, even if your family disapproves,” Ulrey says. But when you suffer from dementia, you may no longer have the ability to judge whether another person has your best interests at heart, or to understand the consequences of your decisions.

If an evaluation shows a victim lacks capacity to make financial decisions, “we potentially have a stronger criminal case,” she says.

But capacity assessment by adult protective services investigators and police is uneven across the country. “Law enforcement doesn’t have good tools to assess capacity,” Ulrey says, adding that most jurisdictions lack people who can conduct thorough evaluations.

In 2015, Weill Cornell’s Lachs coined the term “Age-Associated Financial Vulnerability,” or AAFV, to sound the alarm. He defined it as a “pattern of imprudent financial decision-making that begins at a late age and puts older adults at risk for material losses that could decimate their quality of life.” Financial judgment can start to falter before normal cognition does, Lachs says, regardless of whether the person was savvy with money when they were younger. In other words, it can happen even when the person seems normal.

Despite the severity of the problem, the federal government’s response has been frustrating, according to practitioners and public officials. Joe Snyder, who served as director of older adult protective services at the Philadelphia Corporation for Aging, says he’s doubtful necessary funding will arrive in his lifetime. Before he retired, he oversaw 27 investigators with limited resources handling about 3,500 cases a year. Snyder says it was like using water pistols to fight a forest fire.

The Elder Justice Act, the first comprehensive legislation to address abuse of senior citizens, was enacted in 2010 but remained unfunded until 2015—when it was allocated only $4 million. “Dollars appropriated since then have, in Congressional terms, been dribbling,” says Marie-Therese Connolly, a former Justice Department attorney who championed the law, working with the Senate Special Committee on Aging. Originally, the allocation was to be closer to $1 billion, she says.

“Financial exploitation causes large economic losses for businesses, families, elders and government programs, and increases reliance on federal health care programs,” warned a 2014 elder justice report Connolly helped prepare.

Three years later, a Congressional Record Service report bemoaned a lack of progress. “As a result of this limited federal funding, the federal government has not substantially developed and expanded its role in addressing the prevention, detection, and treatment of elder abuse.”

“It's a fundamentally reactive system,” says Connolly. “The big story is the dearth, the complete nonexistence, the shameful scandalous absence of any credible prevention or intervention research.”

Some progress, however, is being made. In February, the Justice Department announced “the largest coordinated sweep of elder fraud cases in history,” charging more than 250 defendants with schemes that caused 1 million mostly elderly Americans to lose more than $500 million. The alleged perpetrators include people who targeted Marjorie Jones, according to one investigator.

The dragnet, which lasted one year, is part of an ongoing effort “to detect and infiltrate these criminal organizations that are trying to exploit the elderly,” says Antoinette Bacon, a career prosecutor who serves as the DOJ’s national elder justice coordinator. Her position was created through the Elder Justice Prevention and Prosecution Act, a law signed by President Donald Trump in October meant to improve coordination among federal, state and local agencies.

States have been stepping up as well. Thirty-nine of them and the District of Columbia addressed financial exploitation of the elderly in last year’s legislative sessions, according to the National Conference of State Legislatures. More than half enacted legislation or adopted resolutions. Still, Snyder worries the federal block grant many states rely on to pay for services that protect seniors could be cut dramatically under Trump. “If that goes away, programs will be crushed overnight.”

The financial industry says it’s doing more, too. On Feb. 5, the Financial Industry Regulatory Authority, an industry body, put into effect “the first uniform, national standards to protect senior investors.” It now requires members to try to obtain a trusted contact’s information so they can discuss account activity. It also permits firms to place temporary holds on disbursements if exploitation is suspected. Loewy, who left her job as a prosecutor in 2014 to join EverSafe, a startup that makes software to monitor suspicious account activity, is underwhelmed by the industry projects.

“They may say they’re focused on it, but they aren’t really doing much more than training employees,” she says. “Exploiters know what they’re doing. They take amounts under $10,000 that they know won’t get picked up by fraud and risk folks at banks. And they steal across institutions over time.”

The dirty little secret about elder exploitation is that almost 60 percent of cases involve a perpetrator who is a family member, according to a 2014 study by Lachs and others, an especially fraught situation where victims are often unwilling, or unable, to seek justice. Such manipulation sometimes involves force or the threat of force, says Daniel Reingold, chief executive officer of RiverSpring Health, a nonprofit that provides care to about 18,000 seniors in the New York City area. In 2005, he helped establish the first elder abuse shelter in the country.

While many families don’t intervene when they suspect a family member is abusing an elderly relative, Philip Marshall did, in a famous example of elder exploitation. “I was a family member who acted,” says Marshall. “And that’s huge. Because people don’t act. They say ‘we don’t want dirty laundry out there.’”

Marshall wanted his grandmother, famed socialite Brooke Astor, to enjoy her final years at her country home, as she had wished. When his father, Anthony Marshall, wouldn’t let her, Philip sought guardianship, setting off a legal battle. As the fight progressed, Philip says he discovered that his grandmother, who had been diagnosed with Alzheimer’s, was enduring various forms of neglect. It was “all in an effort by my father to gain her money,” he alleges.

The dispute culminated in his father’s conviction and prison sentence in 2009 for siphoning off millions of dollars from Astor. At first, says Philip, “Our goal was just to stop my grandmother’s isolation and manipulation. We didn’t really care about money.” A separate legal proceeding over the neglect allegations was eventually resolved.

Last year, Philip quit his job as a professor to become a full-time advocate in the fight against elder abuse. He gives talks to government officials and financial institutions and spends hours speaking with strangers dealing with exploitation. “So many times, it’s family,” he says. “I don’t think people realize that.”

On a rainy April afternoon at the Harry and Jeanette Weinberg Center for Elder Justice, the shelter Reingold helped start in the Bronx, there are countless versions of Astor’s story unfolding daily, albeit for smaller sums. More than 70 percent of the center’s clients are victims of financial abuse, with most also suffering from emotional and physical abuse as well.

“It’s often a slow and steady and unrelenting experience,” says Joy Solomon, a former New York prosecutor and director of the center. She says her team is seeing an increase in seniors showing up in housing court—because they’re being evicted. “A lot have been financially exploited, and they don’t even know what’s happening until they get that notice.” Losing housing usually accelerates mental and physical decline, she says.

Unless we figure out how to protect the assets of senior citizens from this epidemic, Solomon says, “we’re going to come to a place where we’re seeing a lot of homeless elderly people on the street.”






DOL Announces Enforcement Policy Changes After End of Fiduciary Rule

(Plan Adviser) May 7, 2018 – The 5th U.S. Circuit Court of Appeals has vacated the entire Department of Labor (DOL) fiduciary rule.

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The DOL says, in response to this, it has issued Field Assistance Bulletin (FAB) 2018-02 announcing a temporary enforcement policy related to the DOL’s rule defining who is a “fiduciary” under the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986 (IRC), and the associated prohibited transaction exemptions, including the Best Interest Contract Exemption (BIC Exemption), the Class Exemption for Principal Transactions In Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs (Principal Transactions Exemption), and certain amended prohibited transaction exemptions (collectively PTEs).

The DOL says it understands that financial institutions, advisers, and retirement investors may have questions regarding the investment advice fiduciary definition and related exemptive relief following the court’s order. It intends to provide appropriate guidance in the future. At this point, however, the DOL is aware that some financial institutions may be uncertain as to the breadth of the prohibited transaction exemptions that remain available for investment advice fiduciaries following the court’s order. The uncertainty about fiduciary obligations and the scope of exemptive relief could disrupt existing investment advice arrangements to the detriment of retirement plans, retirement investors, and financial institutions. Further, some financial institutions have devoted significant resources to comply with the BIC Exemption and the Principal Transactions Exemption and may prefer to continue to rely upon the new compliance structures.

Based upon these concerns, the DOL has concluded that financial institutions should be permitted to continue to rely upon the temporary enforcement policy, pending its issuance of additional guidance. The DOL says it is convinced that this temporary enforcement relief is appropriate and in the interest of plans, plan fiduciaries, plan participants and beneficiaries, IRAs, and IRA owners.

So, for the period from June 9, 2017, until after regulations or exemptions or other administrative guidance has been issued, the agency will not pursue prohibited transactions claims against investment advice fiduciaries who are working diligently and in good faith to comply with the impartial conduct standards for transactions that would have been exempted in the BIC Exemption and Principal Transactions Exemption, or treat such fiduciaries as violating the applicable prohibited transaction rules. Investment advice fiduciaries may also choose to rely upon other available exemptions to the extent applicable after the 5th Circuit’s decision, but the DOL will not treat an adviser’s failure to rely upon such other exemptions as resulting in a violation of the prohibited transaction rules if the adviser meets the terms of this enforcement policy.

The agency says it is evaluating the need for other temporary or permanent prohibited transaction relief for investment advice fiduciaries, including possible prospective and retroactive prohibited transaction relief. The DOL will consider any applications for additional relief.






New IRS Online Tool Offers Expanded Access to Information on Tax-Exempt Organizations; Newly-Filed Data Available to Public for First Time

(IRS) May 7, 2018 – The Internal Revenue Service has introduced a new online tool on designed to provide faster, easier access to publicly available information about exempt organizations.

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"This new tool provides taxpayers an easy way to get information about charitable organizations," said Acting IRS Commissioner David Kautter. "Tax-exempt organizations play a critical role in our nation, and this will provide greater insight for people considering donations."

The new Tax Exempt Organization Search (TEOS) replaces EO Select Check, a more limited tool available since 2012 that focused primarily on providing information on an organization’s tax-exempt status.

The new tool makes images of newly-filed 990 forms available for the first time. TEOS also features two major enhancements:

  • Users can access more types of information than were previously available using EO Select Check.
  • The search process has been simplified and allows users to look across multiple data files for information in one search.
    • In addition, TEOS is mobile friendly, which provides access to the search tool using smartphones or tablets. With the new tool, users can view images of an organization’s:
  • Forms 990, 990-EZ, 990-PF and 990-T (501(c)(3) organizations only) filed with the IRS. Initially, only 990 series forms filed in January and February 2018 will be available. New filings will be added monthly.
  • Favorable determination letters issued by the IRS when an organization applied for and met the requirements for tax-exempt status. Initially, a limited number of determination letters will be available. Eventually, determination letters issued since January 2014 will also appear on the system.

TEOS also can be used to find all the information previously available on EO Select Check. This information includes whether an organization is eligible to receive tax-deductible contributions, has had its tax-exempt status revoked because it failed to file required forms or notices for three consecutive years and, for a small organization, whether it filed a Form 990-N (e-Postcard) annual electronic notice with the IRS.

Publicly-available data from electronically-filed 990 forms will continue to be available in a machine-readable format through Amazon Web Services. Visit for more information.  






New Report: Nonprofits — America’s Third Largest Workforce

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(GuideStar) May 3, 2018 – Employment in America’s nonprofit organizations continued to gain ground on other major industries in recent years according to a new report by the Johns Hopkins Center for Civil Society Studies.

Based on projections from U.S. Bureau of Labor Statistics data, the new report, “Nonprofits: America’s Third Largest Workforce” reveals that as of 2015, America’s nonprofit sector:

  • Has the third largest workforce. The U.S. nonprofit workforce ranks third in size among the 18 major U.S. industries, behind only retail trade and manufacturing.
  • Outdistances manufacturing. In 24 states and DC, nonprofits actually employ more workers than all the branches of manufacturing combined.
  • Is a “major” industry in most states. Economists consider any industry that accounts for 5% of a country’s workforce to be a “major” industry. By this measure, the nonprofit sector is a major industry all but one of the nation’s states and District of Columbia. And in more than half of the states, the nonprofit sector accounts for more than 10% of private employment.
  • Is a major industry at the county level. Data available at the county level reveal that, by this same measure, nonprofits constitute a “major” industry in 1,459 (77%) out of the nearly 1,900 U.S. counties on which data are available. And in 856 (45%) of these counties, nonprofits account for 10% or more of the private workforce.
  • Is a diverse industry with a broad array of services. he health field—embracing hospitals, clinics, and home health services—accounts for 54% of all nonprofit employment, but nonprofits are active in a wide assortment of other fields as well, from education and social services to arts and culture.
  • Is a dynamic presence. Nonprofits continued to gain ground as employers between 2012 and 2015 on nine industries: manufacturing, wholesale trade, finance and insurance, and a collection of six smaller industries.

Access to updated nonprofit employment data nationally and by state and county is now available online through Nonprofit Works, an interactive data base created by the Johns Hopkins Center for Civil Society Studies.






States Find Clever Ways to Collect Sales Taxes on Out-Of-State Transactions

(Forbes) May 1, 2018 – The U.S. Supreme Court is currently deliberating a case that could have a major impact on ecommerce companies. It’s called South Dakota v. Wayfair, and it challenges the current rule that remote sellers are only required to collect sales tax if they have a physical presence in the state where the goods are sold. That rule also happens to be the sticking point in President Trump’s recent unsupported accusations that Amazon is not paying its fair share of taxes.

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The Court is expected to issue its decision on the matter in June, but many states aren’t holding their breath. They’ve been down this road a few times before. The Supreme Court first tackled the topic of out-of-state sales in a 1967 case involving a catalog company. It was revisited in 1992, and, over that time period, Congress has introduced about half-a-dozen different legislative proposals that would require internet retailers to collect sales tax on out-of-state transactions. So far, none of them have stuck.

Tired of waiting around, some states have taken matters into their own hands, either challenging the precedent directly, as South Dakota has done to land in front of the Supreme Court, or by developing some clever work-arounds for the current law. All of them should have internet retailers on their toes.

South Dakota: The ‘Go Ahead, Sue Us’ Approach

I recently spoke with Melissa A. Oaks, managing editor for Thomson Reuters Checkpoint Catalyst, who attended the oral arguments in the South Dakota v. Wayfair case. She explained that lawmakers in South Dakota were hoping for this kind of outcome when they designed their internet sales tax law.

“South Dakota structured their law in such a way that they would maximize their chances of the Supreme Court taking the case. They wanted to require remote sellers to collect tax, and the law was intentionally written to directly challenge the current precedent,” Oaks explained.

The state law, which was passed in 2016, requires online retailers to collect sales taxes if the business has more than $100,000 in annual sales to South Dakota residents or more than 200 separate transactions with state residents.

That runs directly counter to the Commerce Clause of the U.S. Constitution, as currently interpreted, which prohibits states from discriminating against interstate commerce.

Other states have been a bit more creative, finding ways to tax these types of transactions while still staying within the bounds of the Constitution.

Massachusetts & Ohio: ‘Cookie Nexus’

One particularly clever state approach has been the one pioneered by Massachusetts and recently adopted in Ohio, which counts the internet cookies retailers place on customers’ computers as a physical presence in the state.

Basically, by claiming the lines of code that live on the customer’s computer as a tiny piece of local real estate, these states have asserted a collection obligation, regardless of where the retailer is physically based.

“If the Supreme Court upholds the current precedent and rules against South Dakota, the next big questions will be: What is physical presence? Can a cookie count?” Oaks explained. “Revenue departments around the country are trying to find these wedge points in the law where they can expand their tax base.”

Colorado, Connecticut and Others: We Know What You Bought Last Summer

Colorado, Connecticut and about eight other states have taken a different approach, which focuses on the fact that retail customers are technically responsible for paying use tax on the items they buy from out-of-state retailers, when the retailer doesn’t charge sales tax themselves. I say “technically” because few consumers ever do this. In fact, the National Conference of State Legislatures says that consumers dodged $17.2 billion in local sales taxes on goods sold over the internet in 2016.

The reason for this, of course, is that it is incredibly difficult to enforce. That is, unless state tax authorities know exactly where to look. Colorado and a growing number of states have adopted complex transaction reporting requirements, while Connecticut used their state record keeping laws to force ecommerce companies to share information with the states about purchases residents have made on their sites. Armed with this information, the states can start going after individuals who didn’t pay their taxes.

While this may seem like a logical move for the state tax collector, the impact on the retailers has been more complicated. This all came to a head when California-based ecommerce company Newegg faced a massive customer backlash after disclosing customer purchase information to Connecticut tax authorities. Ultimately, the company changed course and decided to start voluntarily collecting sales tax in the state.

One Way or Another, Tax Day of Reckoning is Coming

Checkpoint’s Melissa Oaks also pointed out that many of these creative state laws, like the Massachusetts “cookie nexus” law, are still caught up in litigation at the state level and will likely spark more debate in the immediate aftermath of the Supreme Court decision in South Dakota v. Wayfair.

It’s also worth noting that, with today’s technology, it’s becoming much easier for local tax authorities to audit their books and quickly identify areas where consumer purchase patterns and tax receipts are not aligned. For example, the technology currently being used to power Brazil’s Nota Fiscal Electronica mandate enables real-time electronic filing of all invoices and transaction data on a sale to Brazil’s tax authority before any items can be shipped. Essentially, Brazil has built tax reporting directly into the transaction workflow.

If there’s a lesson to be taken from all of this, it’s that budget-strained states will eventually find ways to increase tax revenue. Whether these states are empowered by the Supreme Court, Congress, or find their own ways to work the system, internet retailers are going to have to deal with this issue sooner than later.






Many Tax-Exempt Organizations Must File Information Returns by May 15; Do Not Include Social Security Numbers or Personal Data

(IRS) May 8, 2018 – The Internal Revenue Service is reminding certain tax-exempt organizations that the May 15 filing deadline for Form 990-series information returns is fast approaching.

Form 990-series information returns and notices are normally due on the 15th day of the fifth month after an organization’s tax-year ends. Many organizations use the calendar year as their tax year, making May 15, 2018 the deadline to file for 2017.

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No Social Security numbers on Forms 990

The IRS generally does not ask organizations for Social Security Numbers and cautions filers not to provide them on Form 990. By law, both the IRS and most tax-exempt organizations are required to publicly disclose most parts of Form 990 filings, including schedules and attachments. Public release of SSNs and other personally identifiable information about donors, clients or benefactors could give rise to identity theft. More information on this can be found in the “general instructions” section of the Instructions for Form 990, Return of Organization Exempt from Income Tax.

The IRS also urges tax-exempt organizations to file forms electronically to reduce the risk of inadvertently including SSNs or other unnecessary personal information. Electronic filing also provides acknowledgement that the IRS has received the return and reduces normal processing time, making compliance with reporting and disclosure requirements easier.

Tax-exempt forms that must be made public by the IRS are clearly marked “Open to Public Inspection” in the top right corner of the first page. These include Form 990, Form 990-EZ, Form 990-PF and others.

Forms to file

Small tax-exempt organizations with average annual gross receipts of $50,000 or less may file an electronic notice called a Form 990-N (e-Postcard). This form requires only a few basic pieces of information. Tax-exempt organizations with average annual gross receipts above $50,000 must file a Form 990 or 990-EZ, depending on their receipts and assets. Private foundations must file Form 990-PF.

Organizations that need additional time to file a Form 990, 990-EZ or 990-PF may obtain an automatic six-month extension. Use Form 8868, Application for Extension of Time to File an Exempt Organization Return, to request an extension. The request must be filed by the due date of the return. Note that no extension is available for filing the Form 990-N (e-Postcard).

Many organizations risk loss of tax-exempt status

By law, organizations that fail to file annual reports for three consecutive years will see their federal tax exemptions automatically revoked as of the due date of the third year for which they are required to file an annual report. The Pension Protection Act of 2006 mandates that most tax-exempt organizations file annual Form 990-series information returns or notices with the IRS. The law, which went into effect at the beginning of 2007, also imposed a new annual filing requirement for small organizations. Churches and church-related organizations are not required to file annual reports.

Check tax-exempt status online

The IRS publishes a list of organizations identified as having automatically lost tax-exempt status for failing to file annual reports for three consecutive years. Organizations that have had their exemptions automatically revoked can apply for reinstatement of their tax-exempt status and pay the appropriate user fee.

The IRS now offers an enhanced, mobile friendly search tool, called Tax Exempt Organization Search (TEOS). TEOS provides easy access to publicly available information about exempt organizations. Users can find key information about the federal tax status and filings of certain tax-exempt organizations, including whether organizations have had their federal tax exemptions automatically revoked and if an organization is eligible to receive tax-deductible contributions.