CCST 2007 The INs and OUTs of Filing for Exempt Status Presented by Julie Fry, CPA.

CCST 2007CCST 2007

The INs and OUTs of Filing The INs and OUTs of Filing

for for ExemptExempt Status Status

Presented byPresented by

Julie Fry, CPAJulie Fry, CPA

Solution to 90/10 ChallengesSolution to 90/10 Challenges

• Do you have nightmares about your 90/10 ratio?

• Are you consistently worried about passing the test?

• The solution to your problem may be just around the corner!!


• Current proposed legislation before Congress– Allowance of institutional scholarships in total

revenue calculation.

• What does this mean for your organization?– Set up 501(c)3 entity– Provide scholarships to worthy candidates– Add scholarship dollars when calculating total

revenue


Student loans $ 9,500Student cash 500 Ratio = 95%

Total revenue $10,000 Failed

Student loans $ 7,000Student cash 500 Ratio = 70%Scholarships 2,500 Passed Total revenue $10,000

• How would this actually work?

Non Profit’s - 101Non Profit’s - 101

• A brief history……– Private foundation vs. public charity– Unrelated business income – 1950’s– Intermediate Sanctions – mid 90’s

• IRC Section 4958– Annual filing/reporting requirements

• Form 990

Filing for Exempt StatusFiling for Exempt Status

• The Process– Incorporate• Articles of Incorporation• Bylaws• Filing with State• SS-4


• The Process– Form 1023• Mission/vision

statement• Scholarship program• Establish board of

directors• Financial

information/budgets


• The Process– Form 1023• Narrative

description of activities• Form 2848• Itinerary• Advanced ruling

period


• The Process– Form 1023• Relationship/common

control issues• Conflict of interest

policy• Fundraising• Political influence


• How should scholarships be awarded?

– Non discriminatory fashion

– Awarded upon need and/or merit

– Available to an “open-ended” group, rather than “pre-selected” individuals

– Well documented procedure

Filing for Exempt Status

• What are the costs involved in this process?

Attorney fees

Filing fees – State and Federal *

CPA fees *standard fixed fees


• In conclusion, what are the benefits to your school?

– Can improve 90/10 ratio

– Awards worthy students scholarships– Marketing tool when recruiting new students


• Questions

CCST 2007 The INs and OUTs of Filing for Exempt Status Presented by Julie Fry, CPA.

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