taxit Posted December 10, 2007 Report Share Posted December 10, 2007 My firm processes the payroll for a daycare center that is affiliated with a church. The daycare has never filed a 990 on the advice of a CPA and Attorney who are members of the church. Their gross income is over $25000.00. They received a notice about the new 990-N and asked me if they are required to submit it. I do not have any Tax Exempt tax clients , so I told them I would need to research it. I have read the instructions and it appears to me they should be filing a 990 or 990-EZ. Does anybody know if a daycare center organized through a church would have the same non filing requirement as the church? Thanks ! Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted December 10, 2007 Report Share Posted December 10, 2007 My firm processes the payroll for a daycare center that is affiliated with a church. The daycare has never filed a 990 on the advice of a CPA and Attorney who are members of the church. Their gross income is over $25000.00. They received a notice about the new 990-N and asked me if they are required to submit it. I do not have any Tax Exempt tax clients , so I told them I would need to research it. I have read the instructions and it appears to me they should be filing a 990 or 990-EZ. Does anybody know if a daycare center organized through a church would have the same non filing requirement as the church? Thanks ! I AM NOT AN EXPERT on this area of taxation, but... If the day care is totally owned by the church, and if the purpose is part of the same tax-exempt purpose of the church, then I think it is probably covered by the church's exemption and would not have to file. But this might be a somewhat gray area, and I would do more research than this before offering real advice. You might ask the CPA and/or attorney for their reasoning for advising the day care not to file - it would save you time in researching something that has already been researched if they will just tell you how they arrived at their conclusion. Quote Link to comment Share on other sites More sharing options...
OldJack Posted December 10, 2007 Report Share Posted December 10, 2007 It appears obvious that the day care is not a separate not-for-profit organization, rather it is an operation of the church and not required to file anything but church employee payroll taxes. Quote Link to comment Share on other sites More sharing options...
JohnH Posted December 10, 2007 Report Share Posted December 10, 2007 I agree with Gail & OldJack. If the Day Care is an affiliated organization and furthers the tax-exempt purpose of the church then it is probably not required to file a form 990. This may be of some help - see pages 229 & 230 (pages 4 & 5 of the pdf). http://www.irs.gov/pub/irs-utl/topicg02.pdf Quote Link to comment Share on other sites More sharing options...
taxit Posted December 10, 2007 Author Report Share Posted December 10, 2007 Those were fast responses. Just to clarify, the daycare is for anyone who needs daycare for their children while they are at work. The work is not at the church. JohnH, I had read that information, I wasn't sure if a daycare center would be a church organization like a "ladies aid" or a "youth group". The daycare is a service being provided , but is paid for. Most services provided by a church do not involve a fee. Quote Link to comment Share on other sites More sharing options...
mdmcfarland Posted December 10, 2007 Report Share Posted December 10, 2007 We have a daycare in a church in our small town. We do file a 990-EZ for them. We couldn't see that they fit the dcriteria for being exempt from filing. Quote Link to comment Share on other sites More sharing options...
bstaxes Posted December 10, 2007 Report Share Posted December 10, 2007 The IRS sent out notices on September 10, 2007. Quoting from that notice: "New Notification Requirement for Organizations With Gross Receipts of $25,000 or Less The Pension Protection Act of 2006 requires you to file an annual electronic notice for tax periods beginning after December 31, 2006, if you are not required to file Form 990 (or 900-EZ), Return of Organization Exempt From Tax, because your gross receipts are normally $25,000 or less. If you are a section 509(a)(3) supporting organization, generally, you must file a paper or electronic Form 990 (or Form 990-EZ) even if your gross receipts are normally $25,000 or less. However, if you are a supporting organization of a religious organization and your gross receipts are normally $5,000 or less you may file an annual electronic notice instead of Form990 (or Form 990-EZ)." The letter goes on and states if you do not file for 3 consective years your tax-exempt status is revoked. I have a Firemen Association that reports all income to the State of NJ Firemen Association and I probably file the 990 for them, so they do not lose their tax-exempt status. Can't they make taxes simple???? I guess I would be out of a job then. Quote Link to comment Share on other sites More sharing options...
JohnH Posted December 10, 2007 Report Share Posted December 10, 2007 This is an interesting thread. It has me talking to myself. I thought the new electronic notuce requirements only applied to organizations who would have been required to file 990 or 990EZ if their receipts exceed $25K, but are now required to submit the electronic form. I was thinking that any other organization exempt from 990 filing was not affected by the change. It's also been my understanding that church day care centers, even those providing day care for the general public, were exempt from filing 990 if the day care center meets the "affiliated organization" and "tax-exempt purpose" tests. I'm going to be interested in seeing other replies. Quote Link to comment Share on other sites More sharing options...
mdmcfarland Posted December 10, 2007 Report Share Posted December 10, 2007 The daycare we have in our town has been given its own federal tax exemption as an organization described in section 501©(3). We are also filing returns to maintain their nonprofit status. They are exempt from FUTA tax. The daycare is situated in a church, but it provides services to anyone in town and does charge for these services. It is run by a board of directors some from the church and some are interested community members or parents of those in the daycare. This board hires a director for the daycare and she hires all other employees. Quote Link to comment Share on other sites More sharing options...
taxit Posted December 10, 2007 Author Report Share Posted December 10, 2007 The daycare we have in our town has been given its own federal tax exemption as an organization described in section 501©(3). We are also filing returns to maintain their nonprofit status. They are exempt from FUTA tax. The daycare is situated in a church, but it provides services to anyone in town and does charge for these services. It is run by a board of directors some from the church and some are interested community members or parents of those in the daycare. This board hires a director for the daycare and she hires all other employees. This is almost identical to my situation ,except this daycare does not have their own tax exempt status. They are working under the church. I agree with you as far as filing the 990 or 990-EZ. However, I wanted to find something clear to back up what they have been doing. I am going to try to talk to the CPA & Attorney that are members of the church , to see what I might be missing. Quote Link to comment Share on other sites More sharing options...
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