Transcript 7. e-commerce and internet reporting

Module 5
E-commerce
and
Internet Reporting
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Identify the issues a NPO should be aware
of when soliciting contributions over the
Internet
What are the components of e-commerce?
Describe how and why an NPO should post
their Form 990s on a Web site
Explain why and how IRS Form Form 990s
are posted on the Internet
Describe the tax implications of selling
products or services over the Internet
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Internet Web sites may be used for
commerce, advocacy, and fundraising
NPO may have to register under charitable
solicitation laws in other states whose
residents can access your website (e.g.,
check PA).
◦ See the URS Uniform Reporting System (Multi-State
Filer Project), a joint effort by the National
Association of Attorneys General and National
Association of State Charity Officials – see
www.nonprofits.org/library/gov/urs/
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FASB’s EITF Emerging Issues Task Force has
several pronouncements that may affect NPOs
(see www.fasb.org/eitf). Examples from the
past are:
◦ Barter transactions, Web site development costs,
complex equity instruments/transactions, gross vs.
net presentation of revenue and expense, purchase
rebates, shipping and handling
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Advertise and educate through a website
Sell products and services (Business to
Customer), e.g., online registration for
courses. Note: NPO serves as a tax collecting
intermediary for sale of taxable merchandise
Purchase products for resale (Business to
Business)
Compliance reporting, such as electronic
filing
Solicit charitable contributions – online
donations of cash and in-kind
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UBIT = unrelated business income tax at the
corporate tax rate
E-commerce revenues are subject to the
same UBIT rules as other business-like
activities (watch for payments for banner-ads
and links and revenue between for-profit and
nonprofit sites)
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An NPO may be exempt from paying sales tax
on purchases for tangible personal property
used or consumed primarily in carrying out
the exempt purposes of the organization.
Purchases of property used in fund-raising
activities, such as bingo and raffles (including
items raffled off) are subject to sales tax.
Vehicles purchased primarily for the personal
use of a director are subject to sales tax.
For the MI Sales and Use Tax Certificate of
Exemption, see www.michigan.gov then
Treasury, then Revenue Administrative
Bulletins
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See www.guidestar.org
Public Disclosure rules (IRS Announcement
99-62, effective June 8, 1999 and IRC Sec.
6104, 6652, 6685) are satisfied if an NPO’s
Form 990 is widely available on a Web site
and if the format exactly replicates the form,
e.g., PDF
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State regulations require collection of sales
tax for items sold, even across state lines
Note: there is a federal moratorium on the
direct taxation of Internet activities while a
blue-ribbon commission works on the issue
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