Reporting Issues

Fill ‘er up

A church has decided to purchase gas cards, valued at $20 each, to give to their employees who make less than $30,000/year. The church will do this for several weeks. Is there a tax implication to the church’s employees?

YES and this is why…

This is considered a taxable fringe benefit according to Treasury Regulation 1.132-6(c) because the items given are gift cards. Any cash or cash equivalents (gift certificates, charge or credit cards) are considered taxable fringe benefits.

Reimbursement of Travel Expenses

A ministry typically reimburses travel costs incurred by employees performing ministry projects. In order for the Ministry to reimburse these costs, what is the reimbursement period and what is the employee required to do?

Communicating Internal Control Matters – (2 of 2)

As a recap from Communicating Internal Control Matters post #1 of 2, the AICPA Statement on Auditing Standards (SAS) No. 112, Communicating Internal Control Related Matters Identified in an Audit - establishes new standards relating to the auditor's responsibility to communicate to an entity's management and to individuals charged with the entity's governance significant deficiencies and material weaknesses identified during the course of an audit of the entity's financial statements.

Communicating Internal Control Matters – (1 of 2)

For auditors of financial statements, the AICPA has issued a new auditing standard effective for periods ending on or after December 15, 2006.

AICPA Statement on Auditing Standards (SAS) No. 112, Communicating Internal Control Related Matters Identified in an Audit - establishes new standards relating to the auditor's responsibility to communicate to an entity's management and to individuals charged with the entity's governance significant deficiencies and material weaknesses identified during the course of an audit of the entity's financial statements.

New accounting standard requires entities to record obligations associated with postretirement plans

According to the FASB website
The Financial Accounting Standards Board has published FASB Statement of Financial Accounting Standards (SFAS) No. 158 (SFAS No. 158), Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, to require an employer to fully recognize the obligations associated with single-employer defined benefit pension, retiree healthcare, and other postretirement plans in their financial statements.

IRS updates deposit requirements for employment taxes

According to RIA Payroll Guide Newsletter (preview) 11/10/2006, Volume 65, No. 23 the IRS has revised Notice 931, Deposit Requirements for Employment Taxes, for 2007. The notice provides information on deposits of Social Security, Medicare, and federal income taxes.

For electronic deposit requirements - all depository taxes (e.g., employment tax, excise tax, and corporate income tax) must be made electronically in 2007 using the Electronic Federal Tax Payment System (EFTPS) if:

(1) an employer's total deposits of such taxes in 2005 were more than $200,000, or

Restricted Contributions…GAAP Requirements

Contributions that are restricted based on the passage of time, should be recorded as “temporarily restricted” and then “released to unrestricted” when the passage of time has occurred. For example…a donor contributes $20,000 on 7/5/06 which is restricted to be used for medical benevolence as follows: $5,000 in 2006; $5,000 in 2007; $5,000 in 2008; $5,000 in 2009. How is the contribution recorded?

In 2006 – the church/ministry records the following:
DR Restricted cash $20,000
CR Temporarily restricted contributions – benevolence $20,000

Accounting Standard SOP 98-2 - Joint Costing

All expenses of a discrete joint activity should be reported as fund-raising rather than allocated between fund-raising and other components. In order to overcome this presumption for each discrete joint activity, each of the criteria of purpose, audience, and content must be met for the activity.

Purpose – This criterion is met if the purpose of the discrete joint activity includes accomplishing program (other than cause education) or management and general functions. (Call to Action)

Increase in Charitable Giving

Despite increases in gasoline prices and other necessities, Americans found a way to give 2.7 percent more to charitable causes last year than in 2004, according to a report by the American Association of Fundraising Counsel. Experts say the increase was propelled by a series of significant natural disasters including Hurricane Katrina and the tsunami in Southeast Asia, The New York Times reported in June

How are these types of contributions to be recorded, in accordance with generally accepted accounting principles?