Uncertain tax positions for nonprofit organizations.
ASC 740, formerly known as FIN 48, offers guidance on uncertain tax positions. It is broad in scope and now applies to both nonprofit and for-profit entities. The need to declare an uncertain tax position is a complex determination, comprising the specific circumstances, the likelihood that it will be upheld upon examination, and the amount that should be recognized for tax purposes.
BDO brings a deep understanding of the ASC 740-10, and regularly reviews tax positions disclosed on the ASC 740-10 memorandum for our numerous nonprofit audit clients. For organizations that are not currently clients, we offer a comprehensive range of services, including identifying tax positions, researching positions, drafting the memorandum, and submitting to the existing audit firm.
In our experience, most nonprofits argue that they are exempt from paying income taxes. Still, we encourage every organization to evaluate its status in the applicable jurisdiction, whether federal, state, local, or foreign.