1. Module 5 E-commerce and Internet Reporting Convery 20131

2.  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 Convery 20132

3.  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/ www.nonprofits.org/library/gov/urs/ Convery 20133

4.  FASB’s EITF Emerging Issues Task Force has several pronouncements that may affect NPOs (see www.fasb.org/eitf). Examples from the past are:www.fasb.org/eitf ◦ Barter transactions, Web site development costs, complex equity instruments/transactions, gross vs. net presentation of revenue and expense, purchase rebates, shipping and handling Convery 20134

5.  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 Convery 20135

6.  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) Convery 20136

7.  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 Bulletinswww.michigan.gov Convery 20137

8.  See www.guidestar.orgwww.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 Convery 20138

9.  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 Convery 20139