Taxes and Audits

Nonprofit organizations have a legal and financial duty to comply with all applicable financial and tax regulations, including withholding and remitting payroll taxes and paying Social Security, Medicare, and unemployment taxes. Minnesota nonprofits must also openly and accurately communicate whether the organization is tax-exempt at the federal level with the Internal Revenue Service and at the state level with Minnesota. Organizations must also accurately communicate if they are exempt from sales tax with the Minnesota Department of Revenue.

Additionally, nonprofit organizations that have annual revenues of over $750,000 are required to procure an annual audit. An audit is a formal review, analysis and inquiry of the accuracy of financial information an organization has recorded and prepared. The purpose of an audit is to determine that the financial statements are free of material misstatements. Financial statements and the auditor’s letter to management can assist a nonprofit’s board of directors in assessing the financial health of an organization and may highlight internal controls that can be improved or enhanced.

 

Taxes and Audits Articles

 

 
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