Nonprofit organizations in Virginia face complex compliance requirements at both the federal and state levels. From annual Form 990 filings to maintaining public charity status, understanding these obligations is essential for preserving tax-exempt status and donor confidence. Applying for Tax-Exempt Status To receive tax-exempt status under Section 501(c)(3), an organization must meet a specific description and complete and submit an application . If an organization files its application for recognition within 27 months of incorporation, tax-exempt status (if granted) will be effective as of the date of incorporation . If filing after 27 months, status will be effective from the submission date of the application . Public Charity vs. Private Foundation All Section 501(c)(3) organizations have a “foundation classification” . Any organization that qualifies for tax-exempt status under Section 501(c)(3) is presumed to be a private foundation unless it can show that it qualifies for one of the exceptions . Some types of organizations (churches, schools) are defined as public charities by operation of law . Most organizations qualifying for public charity status do so because they can show that their financial support comes from a broad cross-section of the public . Maintaining Public Charity Status An organization will lose its public charity status starting in its sixth year of existence if it cannot pass the public support test for two consecutive years . If the organization cannot meet the public support test for two consecutive years, it will be reclassified as a private foundation as of the start of the second consecutive year . To avoid unexpectedly losing public charity classification, organizations should keep careful track of public support information throughout the year instead of waiting until the end of the tax year when preparing Schedule A . Activities That Can Jeopardize Tax-Exempt Status For 501(c)(3)s, the four main activities that can jeopardize tax-exempt status are : Activity that results in private benefit or inurement Lobbying activity that constitutes a substantial part of overall activities Political campaign activity Unrelated business activity that is substantial when compared with exempt-function activities Understanding Private Benefit and Inurement Private benefit occurs when an individual or organization receives a benefit from a Section 501(c)(3) organization . A tax-exempt organization that provides a substantial amount of private benefit may risk losing its tax-exempt status (this does not include paying reasonable salaries) . Inurement occurs when an “insider” (officer, director, or key employee) receives any of an organization’s net income or inappropriately uses its assets for personal gain . Any amount of inurement, no matter how small, can jeopardize an organization’s tax-exempt status . Lobbying Rules Lobbying is defined as “the attempt to influence legislation” . If a Section 501(c)(3) organization conducts substantial lobbying, it risks losing its tax-exempt status . The IRS uses one of two methods to determine whether lobbying activities are substantial: Substantial part test – Subjective test based on facts and circumstances, considering time and money spent Expenditure test – Objective mathematical test applying a dollar limit based on total expenditures  Political Campaign Activity Political campaign activity is directly or indirectly participating or intervening in any political campaign on behalf of or in opposition to any candidate for elective public office . For a 501(c)(3), violating the political campaign prohibition may result in revocation of tax-exempt status and imposition of certain excise taxes . Unrelated Business Income UBI (unrelated business income) is income that an exempt organization receives from conducting activities not related to its exempt purpose . Even if an organization uses the income from an unrelated activity to help pay for its exempt activities, that income is still UBI. For 501(c)(3)s, if the conduct of UBI-generating activities is substantial, the organization could jeopardize its tax-exempt status . IRS Resources for Nonprofits The IRS Charities and Nonprofits page provides comprehensive information for tax-exempt organizations . The Stay Exempt program offers web-based mini-courses for new and existing tax-exempt organizations. At Nova Tax & Accounting Services , we provide audit and assurance services and Form 990 preparation for nonprofit organizations across Virginia and Washington DC. Schedule your free consultation to discuss your compliance needs.

An IRS offer in compromise is an agreement between a taxpayer and the IRS that settles a tax debt for less than the full amount owed . The program provides eligible taxpayers with a path toward paying off their debt and getting a “fresh start.” The ultimate goal is a compromise that serves the best interest of both the taxpayer and the IRS . What Is an Offer in Compromise? An offer in compromise allows taxpayers to settle their tax debt for less than the full amount when they cannot pay the full amount or when doing so would create economic hardship . To be considered, you must make an appropriate offer based on what the IRS considers your true ability to pay. Submitting an offer application does not ensure that the IRS will accept your offer. It begins a process of evaluation and verification by the IRS, taking into consideration any special circumstances that might affect your ability to pay . Eligibility Requirements Before you submit an offer, you must: File all tax returns you are legally required to file Make all estimated tax payments for the current year Make all required federal tax deposits for the current quarter if you are a business owner with employees If you or your business is currently in a bankruptcy proceeding, you are not eligible to apply for an offer . Types of Offers Doubt as to Liability – If you have a legitimate doubt that you owe part or all of the tax debt, you will need to complete Form 656-L, Offer in Compromise (Doubt as to Liability) . Doubt as to Collectibility – For taxpayers who owe the debt but cannot pay the full amount based on their assets, income, expenses, and future earning potential. Application Process The application requires you to describe your financial situation in detail . You will need to: Gather information about your financial situation, including cash, investments, available credit, assets, income, and expenses Complete Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals Complete Form 433-B (OIC), Collection Information Statement for Businesses (if applicable) Complete Form 656, Offer in Compromise Pay the $150 application fee and initial down payment (unless you qualify for Low Income Certification)  Payment Options Payment Option 1 – Requires 20% of the total offer amount as a down payment, with the remaining balance paid in five or fewer payments . Payment Option 2 – Requires the first month’s payment as a down payment, with monthly payments continuing while the IRS evaluates your offer. Failure to make regular monthly payments will cause your offer to be returned . Important Facts About Offers in Compromise Penalties and interest will continue to accrue during the offer evaluation process  The IRS may file a Notice of Federal Tax Lien anytime during the evaluation process  The IRS will keep your tax refund for the tax year the offer is accepted  If your offer is returned or not accepted, any required payments made with the filing of your offer will not be refunded  After Offer Acceptance If your offer is accepted, you must continue to timely file and pay your tax obligations . If you fail to file and pay required tax returns during the five years after your offer is accepted, your offer may be defaulted. If your offer is defaulted, all compromised tax debts will be reinstated . Doubt as to Liability Offers If you are filing an offer based on doubt as to liability, you will need to complete Form 656-L. This form is not included in the standard Form 656 booklet and can be requested by calling the IRS toll-free number at 1-800-829-1040 or by visiting a local IRS office or www.irs.gov . At Nova Tax & Accounting Services , our expert tax solutions team can help you evaluate whether an offer in compromise is right for your situation and assist with the application process. Schedule your free consultation today.

A book keeper service provides the essential financial recordkeeping that forms the foundation of any successful business. Whether you operate a small retail shop, a professional services firm, or a growing nonprofit in Ashburn, accurate bookkeeping ensures you have reliable data for decision-making, tax preparation, and compliance with Virginia regulations. What Does a Bookkeeper Do? Professional bookkeepers handle the day-to-day recording of financial transactions. Their responsibilities typically include: Recording all sales, purchases, payments, and expenses with proper categorization Tracking bills to be paid and invoices owed by customers Matching internal records against bank statements to catch errors or unauthorized transactions Calculating wages, withholding taxes, and ensuring timely employee payments Generating profit and loss statements, balance sheets, and cash flow reports Organizing records for tax filing Why Outsource Your Book Keeper Service? Many small businesses choose to outsource bookkeeping rather than hiring an in-house employee. This approach offers several advantages: Cost savings – You pay only for the services you need, avoiding full-time salary, benefits, and training costs. Access to expertise – Professional bookkeepers bring experience across multiple industries and familiarity with current accounting software. Scalability – Services can increase during busy seasons and decrease during slower periods. No turnover disruption – You avoid the disruption of replacing an employee who leaves. Virginia Tax Filing for Businesses The Virginia Department of Taxation offers electronic filing options for businesses. The Web Upload system provides a fast, convenient, and secure method of filing returns and payments, available 24 hours a day, seven days a week . Businesses can use Web Upload for Sales/Use Tax, Withholding Tax, and Forms W-2, 1099-R, 1099-MISC, and VK-1 . Estimated Tax Payments for Small Businesses Small business owners may need to make estimated tax payments . This helps cover taxes the employee owes and includes not only income tax but self-employment tax and alternative minimum tax . The IRS Small Business and Self-Employed Tax Center is an online resource that should be business owners’ first stop to learn about tax issues . Small Business Resources from the IRS The IRS offers several resources for small business owners and self-employed individuals : Gig Economy Tax Center – For taxpayers earning income providing on-demand work, services, or goods through an app or website Small Business Forms and Publications – Employers can select and download multiple small business and self-employed forms and publications Understanding tax responsibilities – Information to help entrepreneurs set up their business Signs Your Business Needs Bookkeeper Services Consider professional bookkeeping support if: You spend hours each week trying to reconcile accounts You are unsure of your current cash position Tax time brings panic because records are incomplete You have received notices from vendors about missed payments You want to focus on growing your business, not managing receipts At Nova Tax & Accounting Services , our accounting and bookkeeping team processes daily records efficiently and cost-effectively. Contact us today for a free consultation.