Michigan Camp Meeting 2019: As a Witness, Matthew 24:14

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Michigan Conference of Seventh-day Adventists

Are You Putting Your 501(c)3 at Risk

Mark Tallis

Are you Putting Our 501(c)3 at Risk

I am the managing partner of Tallis and Associates.

I've been in the accounting field since 1981.

Shortly after getting out of school, got married to my wife Debra.

Moved on to doing consulting work with healthcare professionals.

They are notorious for not knowing how to run an office or managing their personnel.

So did that for a while, got tired of that, decided I'm going out on my own.

Any of you that have been self-employed, you know what that's like with where's the paychecks coming from and oh your wife doesn't work and oh the mortgage is there, food's there and now there's a child.

My wife doesn't know me for 4 months between January and April 15th.

Personally I prepare approximately 700 tax returns during that time frame.

Clients are notorious for waiting until October 15th.

But by the end of the year, we do 700 returns by myself.

I got my bachelor's degree from Michigan State University in accounting, business administration majoring in accounting.

I am a member of the Michigan Tax and Accounts Profession in the state here, and I am also, for the past year, a member of the Michigan Income Tax Advisory Group.

Basically what that is is a group of, right now, about 5 preparers who sit down with the different department heads of Treasury and tell them what they're doing wrong and giving them advice.

Bonds, who is the head of the income tax division and since I'm in Lansing he has requested that we do quarterly luncheons together to talk about problems and where we can help them improve their services And so that works out really well.

I am what is classified as an enrolled agent.

Does anybody know what an enrolled agent is?

We are licensed through the Department of Treasury and not regulated by our own internal board but everything runs through IRS and they are the ones who deal with what we're allowed to do and what not to do.

So, that's basically a little broad overlap of what I do and what I'm all about.

But before we get started, you'll love this 1, 1 of the things that I gotta say is I'm not gonna be giving you tax advice or anything along that lines.

If you take something home that you think will be worthwhile for your organization, please talk to your local professionals on this.

As the old saying goes, you give a thousand accountants a tax return to prepare, you're going to get a thousand different answers.

Each 1 of us has our own way of doing things and our comfort level.

So I don't know the facts and circumstances of your individual organizations so I need you to talk to the people that you work with that do know those actual facts and circumstances so that you're not led astray.

Let's go into some of the traps in the tax code.

As you know there was a new tax code that occurred this past year called the Tax Cut and Jobs Act.

The public gets the tax cuts, the accountants get the jobs.

It expanded our business quite a bit based on what they are doing and so our jobs have expanded.

The need for more accountants has expanded just to keep up with what they're up to.

Basically all of you as Michelle said, you're under the church's 501c3 status, nothing to do with a 990.

They are about a 20 page form and they go in circles.

I do 990s for clients and they're a mess.

However, there is the potential for a form needing to be done.

It's called 990T, unrelated business taxable income.

The counts are a little backwards because we did an acronym of UBIT.

The I and the T are backwards, but it's there.

That return is only done when you have income that is not related to your services.

I've got to remember not to put my hand in my pocket, there's a recorder there, I'll be knocking it around.

So anyway, 2 things I'm going to go over first, that how it affects the churches.

Under the new tax law, as all of you know, standard deductions went up to 12, 000 and 24, 000 which takes away some of that advantage of charitable giving that out of the 700 returns that I did, very few itemized.

The $24, 000 and some other requirements that are in there basically are doing away with that whole concept.

Personally, I think within 4 years, itemized deductions will totally be eliminated from the tax returns, just that they'll increase the standard deduction.

On a positive note, my clientele, I didn't see any changes in their giving.

And personally, when somebody is giving to a church for tax deduction at 15-20%, is it truly charitable giving?

So we look at that and say, okay, what's out there and how does that work?

Now for school treasurers, we have a positive for you guys.

Under the new tax code, there is a provision for 529 plans.

The new tax law changed that and added private K through 12 schools.

So somebody can put in, you can talk to your neighbor for your child or whomever, parents, grandparents, neighbors, person off the street can fund a 529 plan for their child, put that money into that plan, child starts kindergarten, we've got a fund to use towards that tuition.

Now family can put $5, 000 for a single person, $10, 000 for a married couple into a 529.

That will sit there and grow until the child needs it.

And the 1 thing I will say is 529s do not affect their federal returns.

It will affect the state of Michigan return only.

It's an adjustment on Schedule 1 for the Michigan return only.

Now if you got questions feel free to ask as I go through.

It doesn't matter how many, you know, if you have 3 kids and you want to do 529s, max is 5, 000.

Basically the Michigan return starts with the adjusted gross income from the federal, then there's addition subtractions before you get to the taxable side.

And do you use the parochial school then?

Do you use elementary as well as gathering?

It is college and private is the way they've worded it.

Now I may be wrong, but that's my attitude on it.

You set it up with any investment company or any organization like that.

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Are You Putting Your 501(c)3 at Risk

Are you Putting Our 501(c)3 at Risk

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