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Nonprofit Law/1099 For Board Benefits Received?

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Question
Hello.  There has been so much confusion with new 1099 rules.  We have a non-profit ski club that has a board of directors that receive a "free" ski trip as compensation for their time on the Board.  Should they be getting a 1099 issued as the compensation is over $600?  Thank you for your time.
Sheri

Answer
I don't know about any new 1099 rules.  There were some that were passed by Congress but then, later, removed.  Anyway, see  http://www.irs.gov/pub/irs-pdf/i1099msc.pdf which is the IRS'
instructions for form 1099-Misc.

The IRS explains at
http://www.irs.gov/charities/article/0,,id=131083,00.html
--- Start of Excerpt ---
An exempt organization (EO) may have officers such as a
president, vice-president, secretary, treasurer, executive
director, and CEO (chief executive officer).  As used here, the
term officer includes anyone who holds a position of trust,
authority, or command within an organization.

The Internal Revenue Code defines corporate officers as employees
for FICA, FUTA, and FITW purposes.  However, an officer of a
corporation who does not perform any services or performs only
minor services and who neither receives nor is entitled to
receive, directly or indirectly, any remuneration, is not an
employee of the corporation.
---End of Excerpt---

See on pdf page 112 of the 160 page pdf file "IRS Internal
Training: Employee/Independent Contractor" at
www.irs.gov/pub/irs-utl/emporind.pdf
---Start of Excerpt--
A director of a corporation, acting in the capacity of a
director, is not an employee of the corporation for those
services, even if that worker also serves as an employee or
officer of the corporation for other services. Therefore, part of
the compensation paid this worker can be for services
rendered as an independent contractor (director) and part of the
payments can be for services rendered as an employee. Rev. Rul.
58-505.
---End of Excerpt--

Free ski trips are generally considered compensation as a fringe benefit and need to be reported and treated as such both for employees and independent contractors.

There are no minimum for payments to employees for an employer to
be required to file a W-2
http://www.irs.gov/pub/irs-pdf/iw2w3.pdf (page 2 on the right
column indicates for any payments to employees)

The IRS Publication 15-B discusses fringe benefits and is available
at http://www.irs.gov/pub/irs-pdf/p15b.pdf
As the IRS writes at:
http://www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf on page 74
(it generally takes a while to load as it is a 91 page pdf file):
--start of excerpt  ---
The use of the term "volunteer" generally has no significance in
applying the tax law....
A volunteer is an employee if an entity has the right to direct
and control the volunteer's performance, not only as to the results
to be accomplished, but also as to the methods by which the results
are accomplished.  It is the "right" to control, even if the entity
does not exercise the right, that is important. Many factors in an
employment relationship have to be considered before a decision can
be made as to whether the entity has the right to direct and
control.
---End of Excerpt---

On page 12 we see:
--- Start of Excerpt ---
All of the following are considered employees for purposes of
working condition fringe benefits:  Reg. 1.132-1(b)
 Current employees
 Partners
 Board of directors of the employer
 Independent contractors
 Volunteers
Although not employees for most employment tax purposes,
independent contractors are treated as employees for this purpose
and are therefore eligible to receive nontaxable reimbursements as
working condition fringe benefits.
---End of Excerpt---

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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