CHANGES TO PENNSYLVANIA CHARITABLE ORGANIZATION FILING REQUIREMENTS

Amanda J. Bernard, CPA, CFE, CMA

Principal, Maillie LLP

abernard@maillie.com

Governor Tom Wolf signed into law House Bills 1420 and 1421 on December 22, 2017, amending the Pennsylvania Solicitation of Funds for Charitable Purposes Act.  The bills contain legislative changes that will affect the Pennsylvania Bureau of Charitable Organization filings required by not-for-profit organizations that raise contributions in the state.  The bills were sponsored by State Republican Keith Greiner (R-Lancaster), a CPA and PICPA member.

House Bill 1420 (Act 71 of 2017)
The changes from House Bill 1420 affect the thresholds of annual contributions that trigger certain financial statement attestation services by independent Certified Public Accountants.  The goal of the Bill is to provide smaller charitable organizations with some relief from the financial burden of obtaining such services. 

Currently, Pennsylvania requires a charitable organization with total annual contributions of $300,000 or more to submit audited financial statements.  House Bill 1420 increases this audit trigger to $750,000.  Similarly, the thresholds increased from $100,000 to $250,000 and $50,000 to $100,000 of total annual contributions for submitting reviewed and compiled financial statements, respectively.  Financial statement attestation services will be optional for all charitable organizations receiving total annual contributions of less than $100,000 (currently $50,000).  There has been no guidance yet on whether these organizations receiving less than $100,000 will be required to submit another form of financial information, such as internally prepared financial statements.

All charitable organizations soliciting contributions in Pennsylvania should review the new financial statement filing requirements to determine their specific needs.  In addition to the Pennsylvania Bureau of Charitable Organization requirements, an organization should consider other requirements for financial statement attestation services that may be generated by Internal Revenue Service regulations, the organization’s by-laws, grant agreements, other state contribution solicitation registrations, or any other legal or contractual requirements.

House Bill 1421 (Act 72 of 2017)
House Bill 1421 clarifies that state registration forms filed by charitable organizations will be accepted as filed on time and will not accrue late fees if postmarked before the renewal date.  This is a change from current requirements, which state the registrations are only considered filed on time if received before the renewal date.  This bill aimed to prevent not-for-profits from incurring unnecessary fees and to align the timely filing dates with similar requirements of the Internal Revenue Service and other state filings.

The bills become effective 60 days after enactment.  We are anticipating further guidance from Pennsylvania and the PICPA regarding for which filing years the new requirements will apply. 

We would be pleased to assist you in determining your financial statement and Pennsylvania charitable registration needs.  Please contact Maillie’s Not-for-Profit Group today.

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