Enlist the levels of government and sources of authority regulating the not-for-profit organization.
Explanation of Solution
Not-for Profit Organization: A not for profit organization, is a business type operated by individuals or specific groups of people to carry out the beneficial activities to the society. They do not focus on profit generation.
The levels of government regulating not-for-profit organization are:
- State government
- Federal government
The sources of authority regulating not-for-profit organization:
The State government grants not-for-profit organization the right to operate or their legal life, in any form of its choice as either a not-for-profit corporation, charitable trust, or limited liability company. The State government due to this source of authority, regulates the not-for-profit organization to ensure public interest and safeguard the contributors.
The Federal government derives its authority to regulate from various laws under IRS. The not-for-profit organization must file Form 990 under IRS to claim exemption from federal income tax each year. The Federal government also regulates the unrelated business income tax, excessive benefits, political activity and so on.
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Chapter 14 Solutions
Accounting for Governmental & Nonprofit Entities
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