May 22, 2008

Q & A: Non-Profits Subject to IRS Levy?

QUESTION: Does a non-profit child welfare organization have assets that are protected from IRS levy? If so, what are the typical protected assets of non-profit groups?

ANSWER: A non-profit (and I assume in this case, a tax exempt organization under section 501(c)(3)) organization is subject to the same levy as a for-profit corporation. However, because it is a non-profit, I assume again that the only tax is "payroll taxes." A portion of payroll taxes are "trust fund" taxes that can be assessed against the responsible parties (i.e. officers, check signers, knowledgeable board members) personally for collection of the liability. Non-profits are not protected (nor are their responsible parties) from assessment, collection and ultimately levy.
If the tax is other than payroll, then I would need to know what other taxes are assessed, i.e. penalties for late filing, unrelated business income tax, etc. Depending on the type of tax will determine the plan for resolving the matter. In any event, a tax-exempt organization is subject to the same collection efforts and levy as a for-profit.A non-profit (and I assume in this case, a tax exempt organization under section 501(c)(3)) organization is subject to the same levy as a for-profit corporation. However, because it is a non-profit, I assume again that the only tax is "payroll taxes." A portion of payroll taxes are "trust fund" taxes that can be assessed against the responsible parties (i.e. officers, check signers, knowledgeable board members) personally for collection of the liability. Non-profits are not protected (nor are their responsible parties) from assessment, collection and ultimately levy.
If the tax is other than payroll, then I would need to know what other taxes are assessed, i.e. penalties for late filing, unrelated business income tax, etc. Depending on the type of tax will determine the plan for resolving the matter. In any event, a tax-exempt organization is subject to the same collection efforts and levy as a for-profit.

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