Sommerville & Associates offers an extensive practice in the preparation of various federal and state tax returns. Our firm's tax preparation practice focuses on the following services:

Nonprofit Information Returns, Forms 990

A nonprofit’s annual return is a powerful public relations tool. Therefore, it is critical the return both fulfill governmental requirements and portray the organization in a positive light. The staff of Sommerville & Associates, P.C. has over 25 years experience preparing annual returns for various tax exempt organizations such as schools, ministries, foundations, public service associations, churches and their auxiliary organizations.

Individual Income Tax Returns

With our firm's primary practice in the area of religious organizations, we have expertise in the preparation of federal individual income tax returns for ministers and other employees of religious organizations. The tax law for ministers is unique, and our firm makes it a priority to have a strong working knowledge of these unique laws.

Whether it is the establishment of payroll systems, analysis of fringe benefit plans, full service payroll processing and/or the preparation of quarterly and annual payroll returns, we provide unique services specifically created to meet the needs of religious organizations and nonprofit organizations.

Payroll Tax Returns

The payroll tax rules for nonprofit organizations, and especially for churches, can be complicated due to the special rules for both nonprofit organizations and for employees that are ministers. There are many exceptions to the fringe benefit rules for churches that further complicate payroll procedures. Sommerville & Associates can assist organizations in the preparation of payroll returns and in educating an organization's staff to assist in its compliance in this area.

Payroll Processing

Few administrative functions of a nonprofit are as difficult to correctly navigate as the payroll function. As a result of this complexity, the number one area of tax and penalty assessments to a nonprofit is in the area of payroll related assessments. Religious organizations also face unusual payroll rules in the areas minister compensation and worker classification. Typical payroll services do not always understand these issues and fail to inquire as to additional forms of compensation that may be taxable to employees.

Our service includes annual questionnaires to identify compensation issues, regular payroll processing, quarterly transaction reviews to locate payroll items outside of regular paychecks, as well as quarterly/annual payroll filings.

Nonprofit status is granted through legislative grace and governed, for federal purposes, by the IRS. Since the exempt status is an organization’s most valuable asset, we provide consulting services to assist an organization in keeping and protecting its exempt status through compliance with the rules and regulations set forth through the Internal Revenue Code.

Specifically, the engagement includes a review of the organization’s operations for compliance with federal and state laws in the following areas:

• Transactions with key individuals
• For churches, the special payroll rules for churches and ministerial staff members
• General compliance with payroll rules
• Taxation of fringe benefits
• Compensation packages
• Retirement plans
• Unrelated business income
• Governance issues
• Adherence to the organizational and operational tests as they apply to 501(c)(3) organizations
• Required documentation of various expenditures
• Wage and hour issues
• Texas sales taxes – collection and reporting

Churches as well as other nonprofits are required to maintain adequate books and records.

These services include but are not limited to:

• Bookkeeping (Monthly, quarterly, or annual)
• Assisting in the selection of the accounting and/or donor system
• Creating and implementing the chart of accounts
• Consultations regarding required reporting
• Input of data
• Reconciliation of accounts

Our firm offers financial statement preparation in the form of compilations and other special purpose financial statements and partners with other firms to provide our clients with a higher level of financial statements when needed.

The auditors are coming and the amount of information they need is overwhelming. We will work with an organization and its auditors to prepare the required schedules and to reconcile various accounts before the audit engagement begins.

For new organizations, the process of gaining IRS recognition of exempt status can be overwhelming. Working with the attorneys, we can assist in the overall formation of a new organization and then work with the IRS and applicable state to obtain formal recognition of its exempt status.

In addition to the IRS, there are other regulatory bodies governing an organization’s activities. Our services include worker classification for wage and hour purposes, state sales tax issues as well as consulting on specific federal tax matters.

Thirty-eight states plus the District of Columbia require organizations, with the exception of churches, to register in order to solicit donations from their residents. We assist organizations in determining registration requirements as well as registration in the applicable states.