The Clinton Foundation filed its 2014 tax return, and amended its filings for 2010, 2011, 2012 and 2013. In a highly structured statement, Foundation President Donna Shalala explained that this was all voluntary. Besides, she noted, it all came about because of an error in 2010 – 2013 filings. The updated returns can be found at Clinton Foundation amendments.
Earlier this year, the Clinton Foundation said it needed to amend its taxes. There just may have been millions of donations omitted, so Foundation operatives wanted to make it right. Despite the connection and all the speech income, the Foundation is distinct from the Clinton family. There was no suggestion that these monies would be taxed to the Clinton Foundation or to Mr. or Ms. Clinton. Even so, it was still an embarrassing error.
Now, as the Foundation refiles, a letter to supporters from Ms. Shalala suggests that the Foundation has gone beyond all legal requirements, exhaustively reviewing data, and scrupulously fixing any mistakes. She notes that the auditors found other errors too. Yet even with them, amended returns were not needed, the Foundation states. But we did them anyway, Ms. Shalala explained.
The statement says the Foundation does “not owe any taxes,” which seems to be an obvious conclusion for an exempt organization like this one. Although the bottom line was the same, we decided to refile, according to the statement. The nature of the amendments to the Foundation past years’ returns falls into four major categories.
Government grants and contributions. Starting in 2010, the Foundation reported on three consecutive IRS tax returns that it received no donations from foreign government sources. It wasn’t as if they didn’t know how to report them. In prior years, the Foundation reported tens of millions of dollars in such donations. But things changed. Upon becoming Secretary of State, Mrs. Clinton promised that the Foundation would stop accepting donations from foreign governments. It turns out there were exceptions, and that the Foundation’s tax filings with the IRS were less than transparent.
Government grants – both domestic and foreign – were blank in 2010, 2011, and 2012. The Foundation says it inadvertently included government grants as part of the reporting of all grants. “There is nothing to suggest that the Foundation intended to conceal the receipt of government grants, which we report on our website,” the Foundation states.
Revenue from speeches. Bill, Hillary, and Chelsea Clinton all gave speeches in 2010, 2011, and 2012. The money was reported as charitable contributions, but actually, the speech fees were payments for services. That is worth saying again: the speech fees were purely fees-for-services and not donations. What’s more, the Foundation did not send any donor acknowledgement letters to these speech hosts.
Changes to Schedule B. The Foundation admits that there were errors in the amounts of donations and that there were some omissions.Some of these changes led to the listing of additional donors. In several cases, the speech fees were moved from contributions to other income. As a result, there was a decrease to the two percent threshold for reporting on this schedule.
Listing of related entities. The last category of major amendments to the returns is the listing of related entities. As the Clinton Foundation has set up and invested in entities that help it do work on the ground. The amended returns now disclose and reflect these relationships.
Do the Foundation’s refilings fix everything. That remains to be seen. The IRS says if you discover errors after you file, you should amend. One dividing line is what you knew when you filed your original return. If you knew the return was wrong when you filed it, you’d better fix it right away. On the other hand, if the errors were inadvertent and you discovered them only later, it is probably not as serious.
Contact me at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.
via The Tax Lawyer http://ift.tt/1NYg4MX