This quarterly newsletter provides recent updates and education information important to Arizona STOs.

Due Date Reminders

November 16th – Form 990, 990-EZ, or 990-N (e-postcard) is due to be filed with the IRS for fiscal years ending June 30, 2015.
December 31st – Audit or review and agreed-upon procedures reports are due to ADOR for FY 2015.

February 16th – Form 990 or 990-EZ due date for June 30, 2015 returns properly extended by November 16, 2015.

IRS Weighs in on Whether Federal Tax Deductions are Allowed for Donations with Recommendations

The IRS Exempt Organizations Office has released a video and accompanying transcript that addresses the question of whether a donor can receive a federal tax deduction for donations to school tuition organizations that include a student recommendation. 

The video notes that STOs avoid the private benefit prohibition by not allowing donations that are made on the condition that a particular student receive it (the STO still has a final say in who receives the scholarship) and by disallowing a tax credit if the donor designates the contribution for the benefit of any of the donor's dependents. 

As long as these two conditions are met and swapping and other similar methods of having pre-selected, designated beneficiaries and quid-pro-quo arrangements are prohibited, the donor is allowed to take the federal charitable deduction. 

The video does note that if the STO distributes these funds to students that the donors delegate or that improperly benefit the organization's principals, this could jeopardize the organization's 501(c)(3) status, so it is important that your STO has procedures in place to award scholarships not solely on the basis of a donor recommendation. 

The full video and transcript can be viewed here

ADOR Releases Updated Compliance Questionnaire

The Arizona Department of Revenue recently released the updated FY 2015 Compliance Questionnaire. The updated questionnaire removes the requirement to test radio and television advertisement copy for the required wording, allows for additional comments on whether the 90% calculation matches, removes the testing requirement of donors with recommendations, and several other minor changes. The update questionnaire is included in the most recent STO Manual

ADOR Releases 2014 Summary

ADOR also released the FY 2014 Summary of STO Credits in Arizona. The report outlines trends and totals for all Arizona school tuition organizations taken from the fiscal year 2014 reports. The report is a great resource for comparing your organization's performance with other STOs.
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