Fiscal Agent

Fiscal Agent - it is an external organization acting as a broker of the site (Office of the Federal Register 2013, s. 64176). "When lawyers talk about agency, they are talking about situations in which an agent acts on behalf of someone, usually called the principal. The agent is under the principal's direction and control" (J. Nober 2010, s. 1). The agent can be, for example, a bank or a trust company. The agent's task is to help in the purchase of bonds or coupons, dealing with tax matters, the redemption of bonds, replacing lost or damaged securities. All of his tasks are related to finance and administration. Fiscal agents are usually employed by charities or non-profit organizations. They do not have participation or the competence to independently carry out certain economic accountability. Due to the fact that fiscal agents are often employed by charities to deal with their finances, the IRS has set very harsh regulation, so that tax status is kept and all rules are not broken (Office of the Federal Register 2013, s. 64176).

Fiscal Agent versus Fiscal Sponsor

Very often "fiscal agent" and "fiscal sponsor" are used mutually. However, they don't mean the same thing. There are crucial differences separating these two items. The main difference applies "depends on which entity holds variance power over the applicable funds". Variance power is described as having analogous unrestricted power how assets are used. Below are the main characteristics of both representatives (Fiscal sponsor vs financial agency 2017): Fiscal Agent

1. Funds for the fiscal agent are received on behalf of the program, the agent is fully responsible for the doping by the funds were used for a charitable purpose in accordance with the purpose.
2. Accepting funds, the fiscal agent does not bear control for the funds received. This is a temporary relationship.
3. For services may expect the earned fee, because the costs and revenues of the project are separate from the activities of the charity.
4. Donations for the project cannot be deducted from the former tax, although the project has no charity exemptions.

Fiscal Sponsor

1. Funds for the fiscal sponsorship are received on behalf of a charity project. The fiscal sponsor is s trying to make the funds spend on a charitable purpose.
2. "Sponsorships are cheaper, faster, easier and more efficient than setting up a seperate".
3. The sponsoring organization is exempt from tax has the highest authority in terms of available funds, it is necessary to recognize temporarily the available revenues at the time of receiving the funds, and then to recognize and distribute the costs depending on the coverage.
4. Fiscal sponsorship is for future sponsors who are not always willing to invest in new projects, a trustworthy project. Donations from investors are deducted from the donor's tax.

Examples of Fiscal Agent

• First example of a fiscal agent is a bank. Banks are often employed by charities to manage their finances. The bank acts as a broker and is responsible for collecting donations, managing investments, and ensuring that all taxes are paid on time and correctly. Banks also provide services such as issuing checks, processing payroll, and providing advice on investments.
• Another example of a fiscal agent is a trust company. Trust companies are typically employed by charities to manage their finances and investments. They are responsible for managing investments, collecting donations, and ensuring that all taxes are paid on time and correctly. They also provide services such as issuing checks and providing advice on investments.
• A third example of a fiscal agent is an accounting firm. Accounting firms are often employed by charities to manage their finances and investments. They are responsible for managing investments, collecting donations, and ensuring that all taxes are paid on time and correctly. They also provide services such as issuing checks, preparing tax returns, and providing advice on investments.

Advantages of Fiscal Agent

Fiscal agents are a beneficial tool for charities and non-profit organizations. The following are some of the advantages of employing a fiscal agent:

• Fiscal agents bring a wealth of experience and expertise in accounting, tax, and financial matters. They are able to take care of all the details of the organization's finances, freeing up time and resources for the organization to focus on their mission.
• Fiscal agents are independent of the organization, providing an extra layer of oversight and assurance that the finances are handled correctly.
• Fiscal agents are also able to provide guidance and advice, helping the organization to make the best decisions for their financial situation.
• Fiscal agents are also able to provide assistance in obtaining grants and other forms of financing.
• Fiscal agents provide peace of mind, knowing that the organization's finances are in good hands and that all financial details are taken care of professionally.

Limitations of Fiscal Agent

Fiscal agents have certain limitations when it comes to their role and responsibilities. These limitations include:

• Acting within the scope of the authority granted by the principal: The agent must act within the scope of the authority granted by the principal and must not act outside of this scope.
• Confidentiality: The agent must maintain the confidentiality of the principal’s information and must not disclose it to any third parties.
• Liability: The agent is liable for any damages caused to the principal due to the agent’s negligence or failure to follow the instructions of the principal.
• Indemnification: The agent must indemnify the principal for any damages arising from the agent’s breach of contract or negligence.
• Responsibility: The agent must be responsible for their actions and must not take any action that could harm or damage the interests of the principal.
• Reporting: The agent must provide regular reports to the principal on their activities and progress.
• Fees: The agent may not charge the principal any fees beyond those agreed upon in the initial contract.

Other approaches related to Fiscal Agent

Apart from acting as a broker, fiscal agents may have other approaches related to their roles:

• Increasing operational efficiency: Fiscal agents may be used to help increase operational efficiency by providing access to a wide range of services such as account management, payment processing, and reporting.
• Risk management: Fiscal agents can help organizations manage their risks by providing services such as fraud prevention and compliance monitoring.
• Tax compliance: Fiscal agents can help organizations ensure they are in compliance with applicable tax laws and regulations.
• Investment advice: Fiscal agents can provide organizations with investment advice to help them make the best decisions for their financial goals.
• Loan origination and servicing: Fiscal agents can help organizations with loan origination and servicing, which can include loan processing, loan servicing, and loan collection.

Fiscal agents can help organizations increase their operational efficiency, manage their risks, ensure tax compliance, provide investment advice, and help with loan origination and servicing.

Fiscal Agent — recommended articles

Universal agent — Corporate trustee — Minute book — Bank secrecy — Corporate opportunity doctrine — Quasi partner — Working interests — Nominee company — Letter of administration

References

• Fiscal sponsor vs financial agency (2017), Jones & Associates LLC
• Nober J. (2010), Fiscal Agency versus Fiscal Sponsorship, Council on Foundations
• Office of the Federal Register (2013), Federal Register, Tom 78,Wydanie 208, National Archives and Records Service, General Services Administration
• Oceana Editorial Board (2011), CTIA: Consolidated Treaties & International Agreements 2010 Vol 2: Issued October 2011, OUP USA s. 327

Author: Sandra Kaczara