Northwest New Jersey Community Action Program Inc.

PART X, LINE 2:

“The norwescap entities are exempt from income taxes under sections 501(c)(3) and 501(c)(2) of the internal revenue code and classified by the internal revenue service as other than a private foundation. The norwescap entities are also exempt under title 15 of the state of new jersey corporations and associations not-for-profit act. Accordingly, no provision for federal or state income tax has been presented in the accompanying consolidated financial statements. The norwescap entities follow the provisions of fasb asc, income taxes. The standard prescribes a minimum recognition threshold and measurement methodology that a tax position taken or expected to be taken in a tax return is required to meet before being recognized in the consolidated financial statements. It also provides guidance for derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition related to those tax positions. The norwescap entities do not expect a significant increase or decrease to the total amounts of unrecognized tax positions during the year ended august 31, 2016. However, the norwescap entities are subject to audit by tax authorities, including a review of its nonprofit status which management believes would be upheld upon examination. The norwescap entities believe that they have appropriate support for the positions taken on their tax returns. Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. Interest and penalties, if incurred, would be recognized as an administrative expense on the consolidated statement of activities. As required by law, the norwescap entities file informational returns with both the federal and new jersey state governments on an annual basis - form 990 with the internal revenue service, and form cri-300r with the state of new jersey. These returns are subject to examination by these authorities within three years from the latest filing date for federal and four years from the latest filing date for new jersey.”