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Seeking 501(c)(3) Recognition
Lessons LearnedAABE Seattle-Portland
ChapterJune 6, 2003
June 6, 2003 AABE Seattle-Portland
Chapter 2
Background Sought for fundraising and tax
purposes Submitted application in March
2001 Received 501(c)(3) recognition
from IRS in May 2003
June 6, 2003 AABE Seattle-Portland
Chapter 3
Background Expected a long process, but not
two full years. Completed application ourselves Spent most of our time responding
to IRS requests for information Benefits far outweigh the
headache of the process
June 6, 2003 AABE Seattle-Portland
Chapter 4
Background
The benefits of 501(c)(3) recognition: Tax deductible donations Tax exempt status Funding from corporations and
governmental entities who donate only to 501(c)(3) organizations.
June 6, 2003 AABE Seattle-Portland
Chapter 5
Background If you’re well established and have
money to hire someone to complete the application, DO IT!
If you’re like us, little money and/or new chapter, here’s what you need to do . . . .
June 6, 2003 AABE Seattle-Portland
Chapter 6
Application Prep-work Before you begin, have ready: Descriptions of your chapter
activities Budgets for the current tax year and
the three subsequent tax years Scholarship award guidelines List of all funding sources
June 6, 2003 AABE Seattle-Portland
Chapter 7
Application Prep-work The national organization’s 501(c)
(3) recognition letter Chapter bylaws signed by the
president and secretary Current state incorporation Tax or employer ID number
June 6, 2003 AABE Seattle-Portland
Chapter 8
Prep-work: Activities You will need descriptions of your non-
profit activities: type of activity purpose frequency how, when, where, and by whom participation fees/charges percentage of chapter time spent on that
activity
June 6, 2003 AABE Seattle-Portland
Chapter 9
Example Activity: AABE Seattle Fun Run/Walk Purpose: to raise funds for scholarships and activities, and to raise
awareness of the AABE. Frequency: annually How, When, Where, By Whom: the Scholarship Committee will
organize this annual event to alternate between Portland and Seattle. Necessary local permits for the route will be obtained. The event will be advertised through the membership, at their places of employment, community newspapers, and local sports related business, and other AABE events. Scholarship Committee will solicit the assistance of volunteers for the day of the event. Committee also will solicit sponsor to help defray the cost of the event so that a greater percentage of the money raised goes to fund scholarships and other activities.
Participation: open to the public; participants must register Fees/charges: a registration fee Time: 25%
June 6, 2003 AABE Seattle-Portland
Chapter 10
Prep-work: Scholarships You will have to submit scholarship
award guidelines if your chapter awards or intends to award scholarships.
We are willing to share our guidelines and application with you – just ask.
June 6, 2003 AABE Seattle-Portland
Chapter 11
Prep-work: Bylaws Your bylaws document (and state
incorporation document) needs to include language requested by the IRS (the IRS calls it “sample language,” but they really want that exact language).
We are willing to share that with you – just ask.
June 6, 2003 AABE Seattle-Portland
Chapter 12
Prep-work: Tax ID Obtaining the employer ID number
is the easiest part of the process. You can obtain a tax ID number by
mailing or faxing Form SS-4 or by calling 800-829-4933.
June 6, 2003 AABE Seattle-Portland
Chapter 13
Prep-work: Forms You’ll need the following IRS forms for a
complete application: Form 1023 – Application Form 872-C – Consent Fixing Period of
Limitation Form 8718 – User Fee You may download the forms at
www.irs.gov. There is no online application.
June 6, 2003 AABE Seattle-Portland
Chapter 14
The Application Form 1023 Part I – Applicant Part II – Activities and Operational
Information Part III – Technical Requirements Part IV – Financial Data Schedule H - Scholarships
June 6, 2003 AABE Seattle-Portland
Chapter 15
The Application The space on the page should not limit
your response. For example, you should attach additional pages to describe your activities.
Attach to your application all of the prep-work documents mentioned in the earlier slides.
Submit the completed application and other forms with the fee to the address shown on Form 8718.
June 6, 2003 AABE Seattle-Portland
Chapter 16
The Application About the fee: The fee will vary depending on the
size of your annual gross receipts. When we filed, the fee was $150
for under $10,000 and $500 for over $10,000.
June 6, 2003 AABE Seattle-Portland
Chapter 17
What Happens Next After submitting the application,
expect correspondence from the IRS.
Contact the IRS if you haven’t heard anything within 30 days.
Be patient! For a smooth process, keep in mind the following important considerations.
June 6, 2003 AABE Seattle-Portland
Chapter 18
Important Considerations Again, if you can pay someone, do
it! But, if you’re a new chapter, it may
not be cost effective to hire someone since you will need to spend a significant amount of your time with that person defining your activities and goals.
June 6, 2003 AABE Seattle-Portland
Chapter 19
Important Consideration Dedicate about two members to the process. Develop a good relationship with your IRS
reviewer. Check your mailbox regularly. Be mindful of slow mail from the IRS – your
response time may be cut in half. Stick to response deadlines and call the IRS
immediately if there will be a problem meeting a deadline.
Stay on top of the IRS’ review.
June 6, 2003 AABE Seattle-Portland
Chapter 20
Important Considerations Keep a log of any telephone
conversations with the IRS. Keep a complete file of all
correspondence to and from the IRS. Follow IRS directions exactly. All correspondence to the IRS has to
be in writing to be officially recognized.
June 6, 2003 AABE Seattle-Portland
Chapter 21
Important Considerations Do not expect the ability to e-mail or fax
responses to the IRS, but don’t hesitate to ask whether you can.
Remember any annual tax duties that my be necessary - Form 990 or an audit of your financial records.
If you are a large chapter, you may consider professional tax advice.
Ask for help! Call us and others for tips on how to get your 501(c)(3) recognition!
June 6, 2003 AABE Seattle-Portland
Chapter 22
Contact Information Sonya Baskerville [email protected] 503-230-5904 Kirsten Watts [email protected] 206-220-6762 An electronic version of this presentation is
available upon request and at www.aabe-sea-por.org