[Mldxcc] Club tax exempt status web site

Jim Venneman wx6v at sbcglobal.net
Sat Oct 23 15:29:36 PDT 2010 

OK - I've been researching this off an on for a while and here's the deal.

MLDXCC automatically qualified as a Section 501(c)(3) tax exempt organization 
because it has always had gross receipts of less than $5,000 annually and was 
involved in the types of activities that qualified as tax-exempt. From what I 
have gleaned from e-mail messages on this subject going around, it appears that 
no exempt status form was ever filed with the IRS. That is probably why our club 
does not appear as one of the 1,162 tax exempt organizations in California that 
could lose its tax exempt status.

In 2006, a new tax law was passed requiring tax exempt entities, even those with 
less than $5,000 of annual gross receipts, to file an annual information form - 
Form 990-N, commonly known as the e-postcard. The law stated that organizations 
failing to file these forms for 3 consecutive years, beginning for tax year 
2007, would lose their tax exempt status and be required to file annual tax 
returns and pay taxes. Tax exempt status could be restored by filing Form 1023 
and paying the required "User Fee." 


The IRS sent this information out to all tax exempt entities that were in its 
system. Realizing that the revocation issue was not widely known, the IRS 
instituted an amnesty period for small organizations to file the required Form 
990-N. Unfortunately, the amnesty period expired on October 15 of this year. 


As mentioned above, in order to be reinstated as a tax exempt organization, Form 
1023 must be prepared. A LOT of information is required and the minimum fee is 
$400. After that, we go back to filing the Form 990-N every year.

Conclusion - paying a $400 fee for our club is an onerous requirement. I believe 
that the club's gross receipts are less than $1,000 per year [please correct me 
if I'm wrong]. So, even if we filed a tax return for the club, the automatic 
$1,000 deduction available on the required tax form would wipe out any possible 
"profits" that may exist. In other words, there would be no taxes due, not now 
or for any year in the past.  

Our club is well under the radar of the IRS. Due to the miniscule amount of 
funds that our club deals with every year, it is likely to remain so. Unless 
someone is taking a tax deduction on their income tax return for dues payments 
to MLDXCC as a charitable donation, MLDXCC does not exist for tax purposes. 


So - those are the facts as I see them. The club officers can decide what to do 
next. If you want me to do more research on this subject or offer advice, 
please let me know. I'll keep looking around to see if there is anything else of 
importance regarding this topic. If so, I'll post it here.

Jim  -WX6V-      




________________________________
From: Rich <rehill at ix.netcom.com>
To: mldxcc at contesting.com
Sent: Fri, October 22, 2010 10:47:42 AM
Subject: Re: [Mldxcc] Club tax exempt status web site

By the way, the section that ARRL has emphasized is paragraph (J) of the 
code I excerted  below:

    (j) Loss of Exempt Status for Failure To File Return or Notice.--
            (1) <<NOTE: Revocation.>> In general.--If an organization
        described in subsection (a)(1) or (i) fails to file an annual
        return or notice required under either subsection for 3
        consecutive years, such organization's status as an organization
        exempt from tax under section 501(a) shall be considered revoked
        on and after the date set by the Secretary for the filing of the
        third annual return or notice. <<NOTE: Publication. Records.>> The
        Secretary shall publish and maintain a list of any organization 
the
        status of which is so revoked.
            (2) Application necessary for reinstatement.--Any
        organization the tax-exempt status of which is revoked under
        paragraph (1) must apply in order to obtain reinstatement of
        such status regardless of whether such organization was
        originally required to make such an application.
            (3) _Retroactive reinstatement if reasonable cause shown
        for failure_.--If, upon application for reinstatement of status
        as an organization exempt from tax under section 501(a), an
        organization described in paragraph (1) can show to the
        satisfaction of the Secretary evidence of reasonable cause
        for the failure described in such paragraph, the organization's
        exempt status may, in the discretion of the Secretary, be
        reinstated effective from the date of the revocation under such
        paragraph.

Rich
NU6T

On 10/22/2010 10:21 AM, Rich wrote:
> We -may- need to address this issue.  It looks to me that we may need to
> file for tax exempt status and file an annual e-notice.  It can be filed
> for free through the Urban Institute non-profit tax reporting system--if
> necessary.  We may be exempt due to a less than $5,000 annual budget. _I
> don't trust web search tax advice<grin>. _
>
> Info on the web is limited, but the following may be of interest:
>
> http://www.eham.net/ehamforum/smf/index.php/topic,71233.0.html
> List of Florida and Illinois amateur radio clubs in danger of losing tax
> exempt status...it appears that many clubs did of do have tax exempt
> status.
>
> http://www.arrl.org/news/many-radio-clubs-could-lose-tax-exempt-status-in-2010
> *ARRL information*
> http://www.dirtypawwebsites.com/tax-exempt/ THIS MAY BE OUT DATED
> INFORMATION.
>
>      Limitations of This Document
>
>      This document addresses both non-tax-deductible non-profit
>      organizations, and tax-deductible non-profit 501(c)(3)
>      organizations, but only those which meet the following criteria:
>
>          1.  Non-tax-deductible non-profit organizations with gross
>          annual receipts normally not more than $25,000.
>
>          2.  Tax-deductible non-profit 501(c)(3) organizations with gross
>          annual receipts normally not more than $5,000.
>
>      You'll have to check with your state about state requirements. But
>      if your club or rescue meets the above criteria, you'll find the IRS
>      requirements very simple. Namely:
>
>          1.  You don't have to file paperwork with the IRS to establish
>          your tax-exempt status.
>
>          2.  You don't have to file annual tax returns; only a simple,
>          on-line form each year.
>
>      Organizations with greater income will have more complex filing
>      requirements, and should refer to the IRS resources listed below for
>      further information.
>
>      Disclaimer:  Do not take any of the information contained in this
>      document as advice. This document is only to be used as a learning
>      tool, and no guarantee whatsoever is made about its accuracy.
>
>
>
>http://www.taxalmanac.org/index.php/Internal_Revenue_Code:Sec._6033._Returns_by_exempt_organizations
>s
> *IRS TAX Code*
>
>
>
> I think the key legal issue is whether we normally have an annual budget
> above $5,000.  See:
>
> TITLE 26 - INTERNAL REVENUE CODE Subtitle F - Procedure and
> Administration CHAPTER 61 - INFORMATION AND RETURNS Subchapter A -
> Returns and Records PART III - INFORMATION RETURNS Subpart A -
> Information Concerning Persons Subject to Special Provisions
>
> Sec. 6033. Returns by exempt organizations (a) Organizations required to
> file (1) In general Except as provided in paragraph (3), _every
> organization exempt from taxation under section 501(a) shall file an
> annual return_, stating specifically the items of gross income,
> receipts, and disbursements, and such other information for the purpose
> of carrying out the internal revenue laws as the Secretary may by forms
> or regulations prescribe, and shall keep such records, render under oath
> such statements, make such other returns, and comply with such rules and
> regulations as the Secretary may from time to time prescribe; except
> that, in the discretion of the Secretary, any organization described in
> section 401(a) may be relieved from stating in its return any
> information which is reported in returns filed by the employer which
> established such organization.
>
> (2)<snip>
>
> (3) _Exceptions from filing _
>
>        (A) Mandatory exceptions
>              Paragraph (1) shall not apply to -<snip>
>
>          (ii) any organization (other than a private foundation, as
>      defined in section 509(a)) described in subparagraph _(C), the gross
>      receipts of which in each taxable year are normally not more than
>      $5,000, or _<snip>
>
>
> A professional may have a different understanding....I'm not a tax
> professional.
>
> Rich
> NU6T
>
>
> On 10/22/2010 9:28 AM, Rich wrote:
>> I doubt that we have a tax exempt status, and doubt that anyone filed
>> for non-profit status.  I suppose the real question is whether we have
>> to file an annual tax return.  Our treasury (OK, piggy bank) is small
>> enough I doubt we have to pay taxes, but we may have to file some
>> paperwork.  If so, what?  I thought Jim Venneman was looking into that?
>>
>> We are not on the IRS list of entities that are in danger of losing
>> tax-exempt status.
>>
>> Rich
>> NU6T
>>
>> On 10/22/2010 9:17 AM, Dick Wilson wrote:
>>> So...IMO, the next question is, did MLDXCC ever apply for or receive
>>> tax-exempt status as described?
>>> I have been a more or less active member for the past ten years. I do
>>> not recall even discussing this matter other than maybe touching on this
>>> item at a meeting.
>>> There is no mention in by-laws
>>> Ken&    Kay, Ray, Dennis, for instance, have been members longer than I. 
What
>>> say, people??
>>>
>>> Dick
>>>
>>> On 10/22/2010 8:57 AM, Richard (Rick) Karlquist wrote:
>>>> See:
>>>>
>>>> http://www.irs.gov/charities/article/0,,id=227435,00.html
>>>>
>>>> Rick N6RK
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>>>>
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>>>
>>>
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>>
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