Chapters and Associated Groups: It’s tax time!

Having worked with small organizations for a number of years now, inevitably I will hear one state chapter or component leader say, “We don’t have to worry about filing taxes…we didn’t have enough income.”

Well, this is partly true.  Your organization may not need to file a formal 990, but you will have to file something, regardless of how small the revenue.  Organizations with revenues beyond $50,000 must complete an IRS Form 990 or 990 EZ, but if the organization’s revenue is $50,000 or less ($25,000 or less for tax years after December 31, 2007 and before December 31, 2010) a Form 990-N (postcard) must be filed.

The 990-N is an electronic postcard and is simple to complete. You only need to complete eight basic items of information: (1) EIN or TIN; (2) Tax Year; (3) Legal name of organization and mailing address; (4) Any other aliases or names of the organization; (5) Name and address of principal officer; (6) Organization website address; (7) Confirmation that the organization’s annual gross revenue are $25,000 or less ($50,000 or less for tax years after December 31, 2010), and (8) If applicable, a statement that the organization has gone out of business.

The trickiest issue is trying to figure out WHEN to file your organization’s 990, 990EZ or 990-N – always remember five and 15th. Your organization’s tax filings are due the fifteenth day (just like our individual tax returns) of the fifth month after the end of your fiscal year.  For example, if the last day of your fiscal year is June 30th, your organization’s tax filings are due November 15th.  I always suggest that organization leaders/staff add this date to their operational timeline and policy and procedure manual.

For more information about the 990-N, visit Annual Electronic Filing For Small Exempt Organizations.

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3 Comments

  1. Tom Smith
    Posted January 17, 2012 at 11:27 am | Permalink

    I’m the treasurer of the NJ Science Teachers Association. We always file an annual tax return. We have an accountant and it costs us $1,300. per year. I’m wondering if we can file the postcard? When you use the term “revenue” does that mean money that comes in each year or money that we have on hand? We don’t take in $50,000. per year, but we do have an endowment that is quite substantial. The money is invested in CDs.

    Thanks for any insight you can provide

    • Teshia Birts
      Posted January 17, 2012 at 12:10 pm | Permalink

      Great question, Tom. It’s total gross receipts (before settling any accounts, paying bills, issuing reimbursements, etc.) for the fiscal year which would include income made from investments.

      Income from dues, conferences, affinity agreements, investments, etc. — if all of that combined income is $50,000 or less, NJSTA can file a 990N electronic postcard. This does not include revenue earned from prior years AKA cash on hand that has just rolled over from previous years.

      All that said, you may want to consult with your accountant or a non-profit attorney regarding your endowment (since you mentioned it’s substantial) because certain investment income is subject to UBIT (Unrelated Business Income Tax). Ask your accountant if he/she has filed a 990T for the organization in previous years. Most investment income can be excluded from UBIT rules, but you should ask just to be on the safe side. If 990T’s haven’t been filed for the chapter in the past, and the gross receipts are $50,000 or less, it probably fine for your chapter to file the 990N.

      Good luck!

  2. Kelsi Sell
    Posted March 29, 2012 at 7:50 pm | Permalink

    I am trying to help my sister who is President of a small teachers association. 2011 is the first year that the association is independent; prior to 2011, they were part of the state association. They have an EIN for banking purposes, but have done nothing else at either the state or federal level. What should be their first step? They need to organize with the state as a non-profit, correct? And then do they have to file for tax-exemption status with the IRS? Their annual gross receipts are far below the $50,000 threshold so they should be able to file the 990-N postcard. Any help would be greatly appreciated.

    Thank you

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