What should your chapter have?
1. A federal employment identification number “EIN” is necessary for conducting business, especially banking and taxation. Even if you do not have employees, you will need an EIN. You can call the IRS (800-829-4933) to check to see if you have one. If you don’t have a Federal EIN, you can go on the IRS website at IRS.gov to register and you are given one right away. Your tax-exempt status is connected with this federal EIN number, so if you are already tax-exempt, but you don’t know your EIN, please don’t sign onto the website and register for another one.
2. Register with the state of Pennsylvania – If you aren’t sure if your chapter has registered with Pennsylvania, you should be able to search on their website www.corporations.pa.gov, to find out, or contact the Pennsylvania bureau of Corporations and Charitable organizations (717) 787-1057.
You do need to file articles of incorporation with the Pennsylvania Bureau of Corporations and Charitable Organizations. The articles of incorporation are the formal documents filed to legally document the creation of your chapter.
3. You should apply to become tax exempt from federal income taxes – if you don’t do this, you will need to pay taxes on the money your chapter receives. Businesses are also more likely to donate or become a sponsor when you are a tax-exempt organization.
• There is now a shortened form for applying to become tax exempt and the form is a 1023ez. You do need to read through the directions to make sure your chapter will be able to use this form. You should be able to complete this form in a couple of hours. Once you have submitted the form, you should receive a response in a couple of weeks.
4. You should also have a set of by laws because it governs how your chapter will operate. It should have officer election rules, voting procedures and must state the charitable organizations purpose and also have a dissolution clause. The dissolution clause needs to be in there because if there are any funds remaining after the chapter dissolves, then those funds need to go to another nonprofit organization. It is also good idea to designate officer responsibilities so each officer knows what they need to do.
Bank Account information
1. If you have had the same signer or signers on your bank account for years, your chapter may not have your FEIN number or articles of incorporation on record with your bank. Regulations in the banking industry have really tightened up in the last couple of years so you should get this information updated before you need to change something on your account.
2. If your chapter decides to change banks or are changing signers you will probably need to provide this information to the bank before they will make any changes.
3. You should also have 2 signers on the bank account. If something should happen to one of the signers, then you will be able to continue conducting business. The last thing you want to have happen is to only have 1 signer on the account, have something happen to them and then the bank needing documents that you can’t find.
4. There should also be more than 1 person reviewing the monthly bank statements. The President and treasurer would be the most likely people to review the bank statement, unless you have a financial secretary.
Many chapters have meetings or hold events during the year to earn money. While the likelihood of something happening is small, it isn’t worth the risk. Your chapter does need to get insurance to protect your members, directors, officers and volunteers from potential claims or lawsuits.
How many officers are using their personal email addresses to complete state and federal documents? If you are using your personal email address, notices for renewals will not automatically go to any future officers. And if some documents aren’t filed or renewed in a timely manner, it could result in your chapter losing their tax-exempt status or a license. Your chapter should use generic email addresses so it can always be used by the current officers. If you make a generic email address for your chapter, you can have your officer account forwarded to your personal account so you won’t need to check multiple accounts.
Do you know where your corporate documents are? These documents should be easily available to your chapter officers because they may need these documents to conduct business.
Your corporate documents should be stored one of several ways
1. High tech way: you can store documents in a Drop Box account that your chapter has set up, or on Google drive if your chapter has a Gmail account or in a similar way.
2. Low tech way – in a safe deposit box
The type of documents you should have
• Articles of incorporation
• IRS Determination Letter stating you are a tax-exempt organization.
• Board meeting minutes
• State sales tax exemption certificate
What you need to do to keep your tax exempt status
1. File an annual return with the IRS
• Gross receipts are less than $50,000 → file e-postcard using form 990-N. This is the category most chapters will fall under.
• Gross receipts are less than $200,000 & total assets are less than $500,000 →file using either 990-EZ or the 990.
• Fail to file for 3 consecutive years → you will lose tax exempt status
What you need to know when filing the 990-N
• Tax year you are filing for
• Legal name and mailing address – is the name as it appears in the articles of incorporation or most recently amended name
• Any other names the organization uses
• Name & address of a principal officer
• Web site address if you have one
• Confirmation that the organization’s annual gross receipts are $50,000 or less
When is the 990-N due
• If your fiscal year ends December 31, then you need to file by May 15 of the following year. It should be stated in your by-laws when your fiscal year ends and you can also find this information on the IRS website.
• If your fiscal year ends in a different month then you need to file by the 15th day of the fifth month after the end of your fiscal year. So if your year ends June 30th; then you would need to file by Nov. 15th.
• The 990-N must be completed and filed electronically. There is no paper form.
o Can file form 990 (12 pages) or Form 990-EZ (4 pages) instead
Request a new IRS determination letter annually
1. To get an updated IRS determination letter call
877-829-5500 to request this letter.
2. If there is a change of address → complete form 8822-B
Life Cycle of a Public Charity
1. This site has information on the lifecycle of a Public Charity.
Is your chapter a tax-exempt organization?
1. There are several sites to check this. The simple one will tell you if you are tax exempt and the last time a 990n was completed. https://apps.irs.gov/app/eos/
2. There is another IRS website that takes more time to search within the data but gives more detailed information on your chapter tax exempt organization