quiltmonkey Posted February 16, 2011 Report Share Posted February 16, 2011 I was at our little guild meeting last Saturday. We have approx 37 members. About half of these 37 I have never met. They are not active; just pay dues to get the discount at the quilt shop. We make a raffle quilt every year. The revenues from this go toward buying fabric and supplies to make and donate quilts to local charities. We have two accounts: a raffle account (approx $1500) and regular operations account (approx $6500). Part of our member dues go toward operations rent space to meet, hold monthly classes and for the guild and to help pay for a teachers costs or to subsidize our guild members attending an educational event for quilting in the spring or fall. We have a set of bylaws. We have guild officers. We keep records of accounts each month. So, at the meeting last week, I asked curiously if we file any paperwork for non-profit tax exempt status or do we file anything with the IRS? I got the deer in headlights look back at me ... um I don't think they ever have! So are we in big trouble? Sure we don't have huge amounts of $$ in the accounts, but I don't want our fanny hanging out to get spanked later down the road with legal fees to get this all straightened out. I pulled up some web sites about applying for tax exempt status but for our tiny little guild it sure seems like a lot of formal steps, etc... I could see this for a "business" type operation but we are a little quilt guild. Why do we need to go to these lengths? All the formality? Eligible for grants? We're supposed to hold a "board of directors" meeting? Haa!! So, are you aware if your guild files for tax exempt status? We are a non-profit "organization" not a non-profit "corporation" so I think there is a difference between the two. So, that said, do we need to file anything with the government? Link to comment Share on other sites More sharing options...
Guest Linda S Posted February 16, 2011 Report Share Posted February 16, 2011 Hi Shana - yes, my guild is a 501©(3). Here's the little blurb from the webpage: Article X - IRS Status and Dissolution 1. This organization is organized exclusively for charitable purposes within the meaning of Section 501 © (3) of the Internal Revenue Code. 2. Not withstanding any other provision of these articles, the corporation shall not carry on any other activities not permitted to be carried on (a) by a corporation exempt from Federal income tax under Section 501 © (3) of the Internal Revenue Code of 1986 (or the corresponding provision of any future United States Internal Revenue Law) or ( by a corporation, contributions to which are deductible under Section 170 © (2) of the Internal Revenue Code of 1986 (or corresponding provision of any future United States Internal Revenue Law). 3. Upon the dissolution of the corporation, assets shall be distributed for one or more exempt purposes within the meaning of Section 501 © (3) of the Internal Revenue Code (or corresponding section of any future tax code), or shall be distributed to the federal government, or to a state or local government, for a public purpose. Any such assets not so disposed of shall be disposed by the Court of Common Pleas of the county in which the principal office of the corporation is then located, exclusively for such purposes or to such organization or organizations, as said Court shall determine, which are organized and operated exclusively for such purposes. Prepared by Zel Tabbut and Laurie Ball, Co-Chairpersons. 12/18/92 Article X amended 8/17/94. Article IV amended 5/19/95. Articles III, IV, and VI amended 3/19/97. Article V amended 09/17/97 If you want to see all the details, the homepage is: http://www.efn.org/~evq/ All that stuff is under Policies/Guidelines Link to comment Share on other sites More sharing options...
Sams Mom Posted February 16, 2011 Report Share Posted February 16, 2011 Shana, We also have non-profit status and it is an involved process. I don't know what the alternatives are but I know that where I live, they will take you down if you're not following the raffle rules. I would put that high on the list of figuring it out how to stay out of trouble. We can't even apply for a raffle permit until we've been incorporated for five years. Donna Link to comment Share on other sites More sharing options...
JustSewSimple Posted February 16, 2011 Report Share Posted February 16, 2011 Ours is and we are a member of the ADP. Link to comment Share on other sites More sharing options...
quiltmonkey Posted February 16, 2011 Author Report Share Posted February 16, 2011 Oh most definitely we follow raffle rules, get the permits, put that all on the raffle ticket, etc... we are "legal" with all that raffle stuff. I am (as I type) checking the IRS web site under "social clubs" and it looks like we fall in that category. I think it depends on the state you live in. Anyway, I'm still digging away at this;;; I'll let you know what I find out. Link to comment Share on other sites More sharing options...
Kueser Posted February 16, 2011 Report Share Posted February 16, 2011 Shana, let us know what you find out. My guild, which has been organized for over 30 years, has never completed the paperwork either and I have been nagging them from the time I found out. When they started out there were no requirements. I'm sure there are differences with each state as I researched our state, was amazed at the limited number of guilds that are listed as NPs. Link to comment Share on other sites More sharing options...
JustSewSimple Posted February 16, 2011 Report Share Posted February 16, 2011 Shana, if you can convince your guild to join the Area Development Partnership you will get all sorts of freebies for your chapter. You will be included in their mailouts and advertising which will be covered by your yearly dues. I think we are also a member of the local and state arts council. I hope I am telling you right. These are things to keep in mind to help your group grown with new members who actually want to work. We have close to 200 members from several states but only about 8o or so come to the meetings. Link to comment Share on other sites More sharing options...
Farmland Quilter Posted February 16, 2011 Report Share Posted February 16, 2011 Dear Shana, I worked 5 years as legal secretary. A lot depends on your state laws regarding raffles. In Iowa you must be a 501©(3) to hold a raffle. That said there is a work around but the state tax people don't like it much. It is legal to hold a raffle if a group with a 501©(3) status will file the appropriate paperwork regarding the tax for the raffle you are OK. The Catholic church in the area has been doing this for our group for a long time. Its kind of a hassle for the church and last year when we had a raffle they really weren't thrilled about doing it. The club has voted to apply for 501©(3) status with Fed govt and I was going to help with it but some still don't want to go ahead so I have decided not to help with it for now. Too much drama for me. That said the first step you should take is to contact your state IRS they will have a website you can get a contact number from. You probably need to look under gambling as a raffle falls into that category. Try to get hold of a real person. But word of warning sometimes one person will tell you one thing and the next one you talk to will tell you another. What can I say .... Its the govt .... state or otherwise.:mad: Link to comment Share on other sites More sharing options...
tracyv Posted February 17, 2011 Report Share Posted February 17, 2011 The IRS has created almost 30 categories of 501© tax-exempt, non-profit organizations. 501© 3 organizations are charitable organizations, a quilt guild would most likely qualify as a 501©7 social organization, if they have done the appropriate paperwork. Used to be that unless you had annual income as an organization over $25,000 per year, annual reports weren't required, but that has changed in the past few years. The whole raffle thing is regulated by your state's gambling commission, usually a part of the state's IRS system. My experience has been that the state has a lot more time to pay attention, so be sure that your guild is filing the the right paperwork if you are holding a raffle! Yep, I used to run a non-profit! Link to comment Share on other sites More sharing options...
quiltmonkey Posted February 17, 2011 Author Report Share Posted February 17, 2011 No worries re: raffles --- we are (and always have been) following the rules by the book and get the permit number, etc... for raffle sales. we are legit with the raffles. Our state does not have income tax, or sales tax. Just property tax. I think I will pull all the paperwork together for the 501c3 and get it to our guild president so they can process the paperwork. Thanks! Link to comment Share on other sites More sharing options...
delld Posted February 17, 2011 Report Share Posted February 17, 2011 Our guild is tax exempt. We had a local lawyer handle it for us. I know next to nothing about it. It took us a while to do it and it seems like we had to have less than $12,000 annual income and we have far less than that! Good luck! Link to comment Share on other sites More sharing options...
Zora Posted February 17, 2011 Report Share Posted February 17, 2011 2. Tax-deductible non-profit 501©(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 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. The above information was from a tax-exempt advice forum, and they cited the IRS publications which cover their conclusions. A quilt guild with 37 members likely isn't going to have $5K in income per year. I would not waste the time or money to file for tax exempt status. Nobody is ever going to "come after you" from the Federal Govt. Nobody is going to know you even exist, in all probability. Keep good records of income and expenditures just in case you are called on the issue. (Which isn't ever going to happen.) It is a waste of your precious resources to pay a lawyer to file for tax-exempt status for your guild. If, for state purposes, you need to obtain this status, get the forms yourself and do it, or take it to somebody like H & R Block and get it done. Your situation is not complex enough to need legal help. I personally wouldn't bother doing anything at all. Our guild is much larger, and does not file for tax-exempt status. Its been in operation for 15 years without incident. Really, the IRS doesn't care about your guild. Link to comment Share on other sites More sharing options...
quiltmonkey Posted February 18, 2011 Author Report Share Posted February 18, 2011 Hi Everyone! OK --- first I want to thank you all for the great feedback, and advice! Thanks Lynn (Zora) for your info, too. It's so easy... just a few simple documents to create. WE DO NOT NEED TO PAY A LAWYER OR CPA FOR THIS. I spent some time today doing more research and I will attest that Lynn is correct in her advice about it being a simple process (but I had to dig around a bit to figure it out). After speaking on the phone with a very nice and helpful man at the IRS, this is what I found out and this pretty much applies to everyone (meaning guilds) Our guild falls into the 501©(7) which is "hobby / social clubs" THAT SAID........It is Not necessary to .... ...Fill out MOUNTAINS of forms (meaning do not fill out forms 1023 or 1024, which are a bizillion pages...ugh! Good news is, per 501©(7) as a "hobby / social club" we don't need to do that Yes, as a guild, you should probably let the IRS know you wish to be listed as a tax-exempt non profit organization. I know...I know... we are just a tiny speck in the giant scheme of things, but if you want to be identified (in name only, really) you should do it. If you do want to do this, it's easy... you need to do the following: For IRS purposes, your guild/organization needs its own EIN number (even tho you don't have employees, you need one) I applied on line on the IRS web site and had it automatically assigned. Easy. Done. Now you should create a document (basically it's a declaration that your guild is operating as a non-profit) and keep this declaration on file just in case you ever (extreme slim chance) get audited. For the IRS you need to fill out and retain a one page document called "Articles of Incorporation" and have two of your guild officers sign it. There is a sample of this document located in IRS Publication 577 on page 48. I copied and pasted all of the words from this document into MS Word and then I filled in the three blanks. Easy. Done. Retain this in guild official files. Yes, For the IRS backup documentation (just to retain as official declaration you are operating as a non-profit), if your guild doesn't already have one, you should have a "Charter and Purporse of Organization" that states what your non profit organization does. (I basically used the info on our guild web site that describes what we do). I copied and pasted that into MS Word. Easy. Done. Retain this in guild official files. Then I contacted the state (Alaska) and they said "yes" our organization needs to be listed as a non profit with the state. Basically fill out a few spaces on the 2 page form, have guild officers sign it and send $50 with the application. Easy. Done. After I get all this done with signatures, etc. Then I call the IRS back at 877-829-5500 and tell them I have all of my duckies in a row and I'm good to go. The last step is for me to file IRS form 990-N (e-postcard) and I'm done. Now that we are set as a non profit with IRS and the state all we need to do each year is to file form 990-N (e-postcard) on line and we are done. Easy! I do not believe we pay any processing fee to the IRS when filing the 990-N form. It's just a quick half page form on line. No money sent. Just a formality. But for the State? From talking with the guy on the phone, I just got the hunch they only wanted our $50 and they woud pretty much run it though and slap a "non profit" tag on our name. Link to comment Share on other sites More sharing options...
Kueser Posted February 18, 2011 Report Share Posted February 18, 2011 Thanks Shana. I will pass this info on to our officers and maybe we can get 'er done! Link to comment Share on other sites More sharing options...
fineseams Posted February 18, 2011 Report Share Posted February 18, 2011 There is no fee for filing the 990-N. The 990 is the non-profit's version of the 1040 tax form that individuals must file. Even though non-profits don't pay any tax, they have to report all revenue and expenses. The IRS looks at this information to make sure that the non profit is actually operating for the purpose that got them their non-profit status. Depending on the gross revenue the organization receives, you file the 990-N, a short form 990 ez, or a long form 990. If your organization's gross revenues are less than $50,000 you file the 990-N, less than $200,000 you file 990 ez, over $200,000 you file 990. Don't ask me how I know this. You should see my desk at this time of year. And see the dust in my sewing room:-( Link to comment Share on other sites More sharing options...
quiltmonkey Posted February 18, 2011 Author Report Share Posted February 18, 2011 Here's a link to get more info: http://www.irs.gov/charities/nonprofits/article/0,,id=96189,00.html Info about filing the 990-N (e postcard) http://www.irs.gov/charities/article/0,,id=169250,00.html Link to comment Share on other sites More sharing options...
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