Transcript ORDER OF AHEPA

IRS and Your Chapter/District
Informational Purposes Only
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IRS has many different tax exempt or nonprofit classifications known as 501(c) status
All 501(c) organizations are exempt from
federal income tax
But not all income received is tax deductible
by the donor
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501(c) 3 organizations (the most well known)
exist and operate for charitable purposes
Examples: the American Red Cross and
United Way
Donations to these organizations are tax
deductible to the donor
These organizations are required to give
amounts received - less operating costs - to
their charitable causes
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AHEPA is tax exempt as a 501(c) 10
organization not a 501(c) 3 organization
501(c)10 entity is a Fraternal organization
operating under the lodge system
AHEPA has a 501 (c)10 group exemption for
all of its chapters and districts. This exempts
them from paying federal tax on the income
received by the chapter or district
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Chapters and Districts are exempt from
paying federal tax on member dues and
interest income received
However, dues paid by members is not tax
deductible to the member
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Section 170 allows deductible contributions
Secton 170 (c) defines a qualified
contribution
Section 170 (c)4 defines a qualified
contribution as one that is given to an
organization operating under the lodge
system if the gift is to be used exclusively for
religious, charitable, scientific, literary or
educational purposes, or for the prevention
of cruelty to children or animals.
What does this mean for your Chapter?
 The Chapter does not have to setup a separate
501(c)3 organization for charitable purposes
because:
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 The IRS allows a tax deduction to members or donors
contributing to a Chapter’s charitable event
The Chapter cannot comingle the charitable
funds with chapter operating funds (separate
bank accounts are required)
 And proceeds must be used for a charitable
purpose
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Scholarship tax information
Per the IRS:
Scholarship funds must be used for:
1. Tuition and fees required for enrollment, and
2. Fees, books, supplies, and equipment required for
courses of instruction at the educational
organization
 The Scholarship check should be made payable to the
school or university.
 To be IRS compliant, when a check is payable to the
student a release form must be signed by the student
acknowledging that they understand and agree to the
above conditions (#1 and #2) of the scholarship
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Always check with a tax advisor if in doubt
Fraternal
Charitable
New IRS required filing
Existing filing requirement:
 If a Chapter or District receives more than
$25,000 a year in total gross receipts a Form
990 must be filed annually with the IRS.
New filing requirement:
 If a Chapter or District receives less than
$25,000 a year in total gross receipts:
◦ Each Chapter or District must file an annual online
IRS Form 990-N known as an e-postcard - this is
an informational return only
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The Pension Protection Act of 2006 added this filing
requirement to ensure that the IRS and potential
donors have current information about an
organization.
The first e-Postcards were due in 2008 for tax years
ending on or after December 31, 2007. The e-Postcard
is due every year by the 15th day of the 5th month
after the close of your tax year. For example, if your
tax year ended on December 31, 2007, the e-Postcard
is due May 15, 2008. You cannot file the e-Postcard
until after your tax year ends.
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If you do not file your e-Postcard on time, you will
not be assessed a penalty. However, an
organization that fails to file required e-Postcards
for three consecutive years will automatically lose
its tax-exempt status.
After the first e-Postcard has been filed, if you do
not file your e-Postcard on time, the IRS will send
you a reminder notice
This is an important return for all Chapters and
Districts to file online annually. This is not a
function of AHEPA Headquarters.
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The e-Postcard is a simple, Internet-based
form that asks a few identifying questions
about your organization.
You can only file the e-Postcard online –
there is no paper form. All you need is access
to a computer and an e-mail address.
No special software is necessary, and there is
no cost to file an e-Postcard. It’s free!
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To file the e-Postcard, go to www.irs.gov/eo,
and click on “Annual Electronic Filing
Requirement for Small Exempt Organizations
– Form 990-N (e-Postcard),” where you’ll
find a link to the e-Postcard filing system.
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Clicking on the link will take you to the ePostcard form through the Web site of the
IRS’s trusted partner, the Urban Institute.
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The e-Postcard is easy to complete. It only requires the
following information about your organization:
1. Organization’s legal name, (Order of AHEPA)
2. Any other names the organization uses, (Chapter/District Number)
3. Organization’s mailing address, (Chapter/District address )
4. Organization’s Web site address - if it has one, (Chapter/District)
5. Organization’s employer identification number (also referred to as
a taxpayer identification number),
6. The name and address of a principal officer of the organization,
7. Organization’s annual tax year, and
8. Answers to the following questions:
• o Are your gross receipts normally $25,000 or less?
• o Has your organization terminated or gone out of business?
That’s it!
What is the Chapter’s EIN (Employer Identification
Number) ?
1.
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If you do not know the EIN, please contact AHEPA or
DOP Headquarters
What is the Chapter’s tax period?
2.
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Each Chapter is different. The tax period was
established when the EIN number was issued by the IRS
If you know the EIN, when you process the online Form
990-N the tax period will be shown automatically
When I attempted to file the e-Postcard, I
received an error message indicating that the
EIN was incorrect. What should we do?
3.
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Contact AHEPA or DOP Headquarters
Is the Chapter State sales tax exempt?
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Each state is different, but usually a 501(c) 10 status
does not get a chapter sales tax exemption
Always, consult a tax advisor if need
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