Transcript Slide 1
IMPORTANT NOTE This PowerPoint was developed as an integral part of a face-to-face, interactive educational session. When using it as a standalone reference item, some portions of the material may be unclear and/or may require interpretation or explanation. Please contact Randy Welch with any questions. THE “E-POSTCARD” BROUGHT TO YOU BY YOUR FRIENDS AT THE IRS OVERVIEW Tax-Exempt status Taxpayer ID number Prior filing requirements The “E-Postcard” Filing deadlines What information is needed in order to file? OVERVIEW (Cont’d) Various filing issues What if we don’t file? IEA role/Current status of efforts Final recap How do I verify my local’s status? Info on IEA website Questions TAX-EXEMPT STATUS Labor unions are “exempt” under IRC 501(c)(5) NOT the same exemption as school districts, churches, etc. – They are exempt from sales tax – Contributions to them are tax-deductible “Exempt” means you don’t pay income taxes Price: restrictions on how you can spend your money EXEMPTION PROCESS All IEA locals are automatically exempt under the IEA’s “Group Exemption” Saves the paperwork of having to file the exemption paperwork for each new local Taxpayer ID number must be set up correctly! TAXPAYER ID NUMBER (TIN) All new locals must apply for a TIN (also referred to as Federal ID Number/FEIN or Employer ID Number/EIN) Must apply on Form SS-4 SS-4 requires designation of a fiscal year-end- Default is June TAXPAYER ID NUMBER (Cont’d) Need a TIN to open a bank account For new locals or others that need a new TIN, the IEA will apply for you. See your UD or contact the Director of Business Services. PLEASE DON’T…. When opening bank accounts, some locals have…… – Used their school district’s TIN – Used someone’s Social Security number Neither approach is legal If your local has done this, you should contact your UD or the IEA Director of Business Services to assist with filing for your own TIN IRS REPORTING REQUIREMENTS Based on “Normal Gross Receipts” “Normal”= Average of preceding 3 years “Gross Receipts”= All cash taken in EXCEPT IEA-NEA dues PRIOR FILING REQUIREMENT Gross 990 receipts > $100,000: Form – Less than 5% of locals Gross receipts $25,000- $100,000: Form 990-EZ – Less than 5% of locals PRIOR FILING REQUIREMENT (cont’d) Gross receipts < $25,000: NO REQUIREMENT – 90+% of IEA locals never had to file PROBLEM: INVISIBLE ENTITIES IRS had no way to keep track of you Can’t accumulate data Can’t ensure compliance Don’t know if you’re still out there Don’t have current contact info SOLUTION: THE “E-POSTCARD” Gross receipts < $25,000: Form 990N (the “E-Postcard”) Passed as part of the Pension Protection Act of 2006 Must be filed electronically- No paper version available SOLUTION (Cont’d) Info required is simple and basic (For Now!) Must be filed every year EFFECTIVE DATE Effective for “Years beginning after December 31, 2006” So, the first locals affected were those whose fiscal year (per the records of the IRS) ended December 31, 2007 FILING DEADLINE E-Postcard must be filed by the 15th day of the 5th month after the end of the fiscal year December year-end= May 15 deadline June year-end= November 15 deadline Return must be filed annually Return can’t be filed until after fiscal year is complete WHAT INFO IS NEEDED IN ORDER TO FILE TIN Fiscal year-end Both must match IRS database or you can’t file! INFO NEEDED (cont’d) Local’s legal name Mailing address and website address Name/Address of a “Principal Officer” Confirmation that your normal gross receipts are < $25,000 TIN ISSUES Over 100 IEA locals are not in IRS database because… – – – – IRS classified as “dormant” Local uses TIN of employer or leader No bank account/No TIN Local filled out SS-4 incorrectly IEA is in the process of straightening these out with the IRS Can’t file E-Postcard with a TIN not in IRS database! FISCAL YEAR ISSUES Fiscal year determines filing timeframe IEA has access to IRS database, including fiscal year info Most locals don’t know their fiscal year, or what they are using is not in agreement with the IRS FISCAL YEAR ISSUES( cont’d) It is OK to use one fiscal year for internal purposes and another for your IRS filing If you want to change your fiscal year in the IRS database, contact the IEA Director of Business Services FILING ISSUES The filing process is fairly simple, but…. – Still fairly time-consuming – A few quirks, e.g., The name of all locals must be “Illinois Education Association” in order to provide tax-exempt status. Local name is registered as a “DBA” Mailing address issue FILING ISSUES (cont’d) We prefer to file the return for you –Simple e-mail authorization process –Saves you the time involved in the “learning curve” –Ensures that return is filed in a way that does not jeopardize your taxexempt status FILING ISSUES (cont’d) If you prefer to file yourself, we will provide instructions Some locals got the impression that by providing some information that was requested through the IEA website, that they had filed the EPostcard. THIS IS NOT THE CASE. “SUBSIDIARY ORGANIZATION” ISSUE If “subsidiary organizations” file their annual financial information as a consolidated return with the “parent organization,” they do not have to file the 990-series forms This is not practical for the IEA’s 1,000 locals- more bookkeeping for both locals and IEA IRS is giving incomplete information on this CONSEQUENCES FOR NOT FILING After three years, you lose your taxexempt status It is reasonable to assume that the IRS will use the first three years to flush out all of the thousands of organizations that no longer exist, then will make the consequences more onerous It’s important to start filing as required and make it a routine IEA ROLE IN TRANSITION Numerous communications sent to regions and locals to explain the IRS letters and minimize confusion Info presented at “Financial Procedures” training sessions Sessions at WAC and SLA devoted to E-Postcard “Webinars” IEA ROLE (Cont’d) Info posted on IEA website Sending e-mail reminders to local presidents, based on due dates Reconciling info provided by locals with TIN and fiscal year info in the IRS database IEA ROLE (Cont’d) Making sure that all locals that are required to file actually do so Filing E-Postcards on behalf of locals Resolving TIN/Fiscal year discrepancies with the IRS SUMMARY OF DUE DATES December (due 5/15) April (due 9/15) June (due 11/15) July (due 12/15) August (due 1/15/09) September (due 2/15/09) 132 2 627 6 70 5 Total in Database 842 Not in Database 116 Total Locals 959 CURRENT ACTIVITIES Working with a few “December” locals to get their returns filed Sending e-mails to Presidents of the “June” locals, offering to file on their behalf Working with the IRS and locals to clear up the 100+ discrepancies COMMUNICATION ISSUES Hard to find the right person E-mail addresses out of date Communication with IRS is spotty No response from locals that think that by responding to the IEA request for information, they had already filed the E-Postcard FINAL RECAP Are your average annual cash receipts, EXCLUDING IEANEA dues, greater than $25,000? “YES” YES Are you filing Form 990 or Form 990-EZ every year? No further action needed; please notify the IEA Director of Business Services. NO You need to start filing one of these forms immediately. Contact a local tax professional or the IEA Director of Business Services for assistance. “NO” You must begin filing Form 990-N, the E-Postcard, sometime in 2008 or 2009. Your filing deadline depends on the fiscal year-end per the IRS's records. So you are in one of these groups: December year-end (132 locals). Must file between 1/1/08 and 5/15/08 April year-end (2 locals). Must file between 5/1/08 and 9/15/08. June year-end (627 locals). Must file between 7/1/08 and 11/15/08. July year-end (6 locals). Must file between 8/1/08 and 12/15/08. August year-end (69 locals). Must file between 9/1/08 and 1/15/09. September year-end (5 locals). Must file between 10/1/08 and 2/15/09. Not in IRS database of tax-exempt organizations (113 locals). Cannot file until this is resolved. HOW DO I VERIFY MY LOCAL’S STATUS? See me after the session Contact me at [email protected] Fill out online request form INFO ON IEA WEBSITE: Choose “RESOURCES”… RESOURCES (Cont’d) Then “FINANCIAL PROCEDURES” RESOURCES (Cont’d) QUESTIONS??