American Podiatric Medical Association Component Registration and Reporting Requirements with the IRS and State Record Offices

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1 April 25, 2017 American Podiatric Medical Association Component Registration and Reporting Requirements with the IRS and State Record Offices Richard Riley Foley & Lardner LLP Washington DC

2 Basic Requirements and Expectations Each APMA state component association (typically [STATE] Podiatric Medical Association or similar) should be: Legally incorporated as a nonprofit corporation under state law, properly overseen by its officers and directors, and with state registrations and reports kept up to date; and Officially recognized by the IRS as a tax-exempt organization, with federal and state tax filings kept up to date. Creating and maintaining nonprofit corporate status and IRS tax-exempt status is important for the protection of each individual component association and also of APMA. Foley & Lardner LLP 2

3 Nonprofit Incorporation Legally incorporate the association under state nonprofit corporation law. File Articles of Incorporation with state Sec y of State. Adopt Bylaws and other corporate policies. Maintain registered agent and registered office. Name board of directors and officers; decide how they will be chosen. Meet regularly, keep board and officers up to date, follow the rules for corporate oversight and governance. Governance and operational alternatives: How big a board? Employ non-officer Executive Director and/or other staff? Foley & Lardner LLP 3

4 Nonprofit Incorporation cont d All corporations, including nonprofit corporations, must file an annual report (less frequently in some states) with the state Sec y of State s office. Reports are generally simple one- or two-page filings. Keep the annual (or other) corporate reports current. Bringing delinquencies up to date can be inconvenient and expensive. If association is incorporated in a state (say DE) other than where it operates, file reports in both states. Foley & Lardner LLP 4

5 Tax-exempt Status APMA component organizations qualify as taxexempt professional associations under Internal Revenue Code section 501(c)(6). Compare section 501(c)(3) charitable exemption. Sec. 501(c)(6) status means association is exempt from federal corporate income tax, and (generally) from state corporate income tax. Plus a tax-exemption halo. NOT exempt from employment taxes. NOT exempt from state or local sales tax or property tax. Foley & Lardner LLP 5

6 Tax-exempt Status cont d Need to file a written application with the IRS to be recognized as exempt under section 501(c)(6). Application is made on IRS Form Fairly lengthy. Requires narrative description of activities, and multi-year budgets. Applications currently taking about 3 to 6 months, but that is just a guess. It varies, especially if IRS sends follow-up questions. Foley & Lardner LLP 6

7 Tax-exempt Status cont d Tax filing obligations: Annual federal tax return on Form 990. Depending on association s size, may be able to file Form 990-EZ or Form 990-N. But 990 MUST BE FILED. Three years without filing Form 990 means automatic revocation of tax exemption. Possible state tax returns; many states just ask for a copy of the federal Form 990. Employment tax returns. IRS Form 990-T (and state income tax return) to report unrelated business income tax. Foley & Lardner LLP 7

8 Questions? Foley & Lardner LLP 8