PROCESS FOR NATIONAL CAPITOL AREA GARDEN DISTRICTS, CLUBS AND COUNCILS CHOOSING TO FILE FOR 501(C)3 GROUP EXEMPTION What is a grup exemptin letter? The IRS smetimes recgnizes a grup f rganizatins as tax-exempt if they are affiliated with a central rganizatin. This avids the need fr each f the rganizatins t apply fr exemptin individually. A grup exemptin letter has the same effect as an individual exemptin letter except that it applies t mre than ne rganizatin. A grup exemptin may als be called an umbrella plicy. What is the reasn fr grup exemptins? Grup exemptins are an administrative cnvenience fr bth the IRS and rganizatins with many affiliated rganizatins. (Fr the purpse f this paper and prcess, the Organizatin will refer t NCAGC, and the Subrdinates (als called grups, are the Districts Clubs, and Cuncils.) Subrdinates in a grup exemptin d nt have t file, and the IRS des nt have t prcess, separate applicatins fr exemptin. Cnsequently, subrdinates d nt receive individual exemptin letters. As a 501c3 rganizatin yu can accept dnatins frm crpratins and individuals. They in turn can deduct these gifts frm their incme tax. What criteria must rganizatins meet t be included in a grup exemptin? T qualify fr an umbrella plicy r grup exemptin, the central rganizatin and its subrdinates must have a defined relatinship. Subrdinates must be: Affiliated with the central rganizatin; Subject t the central rganizatin s general supervisin r cntrl; and exempt under the same paragraph f IRC 501(c), thugh nt necessarily the paragraph under which the central rganizatin is exempt. Actins fr Clubs, Districts and Cuncils Desiring t be Included in the Grup Exemptin 1. First, be sure yu have an Emplyee Identificatin Number (EIN) befre yu get started. This can be btained frm the IRS. 2. A list f the names, mailing addresses (including zip cde), actual addresses (if different), and emplyer identificatin numbers f subrdinates t be included in the grup exemptin letter. A current directry f grups may be furnished in lieu f the list, if it includes the required infrmatin. 3. Submit a letter stating that yur club is aware this will change their charity status (districts, cuncils r clubs may have been a 501(c)4 r 7 charity) and is making the change vluntarily t cmply with IRS guidelines fr 501(c)3 status. Prvide the name
and cntact infrmatin, including phne number and email address f smene wh can answer questins abut yur rganizatin s finances. Prvide an fficial mailing address fr the club. (Many rganizatins use a pst ffice bx s that the mailing address can remain the same year after year.) 4. A ne-page descriptin/list f the rganizatin s activities (majr events, fundraisers, etc ). 5. An rganizatin may r may nt be incrprated but it cannt be a private fundatin. 6. The fiscal year must be the same as NCAGC, August 1-July 31. 7. A cpy f yur rganizatin s bylaws Any changes t yur bylaws need t be made befre applying. The IRS requires that the rganizing dcument includes wrding abut the rganizatin: Here s an example: Said rganizatin is rganized exclusively fr charitable, religius, educatinal, and scientific purpses, including, fr such purpses, the making f distributins t rganizatins that qualify as exempt rganizatins described under Sectin 501(c)(3) f the Internal Revenue Cde, r crrespnding sectin f any future federal tax cde. Yu can mdify the Object Article in yur Bylaws by adding the fllwing: T be rganized exclusively fr educatinal and charitable purpses, including, fr such purpses, the making f distributins t rganizatins that qualify as exempt rganizatins described under Sectin 501(c)(3) f the Internal Revenue Cde, r crrespnding sectin f any future federal tax cde. The IRS requires that the rganizing dcument includes wrding abut disslutin: Upn the disslutin f the rganizatin, assets shall be distributed fr ne r mre exempt purpses within the meaning f Sectin 501(c)(3) f the Internal Revenue Cde, r crrespnding sectin f any future federal tax cde, r shall be distributed t the federal gvernment, r t a state r lcal gvernment, fr a public purpse. Any such assets nt dispsed f shall be dispsed f by a curt f cmpetent jurisdictin in the cunty in which the principal ffice f the rganizatin is then lcated, exclusively fr such purpses r t such rganizatin r rganizatins, as said Curt shall determine, which are rganized and perated exclusively fr such purpses. Here s a sample Disslutin Article fr yur rganizatin s Bylaws: Upn disslutin f (Insert the name f yur district, club r cuncil), assets shall be distributed t the Natinal Capital Area Garden Clubs Inc., which has been qualified as an exempt rganizatin as described under Sectin 501(c)(3) f the Internal Revenue Cde, r crrespnding sectin f any future federal tax cde. N fficer r member shall receive any f the assets. Any such assets nt dispsed f shall be dispsed f by the Circuit Curt f (Insert yur cunty and state), exclusively fr such
purpses r t such rganizatin r rganizatins, as the curt shall determine, which are rganized and perated exclusively fr such purpses. 8. The IRS has 90 days t prcess ur request, hwever they may require mre infrmatin. The IRS will ntify us via email if they need additinal infrmatin. If the IRS requires additinal infrmatin, they nly prvide a cuple f weeks t cmply. It is imperative we get the applicatin crrect the first time. 9. IRS will prvide a letter cnfirming r denying the 501(c)(3) exemptin. If the umbrella plicy is apprved, yu will be required t file yur wn 990-N (e- Pstcard) fr Tax-Exempt Organizatins. If grss receipts are less than $50,000 fr the tax year, an e-pstcard can be filed. This can be dne nline. If yur grss receipts are between $50,000 and $200,000 fr the tax year, yu will need t file a 990-EZ. Fr thse with grss receipts in excess f $200,000 r assets ver $500,000 then the 990 is filed. 990-N filers may chse t file a cmplete frm 990 r Frm 990-EZ instead. Yu will be required t ntify NCAGC when yu have filed. References: IRS Publicatin 557 (Rev. January 2018), Tax Exempt Status fr Yur Organizatin https://www.irs.gv/charities-nn-prfits/charitable-rganizatins/exemptinrequirements-sectin-501c3-rganizatins IRS Publicatin 4573, Grup Exemptin Prject Manager: Cnstance O. Taylr, ctaylr55@gmail.cm, June 7, 2018
Timeline June 10 Infrmatin letter regarding Grup Exemptin 501(c)3 Charitable status will be sent via email t all District Representatives fr distributin t their clubs July 1 Thse desiring t be included in the grup exemptin ntify NCAGC, Cnnie Taylr, ctaylr55@gmail.cm August 15 All interested grups shuld ntify NCAGC f their intent t change their charity status Octber 30 Applicant packages must be submitted t NCAGC fr inclusin in the grup exemptin package filed with IRS. This date was selected t give rganizatins an pprtunity t vte n and make changes t their bylaws in rder t be cmpliant with IRS requirements. Mre applicants can be added t the grup exemptin at anytime; hwever, the applicatins will nly be filed nce a year by NCAGC. Nvember 15 Grup exemptin applicatin is submitted t IRS by NCAGC, with payment f $2,000.00
501(C)3 APPLICANT PACKAGE FOR NCAGC GROUP EXEMPTION The fllwing infrmatin is required t file fr the 501(c)3 Grup Exemptin: 1. On an individual sheet f paper fr each listed item, prvide the fllwing: a. Letter f Authrizatin: (Name f Organizatin) authrizes NCAGC, Inc. t be include in the 501(c)3 grup exemptin. We are nt a private fundatin as defined in IRC 509(a). This letter shuld be signed by a principal fficer in yur club and include a phne number and email address. This persn shuld be able t answer any questins r act as a pint f cntact t btain additinal infrmatin if needed by the IRS. b. Prvide a list f the names f fficers and include cntact infrmatin (include mailing address, email address and telephne number), the mailing address (including zip cde). c. The emplyer identificatin number (EIN). If yu are nt sure if yur rganizatin has an EIN, please check with the IRS befre yu prceed. Cntact the Business and Specialty Tax Line at (800) 829-4933. EINs never expire and having mre than ne number can cmplicated matters. S, if in dubt, check with the IRS. d. Letter f Accunting Perid: All rganizatins must be under the same accunting perid as NCAGC, August 1-July 31. If yur accunting perid is different, yu must make a bylaws change befre applying. Please prvide a letter stating yu are under the same accunting perid. e. A detailed descriptin f the purpses and activities f the subrdinates, including the surces f receipts and the nature f expenditures. Tell us abut any fundraising, club dues and ther activities that generate incme and hw yu spend yur funds (paying dues t NCAGC, charitable cntributins, etc ). 2. Prvide a cpy f yur club s bylaws and ensure it includes required IRS wrding regarding the club s charity and educatin status and the IRS disslutin statement (see, sectin 7 f NCAGC dcument regarding filing fr 501(C)3 status). 3. All applicant packages must be received by Octber 30, 2018. Organizatins unable t meet this deadline can apply in 2019 (date t be determined). 4. Any questins, cntact Cnnie Taylr, NCAGC Assistant Treasurer, ctaylr55@gmail.cm.