AboutHarvey Mechanic Expertise Federal tax issues of nonprofit 501(c)(3) public charities only. Establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer question about Nonprofit's Unrelated Business or how to fill out forms. This forum is only for legal questions about a specific nonprofit asked by members or those otherwise directly effected by the specific nonprofit organization.
Experience I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar.
Expert: Harvey Mechanic Date: 7/16/2008 Subject: gymnastic booster club
Question QUESTION: We recently organized a booster club for the competitive team of a new gymnastics facility in our area. We decided not to become 501 3(c) classified at this time. We opened a non-interest bearing checking account and the bank officer who we assisted us also helped us get an EIN tax number. We are registered with the IRS as a non-profit athletic team. I was told that we would not be taxed or have to pay taxes on monies we raised. Is this true? Also, can the monies raised be individualized into each gymnast "account" since we are not 501 3(c)?
I would appreciate any guidance &/or suggestions.
ANSWER: You stated that you are registered with the IRS as a nonprofit. I would need to know the subsection of Internal Revenue Code Section 501(c) that the organization was incorporated or associated under and under. Then I will be able to answer further.
Harvey Mechanic
Attorney At Law
Harvey108@hotmail.com
---------- FOLLOW-UP ----------
QUESTION: Our club is not incorporated. We're 3 mo. old and really don't know exactly what we need to do. Most of us parents are new to this sort of thing, and have found out that the clubs we were associalted with in the past were probably not set up correctly (legally).
Answer It appears that your organization is an unincorporate association. The IRS will not treat your organization as a nonprofit (tax exempt) organization unless it has adopted proper articles of association, which limit your activities to exempt activities and then you would need to operate also like a nonprofit organization. Otherwise, you may simply be a club, but then donations will not be deductible when given to you.
Your taxation will depend upon how you raise money. If by a business, then it would be taxable but may go into individual acccounts, but it may then be treated as compensation to those individuals.
Harvey Mechanic
Attorney At Law
Harvey108@hotmail.com
