AboutHarvey Mechanic Expertise US 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 questions about Nonprofit's unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation.
To search my previous answers you can do a Google search: site:allexperts.com/q/nonprofit [with your other search terms appended].
Experience I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar.
Education/Credentials B.S. Columbia University in New York City, 1970
J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude
Question QUESTION: Our gymnastics booster club has been formed with State of Florida as a Non-Profit Corporation and we have obtained a Tax ID Number. We have NOT, however, applied for the IRS designation as a 501(c)(3) organization. We know that an individual or entity therefore cannot deduct funds donated to us as a charitable contribution on their tax return. But, what we don't know:
What are our limitations or what are the ramifications of only being formed as a Non-profit Corporation, but not having the IRS designation. What can we do or not do legally?
ANSWER: You wrote, "We know that an individual or entity therefore cannot deduct funds donated to us as a charitable contribution on their tax return". That is incorrect if you are a new organization or have not averaged more than $5000 annual gross revenue. See instructions to Application for Exemption
www.irs.gov/pub/irs-pdf/i1023.pdf
in the right column on the first page under "Form 1023
not necessary" discusses who does not need to file and
among those is "Any organization that has gross
receipts in each taxable year of normally not more than
$5,000."
In order to receive donations that are deductible you would need
to have some articles of organization, like articles of
incorporation or articles of association or trust document which
is discussed starting on page 22 of:
www.irs.gov/pub/irs-pdf/p557.pdf
at "Organizational test". You must have the required clauses in
the organizational document. Samples start on page 69
As for your specific question, let me know if your gross income is over $5000 and then I will reply further. However, if you are required to file form 1023 and you do not file, then the IRS will treat your organization as a regular, for-profit organization.
My summary of IRS regulations relating to 501(c)(3) booster organizations is at: http://snipurl.com/boostersirs
and you may be interested to read that.
Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com
---------- FOLLOW-UP ----------
QUESTION: Attorney Mechanic: Thank you so much for your prompt response. In answer to your question, our annual receipts are in fact more than $5,000, even though it is simply money in/money out - Gross receipts are around $30,000, which gets paid right back out. Will that help in answering? Thanks Again.
Answer As your annual gross receipts are $30,000 the IRS will treat your organization as a regular for-profit corporation, especially if you engage in sales activities unless you file Form 1023 and receive the IRS approval.
Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com
