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Nonprofit Law/Youth Soccer Club Accounts and Group Exemption

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Question
Our Soccer Club is a 501(c)3 organization.  The club has a bank account that is used for club operating revenues and expenses.  Each team (approx. 48 in the club currently) has a bank account that as the main name on the account is the club and the club EIN is used.  A secondary name of the team name designation is on each account.  Teams use the Club 501(c)3 for fundraising purposes. Only tournament expenses, travel expenses, etc are paid from the team account. Nothing is paid from the team account to the benefit of an individual on the team or parents, or used to cover club fees.

Should the Club file for a group exemption for the individual teams?  IRS publication indicates that subordinate organizations should have organizing documents.  The teams do not have individual organizing documents.  I think this would be preferable over each team filing Form 1023, however, are either of these options even necessary if the teams are using the club EIN.

Should the revenues and expenses of each team be included in the 990 of the club each year?

Answer
The IRS exemption organization fee page has, for the 4th item,
that the fee is $3000 for an organization to apply for the group
exemption determination so that they could then have subordinate
organizations as exempt without the subordinates filing with the
IRS.
http://goo.gl/TXwq9

Even if you want to spend $3000, that group exemption only applies when the subordinate organizations are separate entities (like separate corporations).  I don't think that you need to make any changes as long as you monitor the activities and finances of the teams.  As there is only one entity, all of the teams' revenues and expenses need to be included in that one Form 990 each year.

Harvey Mechanic
Attorney at Law

Nonprofit Law

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about 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 possible 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. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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