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Nonprofit Law/Group Exemption or Not?


Are there any disadvantages to registering our booster club as tax-exempt under the irs umbrella ruling, rather than on our own?  The major advantage to us would be the saving of some money.  Do we lose any control of our club if we use the umbrella ruling?

Thanks very much.

What you are referring to what the IRS calls "group exemption". Group Exemption is discussed starting on the bottom of the middle column of page 8  of IRS Publication 557 at

and at length at:

Are you sure that you would be saving money in the long run?  The IRS exemption on your own would only have a one-time fee for the IRS Form 1023 application for exemption. The IRS minimum filing fee for such a determination letter is $400 and goes up to $850.

Would the parent of the group require an annual fee from your organization?  I am assuming that they want some initial fee also.

Other than the saving of money, you may find that the parent would require annual financial reports from your organization, while the IRS only requires such reporting if your organization has a gross income of $50,000 or more.  As to control, I believe you should contact the proposed parent organization and request a copy of the contract (or whatever they call it) so you can see what they require.  You would see there also why type of controls that they have in that agreement.

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. 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 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 "" without the quotes and then add your search terms before hitting enter.


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.


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

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

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