 |
|
|
|---|---|---|
National Law
|
|
|
| |
||
Roadmap to Annual
Squadron and District
Income Tax Questions
The e-Postcard: Any District or Squadron that normally has annual gross receipts of $25,000 or less and doesn’t file Form 990 or 990-EZ must file Form 990-N (the e-Postcard). Most squadrons and/or districts do not have their own IRS 501(c)(3) tax-exempt status but rather are covered as subordinate units of the tax-exempt status held by USPS. However, as subordinate units they are individually required to file appropriate IRS tax forms. If your District or Squadron fails to file the e-Postcard for three consecutive years, it must reapply for tax-exempt status. For guidance on the new filing requirement, read these Frequently Asked Questions compiled by the IRS or for complete details visit the IRS website at http://www.irs.gov/charities/article/0,,id=169250,00.html.
File Form 990-EZ (short form) if gross receipts from related and unrelated income are more than $25,000 but less than $100,000 and if gross assets at the end of the year are less than $250,000.Gross receipts are the total amount received from all sources, except annual National or District dues collected and not retained by the Squadron, during the annual accounting period without subtracting any costs or expenses.
File Form 990 if your gross receipts, including unrelated income are more than $25,000 and if gross assets at the end of the year are $250,000 or more.
File Form 990-T if gross income from an unrelated trade or business is $1,000 or more. "Gross income" is gross receipts minus the cost of goods sold. "Unrelated trade or business income" is the gross income derived from any trade or business that is regularly carried on, and not substantially related to, the organization's exempt purpose or functions. Filing Form 990-T with taxable income will require the issuance of a check for the appropriate tax.
Filing Form 990-EZ or Form 990 must contain the "Group Exemption Number" assigned to USPS by the Internal Revenue Service. That number is "1041." It goes in the related header block on page 1 of Form 990-EZ or Form 990.
Forms 990-N, 990-EZ, 990, and 990-T must be filed by the 15th day of the 5th month after the end of the tax year, unless an extension to file is granted.
Forms 990-EZ, 990, and 990-T should be mailed by CERTIFIED MAIL, RETURN RECEIPT REQUESTED, on or before the filing due date, including extensions, to the following address:
Internal Revenue Service Center, Ogden, Utah 84201-0027While it is not necessary to file by certified mail, return receipt requested, it is good practice to file by this method to show proof of delivery.
Failure to file a Form 990-EZ, Form 990, or Form 990-T creates an unending Statute of Limitations. However, the Statute of Limitations starts to run as soon as a return is filed. In most cases, the Statute of Limitations will be three years.
- Forms 990, 990-EZ, and 990-T and the related instructions can be downloaded to your computer at www.irs.ustreas.gov.
Answers to Common Questions and Suggested Guidance
A Squadron should include as gross receipts only the portion of annual dues retained by the Squadron. Do not include National or District dues.
A Squadron or District should include investment income as gross receipts.
A Squadron or District should include as gross receipts all income from checks for a specific program or event if the checks are made payable to the Squadron or District.
A Squadron or District should include as gross receipts only the net amounts received from a specific program or event after payment of expenses, if receipts were collected by and bills paid by a member, not the Squadron or District.
A Squadron or District should include as gross receipts sales of educational materials to members with corresponding deductions therefrom for the cost of said materials.
A Squadron or District should include as gross receipts all income from a fund raiser with corresponding deductions therefrom pertaining to the cost of the fund raiser.
Interest income, dividend income, and recognized capital gains (while considered as part of gross receipts) are not gross income from an unrelated trade or business.
Royalty income generally is not gross income from an unrelated trade or business.
Rental income from renting real property generally is not gross income from an unrelated trade or business unless it involves debt-financed property.
Advertising income from ads in rosters and newsletters generally is considered as gross income from an unrelated trade or business.
Sales of Ship Store merchandise, except educational material, generally is considered as gross income from an unrelated trade or business.
In determining the taxable income from the sale or activities which generate unrelated business income tax, directly related expenses are deductible against the income derived therefrom.
Income tax due on unrelated business taxable income is computed using corporate tax rates.
Public Disclosure Requirements
On April 8, 1999, the IRS issued final regulations governing the public disclosure requirements for tax-exempt organizations concerning the organization's application for recognition of tax-exemption, and the organization's three most recent annual information returns i.e. Forms 990 and 990-EZ, along with all schedules, attachments and supporting documents. If a request for information is made in person, an organization generally must provide the requested information immediately. Written requests for information must be responded to within thirty days from the date an exempt organization receives a request. Organizations are not required, however, to disclose portions of the return that identify the names and adresses of contributors, nor are organizations required to disclose their Form 990-T. In the event that you have a request for any of the above information, please contact the USPS Headquarters Manager for further guidance.
The above information is designed to provide general guidance. The Internal Revenue Service Code, Revenue Rulings, and Revenue Procedures dealing with the above subject matter are quite voluminous and complex. In the event that you have a set of circumstances that requires further guidance, please consult with your Squadron or District Law Officer and/or a local attorney or CPA with experience in this area of the tax law.
|
|