Local Section Finances and Taxes


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Local Section Finances and Taxes

  1. 1. Accounting & Taxes for LocalSectionsLocal Section Leadership WorkshopStetson WilsonControllerApril 26, 2013
  2. 2. Agenda• Local Section Structure• Quarterly Dues Payments• Local Section Benefits• Local Section Obligations• Annual Tax Return• Unrelated Business Income Tax (UBIT)• Implications of not filing annual tax return• Additional information• Questions
  3. 3. Local Section Structure• Separate entities under the AIChE umbrella• Share in the 501(c)(3) non-profit status of thenational organization, because:– You share in AIChE’s exempt purpose of educating thepublic on topics related to Chemical Engineering– You are non-profit• Maintain your own financials and accountbalances• Have your own Tax ID Number (EIN)• Not included in AIChE’s financial statements, taxreturns or audits
  4. 4. Quarterly Dues Payments• January - March• April - June• July – September• October – DecemberNote: Paid to Local Section after quarterly/year-endbooks are closed(typically within 2 months)
  5. 5. Local Section Benefits• Most sources of revenue are exempt fromfederal income taxes• Sponsors and contributors (and LS members)can claim deductions on their tax returns• Reduced postage rates for certain types ofmailings
  6. 6. Local Section Obligations• Maintain your finances in a responsible manner• File annual tax returns• Pay taxes on unrelated business income (UBIT)• Abstain from lobbying – influencing elections ofcandidates for public office• Keep IRS and AIChE updated on current Treasurerand LS mailing address• Complete AIChE Local Section Treasurer’s reportannually- May 31stdeadline
  7. 7. Annual Tax Returns• Must be filed by the 15thday of the 5thmonth afterthe end of your fiscal year– May 15 for Jan-Dec fiscal year• Which form to file?– Form 990-N if gross receipts/revenues are < $50,000– Form 990-EZ if gross receipts are < $200,000 and totalassets are < $500,000– Form 990 if either of the 990-EZ criteria are not met– Form 990-T if gross income from UBIT >$1,000
  8. 8. Form 990-N• Referred to as e-Postcard• Minimal information required:– Legal name (and other names used)– Mailing address– Website (if it has one)– Employer Identification Number (EIN)– Group Exemption Number (GEN) - 2603– Name and address of a principal officer– Annual tax year– Answers to the following questions:• Are your gross receipts normally $50,000 or less?• Has your organization terminated or gone out of business?• Should receive confirmation back from the IRS
  9. 9. Unrelated Business Taxable Income (UBIT)• Most receipts are exempt from taxes:– Dues / contributions / sponsorships– Fees for seminars, symposia, etc.• Revenues from advertising may not be exempt if:– Ads are included in >3 newsletters per year– Outside entity is paid to help prepare / distribute thenewsletter (vs. volunteer support only)– Gross income >$1,000• Gross receipts minus cost of goods sold• UBIT requires filing of Form 990-T
  10. 10. Implications of Non-Compliance• Many LSs and SCs recently lost their tax-exemptstatus for not filing returns for 3 consecutiveyears• Implications– Contributors cannot deduct their donations from theirtax returns (including dues)– Must pay income taxes on receipts– Must file tax returns with the IRS• Need to apply with the IRS to have their tax-exempt status reinstated (including associatedfees)
  11. 11. Additional Information• Form 990-N:– http://epostcard.form990.org/• Form 990-EZ:– http://www.irs.gov/pub/irs-pdf/i990sa.pdf• Form 990-T:– http://www.irs.gov/pub/irs-pdf/f990t.pdf• Change of Address (Form 8822):– http://www.irs.gov/pub/irs-pdf/f8822.pdf• AIChE Local Section Treasurer’s Report:– https://chenected.wufoo.com/forms/aiche-treasurers-report-for-local-sections/#public• Group Exemption Number (GEN) – 2603