IRS Exemption Update

We at headquarters know it is frustrating to you in the field that the matter of an IRS 501(c) (3) Group Exemption has not yet been resolved. It is even more frustrating to those of us working the issue here. What we had been told would be a relatively simple, straightforward and quick process has proved otherwise. Unfortunately, as recently as 19 March, the status has not changed.

The IRS case worker has confirmed that there was no problem with our current request; that it had been forwarded to IRS Headquarters with a recommendation to approve; but that IRS Headquarters had not yet taken action and there was little recourse until they do. We will continue to work this issue weekly and are exploring other options, but the IRS has the power. Until the group exemption is resolved, chapters will remain in 501(c)(19) status, and we are filing this year’s AFAVBA Form 990 with our chapters still shown as subordinates. We will provide updates in each future issue of Newsline until the matter is resolved.

And yet another IRS complication … As has been discussed in previous issues of Newsline (most recently in December 2007 http://www.afa.org/members/nwsline/dec07/irs.asp), tax-exempt organizations whose normal annual gross receipts were $25,000 or less were previously not required to file a return. As many of you may know, in compliance with the Pension Protection Act of 2006, the IRS now requires all tax-exempt organizations, regardless of size, to file. Most of you have received letters to that effect. The form we’ve discussed before for units with income below $25,000 (990-N) is now up on the web and for most is easy to fill out.

Start at: http://www.irs.gov/charities/index.html and follow the clicks until you get to the contracted website for the form. The first thing the form will ask for is your unit EIN (Employer Identification Number). If it recognizes yours, the rest is self-explanatory and you’re done for this year.

However, we have found it does NOT recognize all of our AFA EINs (even though we report these to the IRS each and every year).

If it does NOT recognize yours, it is because for some reason the unit’s EIN has been dropped from the applicable IRS database. If you have the letter the IRS sent when you received your EIN (with the name and address of the person who originally requested it), you’re in luck. The number can be reinstated relatively easily with a telephone call (800-829-4933, then Option #1, “New EIN”). Even with a successfully reinstated EIN, it can take from 4 to 8 weeks for the update to make it into the 990-N database, during which time you can periodically attempt to try to complete the form – until it accepts your number.

If you don’t have a copy of the IRS EIN letter, we highly recommend that that you STOP!!! Let us know that this is your case (e-mail to JGalbreath@afa.org), and we will advise you when we get further guidance from the IRS. The 990-Ns are technically due by May 31st. The good news is that there is no penalty for not filing until an organization has failed to file for three consecutive years (even the IRS should be able to sort this out by then!).
 

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