IRS Exemption Update

There is nothing further to advise on the group exemption, although we have seen movement in the IRS process. We expect more positive words in the near term, but as a reminder, all chapters remain 501 (c)(19) entities at present and contributions to chapters are not tax deductible.

If there are still States/Chapters experiencing difficulties in filing the IRS Form 990N, we recommend: “Don't continue to try to file a 990-N at all now!”

That may seem cavalier, but our rationale is:

1) There is no penalty for not filing at all until May 2010, and the IRS recognizes they have a huge problem with the form. If the chapter's EIN is not immediately recognized in the data base, it will be a long hassle (we have examples of situations still not resolved after six months), and ultimately it should soon not be necessary; because...

2) Our long-awaited (c)(3) group exemption should be granted soon, and the group exemption filing will remove any 990-N requirement for the chapters covered under the group. We may be a little overly optimistic about the group exemption approval, but we have plenty of time to revise this guidance once the existing database difficulties are worked out and before May 2010!