Can’t we operate without IRS tax exempt status?

Carol,

Does my homeschool support group really need to apply to 501(c)(3) tax exempt status with the IRS? It seems like a lot of time and money. We have a small budget and we don’t accept tax deductible donations.

Can’t we just operate as we are?

You described your group as a support group, meaning you exists for the benefit of the members and you do not accept or plan to seek tax deductible donations.

Many larger homeschool organizations, especially co-ops that have an educational function and not just a support group purpose, seek 501(c)(3) tax exempt status for its many benefits:

• tax exemption
• ability to accept tax deductible donations
• ability to participate in fund raisers only open to 501(c)(3) charities

See my article Do we need 501c3 status?

But homeschool support groups are different. They don’t hold classes; they focus on fellowship. Support groups don’t accept donations; they get all their income from membership dues and maybe a little bit of fund raising.

I attended an IRS webinar and asked your question. Here’s what the IRS said:

It is true the Tax Reform Act of 1969 requirement to “give notice,” (to apply for recognition of tax-exempt status) applies only to organizations wanting section 501(c)(3) status.
So, although other types of organizations are not required to file Form 1024, they may still wish to do so in order to receive a determination letter of IRS recognition of their status. Having the determination letter ensures public recognition of their status and may enable exemption from some state taxes.
Also, even though an organization may “self-proclaim” its tax-exempt status, it is still subject to the rules governing its particular sub-section. It is also subject to IRS examination to determine whether it meets the requirements for the exemption it is claiming.

Translation:

If your organization wished to obtain 501(c)(3) tax exempt status, then you must file an application for that. I can help . See my Services page

If  instead, your group fits the criteria of a social club (what the IRS calls a 501(c)(7)), then your organization can “self-proclaim” that you are tax exempt without filing the paperwork.

But you still have to obey the rules and fit the IRS definition of a social club. 

What it takes to be classified as a 501(c)(7) Social Club

And you don’t have a nice letter from the IRS to prove that you are tax exempt.

So there you have it…most homeschool support groups, if they operate as a social club, can be considered tax exempt without going through the time and expense of tax exempt application with the IRS.

Carol Topp, CPA

Meet Carol Topp at a homeschool convention near you!

I’ll be speaking at the following homeschool conventions in 2011:

• Mid South Homeschool Convention March 3-5, 2011 in Memphis, TN

Topics:

Homeschool Leader: Are You Burnt Out?

Micro Business for Teens

• Midwest Homeschool Convention March 31-April 2, 2011 in Cincinnati, OH

Topics:

Homeschool Leader: Are You Burnt Out?

Micro Business for Teens

• Ultimate Homeschool Expo (online) May 2-6, 2011

Topics:

How a Homeschool Co-op Can Bless Your Child

What Your Child Can Learn from Starting a Micro Business

Career Exploration for Homeschool High School Students

• Schoolhouse Expo (online) May 16-20, 2011.

Topic: Micro Business for Teens

• Home Educators of Virginia, June 9-11, 2011 in Richmond, VA

Topics:

Micro Business for Teens: Starting and Running a Micro Business (2 parts)

Budget is a Dirty Word

Help! My Homeschool Group is Growing

How to Teach Your Kids About Managing Money (When You’re Not Doing So Great Yourself)

I hope to meet you in person or on-line at one of these wonderful conventions.

Carol Topp, CPA

Lessons from a goose on leadership

Who knew that geese could tell us so much about leadership?

Geese fly in a V formation to create uplift. They fly 71% farther when flying together than if they flew alone.
Application for homeschool leaders: Don’t run your group alone. Gather other people to help you and you’ll go farther and avoid burnout.

When the lead bird gets tired, he drops out of the head spot and flies in the back to recover and take advantage of the lift from the other birds.
Application for homeschool leaders: Rotate leadership. Bring in fresh, new people. Set term limits for board members.

Geese honk to offer encouragement to each other, sort of an “Atta boy!” or “You can do it! Keep going!” to each other and their leader.
Application for homeschool leaders: Encourage your leaders. Offer appreciation gifts and thank you cards.

Thanks to :

http://www.airpower.maxwell.af.mil/apjinternational/apj-s/2007/4tri07/popeeng.htm

Carol Topp, CPA

Special Needs Webinar Feb 22

Special Needs Webinar  “Bringing Hope”  February 22, 2011

For those who struggle silently at home with special needs children, this event is especially for you. More than just a pep-talk that “you can do this too,” these sessions give you real help from those who have been successful in working with children.

These are proven and tested ideas from the two of the trainers themselves, Tara Jenner (a homeschool mom) and Jane Davis who has pioneered brain potentials with phenomenal results. You will hear from Michael Hughes and expert on teaching reading and grammar, Christine Field, a past homeschool mom and attorney who discusses your rights, and Attorney Dorcey that shares how to plan financially for your children, and so much more!

Grab Your Ticket Today for Only $9.97
(Includes access to our Membership Site full of ebooks, audios, articles, and special offers from this expo.)

YOU CAN LISTEN FROM YOUR COMPUTER OR PHONE!

Everything is hosted online. EVERY seminar is recorded. Many sessions will be taught live and then posted on the private members only website created especially for you. You can enjoy everything on your own time!

Learn more here

Carol Topp, CPA

More nonprofits can file the easy Form 990N

Many homeschool organizations that have tax exempt status are small enough they do not have to file any tax forms with the IRS. And now new IRS guidelines mean even more groups are free from IRS filing requirements!

Small exempt organizations can file the simple Form 990-N, the electronic postcard, instead of the longer Form 990-EZ or  Form 990.

The e-Postcard is an electronic notice filed at http://epostcard.form990.org.

Need help determining your gross receipts? Send me an email and we can arrange a private consultation over the phone. Email me here.

If your tax exempt homeschool organization needs help filing their Form 990EZ or Form 990, I can help. Read more here.

Would your homeschool group benefit from being tax exempt? Find out by reading my articles on the pros and cons of tax exempt status.