Lots of homeschool support groups find themselves evolving into bigger organizations than their founders imagined. They grew from being small monthly support groups to larger organizations offering field trips, co-op classes, graduation ceremonies, clubs, and other activities.
For example, TACHE (Tyler Area Home Educators) in Tyler, Texas began in the 1980s as a small support group for homeschool families. They grew to over 400 families and now manage an annual budget of nearly $20,000 and offer a plethora of educational activities.
They wisely decided to incorporate as a nonprofit corporation in 2009. But, unfortunately, TACHE did not apply for 501(c)(3) tax exempt status at that time.
In September 2013 TACHE decided it was time to apply for tax exempt status as a 501(c)(3) educational organization and contacted me. Because TACHE waited more than 27 months after their date of formation (in 2009) to apply for 501(c)(3) status, we had to explain TACHE’s history to IRS and give an explanation why they did not apply earlier.
I helped TACHE apply for 501(c)(3) status in February 2014 and after about 7 months of waiting, the IRS granted 501(c)(3) status.
But TACHE wasn’t finished with the IRS just yet. TACHE failed to file their Form 990-N Annual Information Return with the IRS for three consecutive years and had their tax exempt status automatically revoked. We were concerned that there would be a period of time when TACHE would have to file and pay income tax. There were a few phone calls and letters to the IRS, but finally the IRS reinstated TACHE’s tax exempt status and agreed that they did not owe any back taxes.
The process is does not always take that long, but here are a few lessons learned.
- Don’t delay! Apply for 501(c)(3) tax exempt status within 27 months (or sooner) from your date of formation (usually the date of incorporation in your state as a nonprofit corporation)
- File the Form 990-N every year. This is required for support groups as well as homeschool co-ops. If you fail to file the Form 990-N, the IRS will automatically revoke your tax exempt status.
- Get help when you need it. My fees are reasonable and I focus on helping homeschool organizations. Contact me.
- Be patient. Although the IRS has cleared a lot of their backlog, it still took 11 months for the IRS to reinstate TACHE’s tax exempt status.
- Learn all you can about tax exempt status for your homeschool group. My book, The IRS and Your Homeschool Organization, is a good start.
Congratulations to TACHE! It was along process, but it’s finished and TACHE can continue to serve homeschool families in Texas for many years to come.
Carol Topp, CPA
I will be recuperating from surgery and will be unavailable to answer your emails from November 15, 2015 until January 2016. Until then, here’s how you can get help.