I am the new treasurer of a homeschool group in TX. We have about 100 members (dues are $30). Last year our board reviewed our status with reference to your website and decided 501c(7) fit us best.
You say that you can self declare 501c(7) status. On the IRS website I found an application(form 1024) and I could find no reference to self declaration.
Can you point me to some documentation that shows we are allowed to self declare? I am just trying to make sure everything is in order.
Roy in TX
Roy,
I could not find any information on “self proclaiming” 501c7 status on the IRS website either. I attended an on-line webinar on February 24, 2011 hosted by the IRS called “Starting Off Right: What New Non-501c (3) Organizations Need to Know.”
I asked a question, “I’ve heard that organizations such as the ones you are discussing today – 501(c) 4s, 5s, 6s, 7s, 8s, and 10s – are not actually required to complete and submit Form 1024, Application for Recognition of Exemption Under Section 501(a). In other words, an organization that believes it qualifies for exemption under one of these subsections can simply say it does and start to operate. Is that true?”
The IRS’s reply was :
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.
You can view the slides from the webinar here:
https://www.irsvideos.gov/StartingOffRightNON501c3/player/frame-wm.htm
I hope that helps!
Carol Topp
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RE: SELF DECLARATION of Social Club status and annual filing
Thanks for having this conversation. Getting to a simple solution with IRS is interesting! I may have done it.
I am in the process of trying to file the E Postcard return for our self-declared Social Club (a recreation group). I plugged in our IRS TIN into the website, which indicated IRS had no record of our nonprofit status. Then I called IRS at 877 829 5500 and after a brief(!) wait (after duly punching the telephone keypad numbers) I gave our info and the fact we did not need an IRS exemption letter, had annual income of less than $5000, met the requirements of IRS 501(c)(7) Social Club, had our TIN and wanted to file the E Postcard annual return but couldn’t.
Results: she said in 6 weeks we should be able to file the E Postcard. Therefore no need to send in the official IRS recognition form and $400. So we’ll see. I made record of the agent name and number just in case.
Fred,
I’m glad you found it fairly easy to get added to the IRS exempt database so that your social club can file its Form 990-Ns.
501(c)(7) Social clubs do not have to file the Form 1024 Application for tax exempt status, nor pay the $400 fee. They can “self-declare” their tax exempt status, even if their annual gross revenues are over $5,000 (the $5,000 threshold applies to nonprofit organizations applying for 501(c)(3) status as a charitable, educational or religious organization, not to 501(c)(7) organizations).
But, 501(c)(3) organization (and that would include homeschool co-ops with a educational purpose), do have to apply for 501(c)(3) status. It’s not automatic; you cannot self-declare 501(c)(3) status.* 501(c)(3) origanizations have to apply and pay the $400 fee. They apply using Form 1023 or the new, shorter Form 1023-EZ.
* there are 2 exceptions to applying for 501(c)(3) status:
1. Churches
2. Tiny organizations with annual gross revenues less than $5,000. But even these organizations have to file a Form 990-N every year. So they need to do what Fred did and call the IRS to get added to their exempt organization database.
Carol Topp, CPA