Carol,
I thought our homeschool organization had reached a conclusion on this issue and self-proclaimed 501(c)(7) status as you recommended. However, we have a new treasurer who wants documentation. I have searched the internet and cannot find anyone else talking about “self-proclaimed” status for 501c7 Social Clubs. I have read Pub 557 and the 1024 instructions and do not find an exception to the filing requirement. Can you point me to your source for this info?
Thanks, Cynthia
Cynthia,
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.
Here’s a link to the IRS video and transcript from the webinar. The question I asked and the IRS’s reply can be found on page 39
https://www.irsvideos.gov/StartingOffRightNON501c3/
Cal the IRS to be added to their list
If you do choose to self declare 501c7 tax exempt status as a social or recreational club, your group must still file a Form 990-N every year to maintain its tax exempt status.
See this blog post for tips on how to call the IRS and be added to their exempt organization list so you can file the required annual Form 990-N.
I hope that helps!
Carol Topp, CPA
HomeschoolCPA.com