4-H Affiliate Tax Options
Entities who are affiliated with the 4-H Youth Development program, and whose 501(c)(3) tax exemption has ended in 2011 as a result of the sunset of GEN
2704, will have four options to consider regarding their tax status. These options are listed below along with an outline of the advantages and disadvantages of
each option.
4-H Affiliates are organizations which are authorized to use the 4-H Name & Emblem, but which do not operate as a 4-H Club. Examples of 4-H Affiliates include,
but are not limited to, County 4-H Councils and 4-H Fair Boards.
4-H Affiliate Tax-Exempt Options
1. Join the Purdue Group Exemption
Number (PU GEN)
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2. Obtain status as separate
501(c)(3) Entity
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Advantages
No financial cost for entity to join PU GEN.
May accept charitable contributions from individuals,
businesses, or organizations.
Eligible to apply for grants as a non-profit entity using
IRS 501(c)(3) tax recognition as subordinate
organization under PU GEN.
Not required to complete separate Form 1023 or
Form 1024 application to obtain tax exempt status
under 501(c)(3) or 501(c)(5) because of conferred
status as subordinate organization under PU GEN.
Exempt from paying taxes on entity income derived
from tax-exempt function activities and sources of
income exempt from unrelated business income tax.
May accept charitable contributions from individuals,
businesses, or organizations.
Eligible to apply for grants as a non-profit entity using
separate IRS 501(c)(3) determination letter issued to
entity.
Not asked to include specific general supervision and
control language in governing document .
Exempt from paying taxes on entity income derived
from tax-exempt function activities and sources of
income exempt from unrelated business income tax.
Separate identification as 501(c)(3) organization in IRS
Publication 78.
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Disadvantages
Will agree to be under Purdue’s general supervision
and control – specific language to be included in
governing document.
Governing document must be amended to satisfy IRS
current organizational test for 501(c)(3) entities.
Annual review to maintain participation in PU GEN;
Purdue determines whether eligibility conditions to
remain in PU GEN continue to be met.
No separate identification as 501(c)(3) organization in
IRS Publication 78.
 File Form 1023 Application
http://www.irs.gov/pub/irs-pdf/f1023.pdf (30 pages);
38 pages of instructions available at:
http://www.irs.gov/pub/irs-pdf/i1023.pdf; typical
application package between 50-100 pages; estimated
100 hours preparation time for novice.
 Professional fees; attorney/accountant should be
hired to complete/review of Form 1023 application
and documents required to be submitted with
application. Estimated professional fees are likely to
be ~$3,000-$5,000 or more, depending on the facts in
each situation and local resources available.
REV: 1/5/2012
4-H Affiliate Tax-Exempt Options
Advantages
 No annual determination by Purdue to continue
501(c)(3) status through PU GEN.
3. Obtain status as separate
501(c)(5) Entity (provides for
exemption of labor, agricultural or
horticultural organizations)
 Exempt from paying taxes on entity income derived
from tax-exempt function activities and sources of
income exempt from unrelated business income tax.
 Some IRS required provisions in governing document
to obtain exempt status under 501(c)(3) are not
required to be included in 501(c)(5) governing
document.
 Not asked to include specific general supervision and
control language in governing document.
 No annual determination by Purdue whether to
continue exempt status under 501(c)(5).
4. Become taxable entity
 Not asked to include specific general supervision and
control language in governing document.
 Not required to include IRS required 501(c)(3)
provisions in governing document.
Disadvantages
 Initial filing fee $850 for 2011 applications (for entities
with gross receipts of at least $10,000).
 IRS may take as long as a year to process application.
 Will NOT be recognized as a 4-H Affiliate. May not
have 4-H in its name or purpose, nor be granted use of
4-H Name & Emblem.
 File Form 1024 (3-4 page application + 20 pages of
instructions) http://www.irs.gov/pub/irspdf/k1024.pdf.
 Initial filing fee $850 for 2011 applications (for entities
with gross receipts of at least $10,000).
 Unable to acknowledge receipt of deductible
charitable contributions from individuals, businesses,
or organizations even if contributions promote
charitable activity conducted by 501(c)(5) entity.
 May not be able to apply for grants as a non-profit
entity if granting agency insists on 501(c)(3) status as
condition for grant.
 Will NOT be recognized as a 4-H Affiliate. May not
have 4-H in its name or purpose, nor be granted use of
4-H Name & Emblem.
 Pay taxes on income received.
 Pay taxes on any property owned.
 Unable to acknowledge receipt of deductible
charitable contributions from individuals, businesses,
or organizations.
 Ineligible to apply for grants as a non-profit entity.
 Annual IRS filing requirements as business or for-profit
corporation/organization.
 Will NOT be recognized as a 4-H Affiliate. May not
have 4-H in its name or purpose, nor be granted use of
4-H Name & Emblem.
 As a result of the sunset of GEN 2704, any 4-H Affiliate
which derived its tax exempt status through GEN 2704
and which does not undertake option 1, 2, or 3 above,
will be characterized by the IRS as a taxable entity.
REV: 1/5/2012
*NOTE: The ability of 4-H Affiliates to participate in the PU GEN is subject to the final approval of the Purdue University Executive Vice President and Treasurer.
Regardless of the tax option that the 4-H Affiliate chooses, the following obligations will be met:
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Annual IRS Form 990-series filing requirements (for Options 1-3 above):
o Entities earning $50,000 or less in annual gross receipts will file an e-postcard (http://epostcard.form990.org/).
o Entities earning over $50,000 in annual gross receipts will file a Form 990. This is typically a 20+ page report (http://www.irs.gov/pub/irspdf/f990.pdf), including conflict of interest statements, statement of unrelated board members, etc.
o Need to file Form 990-T for sources of unrelated business income.
Sign a Memorandum of Understanding (MOU) with the County 4-H program that outlines specific guidelines for the groups to collaborate with one
another.
Individuals serving as volunteers for the 4-H Affiliate will successfully complete the 4-H Volunteer Screening process and annually sign the Adult
Behavioral Expectations Forms.
Maintain an active Employer Identification Number (EIN) with the IRS (whether or not the entity handles any finances).
Submit an annual report of the entity’s finances to the County Extension Office.
May or may not be exempt from paying applicable property taxes. Indiana law controls entity’s eligibility for property tax exemption. Indiana application
form required to request a property tax exemption tied to specific provisions of Indiana Code.
REV: 1/5/2012