Wednesday, November 16, 7:30 – 9:00 p.m.
Chuck Hibberd, Renee McKee, Steve McKinley, Deb Trice
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History of 4-H tax exempt status
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IRS/EIN updates beginning in 2007
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4-H Headquarters and IRS decision to
“sunset” 4-H Group Exemption Number 2704
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Discussions among:
• State 4-H Office
• CES Administration
• Purdue Legal Counsel
• Purdue Business Office
• Comptroller, Internal Audit
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Each 4-H Entity will:
• File an annual IRS 990-series tax form
• Maintain an active Employer Identification
Number (EIN)
• Submit an annual financial report to the Extension
office
• Have an audit/review of their finances conducted
at least every 5 years (or when the primary
volunteer handling finances changes)
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Purdue University will hold the GEN for…
• all 4-H Clubs
• those 4-H Affiliates which respond that they wish
to be included by the application deadline and
which are invited to join
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Per IRS regulations, Purdue must be able to
demonstrate evidence of general supervision
and control over each 4-H entity that is
included in the GEN.
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Each of the 2,305 4-H Clubs in Indiana will
adopt a constitution with standardized
language (template provided).
Each 4-H Club will sign a standardized
authorization letter indicating its desire to be
included in the Purdue GEN (template
provided).
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Have additional tax options beyond what is
available to 4-H Clubs.
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Will make decisions regarding their tax
status.
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4-H Councils
4-H Fair Boards
Adult Leader Organizations
Parent Advisory Boards
Township Committees
Project Committees
Event Committees (e.g., Queen contest,
Livestock Auction, etc.)
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Many 4-H Affiliates have formed over the
years as groups or committees of a county
governing body.
The county governing body will now serve as
a parent organization of these groups for IRS
purposes.
The assets of these groups will be listed as
line items within the parent entity’s budget.
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Day-to-day operations of the group may
continue.
A separate bank account using the parent
organization’s EIN may be established.
These groups will not file a separate IRS 990series return (they will report their finances
through the parent organization’s 990
return).
Each 4-H Affiliate will choose one of these tax
options:
1. Join the Purdue Group Exemption Number (PU
GEN)
2. Seek independent status as a 501(c)(3) entity
3. Seek independent status as a 501(c)(5) entity
4. Become a taxable entity
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A chart outlining the advantages and
disadvantages of each option has been provided.
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Provides non-profit status to entity as a
subordinate organization under Purdue at no
financial cost to the entity.
Maintains eligibility to apply for grants as a
non-profit entity and to accept deductible
charitable contributions.
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The entity will need to adopt five (5)
standardized provisions into its governing
document(s) (e.g., articles of incorporation or
constitution).
These provisions establish Purdue’s “general
supervision and control” of the entity as
required by the IRS.
Exact wording for these provisions has been
provided.
#1 Purpose of entity
#2 Use of earnings
#3 Activities consistent with Internal Revenue
Code
#4 Dissolution of entity
#5 Generation of federal tax exempt status
Wording for each of these 5 provisions must be
included as provided in the entity’s governing
document (Constitution or Articles of Incorporation).
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Educational, scientific, charitable purposes
Provide 4-H Youth Development experience
If entity has existing statement of purpose, it
would be replaced by this wording.
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Earnings may not be used to personally
benefit individual members of entity.
Does NOT prohibit entity from deciding to
give scholarships or awards to individuals.
Blank space in #2 allows you to fill in the
actual Article # that describes the entity’s
purpose in the governing document.
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Entity’s activities must comply with section
501(c)(3) of Internal Revenue Code for tax
exempt organizations
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Examples of prohibited activities include:
• Supporting political parties/campaigns
• Gambling/games of chance
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Describes distribution of assets in the
unlikely event that an entity should cease to
exist
Assets may be used only for future 4-H
educational programming/new 4-H entities
Transferred temporarily to County office of
Purdue Extension and held in trust for a
future 4-H entity
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In this option, federal tax exempt status
would be obtained through a Group
Exemption Number held by Purdue University
EIN required
Annual filing of IRS 990-series return required
Purdue will NOT file a 990 on behalf of the
entities in the GEN
An Authorization Letter will be signed by the 4-H
Council or 4-H Fair Board representative (template
provided).
• Amended governing document(s) will be submitted.
• Information is due to the County Extension Office by
February 1, 2012.
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The ability of 4-H Affiliates to participate in
the PU GEN is subject to the final approval of
the Purdue administration.
It is expected that the majority of 4-H
Affiliates will be invited to join. Criteria
include:
• Purpose of entity’s existence
• Level of annual gross receipts
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Exempt from paying taxes on income received.
Maintains eligibility to apply for grants as a nonprofit entity and to accept charitable
contributions.
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Will sign an MOU with 4-H describing how work
is accomplished together in respect to state and
national 4-H policies (e.g., use of 4-H Name &
Emblem, fund raising, etc.)
Requires substantial application process (50-100
pages), involving time (~100 hours) and
application and professional fees (~$3,000$5,000).
Exempt from paying taxes on income received.
Will sign an MOU with 4-H describing how work is
accomplished together in respect to state and
national 4-H policies (e.g., use of 4-H Name &
Emblem, fund raising, etc.)
• Cannot acknowledge charitable contributions.
• May not be able to apply for grants as a non-profit
entity.
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Will sign an MOU with 4-H describing how work is
accomplished together in respect to state and
national 4-H policies (e.g., use of 4-H Name &
Emblem, fund raising, etc.)
Pay taxes on income received and property owned.
Cannot acknowledge deductible charitable
contributions.
Ineligible to apply for grants as a non-profit entity.
Will be the default choice for those entities who
decide not to choose option 1, 2, or 3.
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Affiliates need to choose their tax option and
submit a signed MOU to the County
Extension Office by February 1, 2012
regardless of the tax option chosen.
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A draft version of a sample MOU has been
provided.
• Some standard language is provided that must be
included; additional entries may also be included
to meet local needs/situations.
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Each incorporated entity has annual filing
requirements with the Indiana Secretary of State
• Filing notice is e-mailed from Secretary of State to
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responsible party.
• Visit: http://www.in.gov/ai/appfiles/sos-berf/ to file a
report.
For a list of entities in your county, visit:
http://www.in.gov/sos/business/index.htm; then
click on Business Search (left column)
Conduct two searches:
• One with your county name
• One with 4-H
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Click on the entity name to check its filing
status. Some of the options you’ll see:
• Current
• Report due date
• Entity is past due on report (with option to click to file
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report)
Inactive Date
Status: Admin Dissolved
Other (former) names for this entity
Option to view filing history, report information,
registered agents, etc.
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Entities that have past due reports can be reinstated:
• Submit a Certificate of Clearance
• Complete the Application for Reinstatement
• Complete the Business Entity Report, submitting filing
fees for each year ($10/year for non-profits) and
reinstatement fees ($30).
• For Reinstatement Directions, visit:
http://www.in.gov/sos/business/files/domestic_packet.pdf
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Please share this information with the volunteers
responsible for filing these reports for the respective
entities.
NOTE: A recording of this program will be made available.