NON-PROFIT COMPLIANCE POLICIES
INTERNAL REVENUE SERVICE REQUIREMENTS
The IRS requires that all subordinate organizations (in the case of the NSSAR, state societies and chapters and a few other related entities) obtain a 9-digit tax identification number. That number must be linked to the NSSAR’s group exemption number (0690) meaning that the subordinate organization carries the rights and obligations of an organization exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code. All state societies and chapters should have one of these numbers, and if not, they should contact the Director of Finance at NSSAR headquarters to find out how to obtain such a number.
The National Society of the Sons of the American Revolution files IRS form 990 (Return of Organization Exempt from Income Tax) every year. The information in this report applies only to the operations of the National Society. Financial and other data pertaining to the state societies and chapters is not included in this return. Each subordinate must file its own form 990.
Generally, a subordinate who has averaged less than $50,000 in gross receipts over the current and previous two years can file form 990-N, an electronic post card. This is an Internet based filing and there is no option for filing a paper report. The report can be filed by visiting the IRS web site at www.irs.gov and clicking on the “Charities & Non-Profits” link.
Here is the data that the IRS will require to file the 990-N:
- Organization’s name (should always be the National Society of the Sons of the American Revolution)
- Any other names your organization uses (should be the State Society or Chapter name)
- Organization’s mailing address
- Organization’s website address (if applicable)
- Organization’s tax identification number
- Name and address of a principal officer of the organization
- Organization’s annual tax period
- A statement that the organization’s annual gross receipts are still normally $50,000 or less
- If applicable, indicate if the organization is ceasing to exist
The IRS refers to “tax” periods for all organizations, although non-profits do not normally pay federal income tax, unless they have unrelated business income. The 990 must be filed by the15th day of the fifth month after the close of the tax period.
Each subordinate should maintain accurate financial records in order to file the 990. It is recommended that each subordinate have one person who keeps track of receipts and disbursements, either with a checkbook, a spreadsheet or any one of the numerous computer programs available to help small businesses keep their books. At the close of the tax period, that person should total all of the receipts of the subordinate and keep that information available for at least 7 years, in case of a possible audit.
According to the IRS, “to determine if an organization’s gross receipts are normally $50,000 or less, apply the following test. An organization’s gross receipts normally are considered to be $50,000 or less if the organization is:
1. Up to a year old and has received, or donors have pledged to give, $75,000 or less during its first tax year;
2. Between 1 and 3 years old and averaged $60,000 or less in gross receipts during each of its first 2 years; or
3. Three years old or more and averaged $50,000 or less in gross receipts for the immediately preceding 3 tax years (including the year in which the return would be filed).”
Most NSSAR members pay chapter, state and national dues. When calculating gross receipts, the subordinate should only count the dues kept by that subordinate. For example, national dues forwarded on to the National Society by the state society should not be included in gross receipts when applying the gross receipts test above. The amount of these dues should also not be included on the subordinate’s form 990 either.
The IRS includes a list of items that should be considered when calculating gross receipts in their publication “Instructions for Form 990 and 990-EZ”. This document can be found on the internet at www.irs.gov. Some of the items an SAR subordinate might have in gross receipts are:
- Contributions, gifts and grants
- Program service revenue
- Membership dues and assessments
- Interest on savings and temporary cash investments
- Dividends and interest from securities
- Gross amount from sales of securities and other assets
- Gross sales of inventory
The IRS states that organizations failing to meet their filing requirements for three consecutive years will have their filing status revoked. So, it is important that each active SAR subordinate meet its filing requirements each year.
Subordinates that do not meet the tests for filing form 990-N must file either form 990-EZ or form 990. It is recommended that a professional experienced in preparing such a return complete this filing.