ORDER OF AHEPAIRS and Your Chapter/DistrictInformational Purposes Only

IRS has many different tax exempt or non- profit classifications known as 501(c) status

All 501(c) organizations are exempt from federal income tax

But not all income received is tax deductible by the donor

IRS 501(c)

501(c) 3 organizations (the most well known) exist and operate for charitable purposes

Examples: the American Red Cross and United Way

Donations to these organizations are tax deductible to the donor

These organizations are required to give amounts received - less operating costs - to their charitable causes

IRS 501(c) 3

AHEPA is tax exempt as a 501(c) 10 organization not a 501(c) 3 organization

501(c)10 entity is a Fraternal organization operating under the lodge system

AHEPA has a 501 (c)10 group exemption for all of its chapters and districts. This exempts them from paying federal tax on the income received by the chapter or district

IRS 501 (c) 10

Chapters and Districts are exempt from paying federal tax on member dues and interest income received

However, dues paid by members is not tax deductible to the member

Chapters and Districts

Section 170 allows deductible contributions Secton 170 (c) defines a qualified

contribution Section 170 (c)4 defines a qualified

contribution as one that is given to an organization operating under the lodge system if the gift is to be used exclusively for religious, charitable, scientific, literary or educational purposes, or for the prevention of cruelty to children or animals.

AHEPA and IRS Section 170 (c)4

What does this mean for your Chapter? The Chapter does not have to setup a

separate 501(c)3 organization for charitable purposes because: The IRS allows a tax deduction to members or

donors contributing to a Chapter’s charitable event The Chapter cannot comingle the charitable

funds with chapter operating funds (separate bank accounts are required)

And proceeds must be used for a charitable purpose

Chapter/District Information

Chapter and District IRS Section 170 (c) 4

Educational FoundationsScholarship tax information

Per the IRS:

Scholarship funds must be used for:1. Tuition and fees required for enrollment, and2. Fees, books, supplies, and equipment required for

courses of instruction at the educational organization The Scholarship check should be made payable to the

school or university. To be IRS compliant, when a check is payable to the

student a release form must be signed by the student acknowledging that they understand and agree to the above conditions (#1 and #2) of the scholarship

Always check with a tax advisor if in doubt

Chapter/District Educational Info

AHEPA Group Exemption Recap

Fraternal Charitable

e-postcard – Form 990-N

New IRS required filing

Existing filing requirement: If a Chapter or District receives more than

$25,000 a year in total gross receipts a Form 990 must be filed annually with the IRS.

New filing requirement: If a Chapter or District receives less than

$25,000 a year in total gross receipts:◦ Each Chapter or District must file an annual online

IRS Form 990-N known as an e-postcard - this is an informational return only

IRS Filing Requirements

The Pension Protection Act of 2006 added this filing requirement to ensure that the IRS and potential donors have current information about an organization.

The first e-Postcards were due in 2008 for tax years ending on or after December 31, 2007. The e-Postcard is due every year by the 15th day of the 5th month after the close of your tax year. For example, if your tax year ended on December 31, 2007, the e-Postcard is due May 15, 2008. You cannot file the e-Postcard until after your tax year ends.

e-postcard – Form 990-N

If you do not file your e-Postcard on time, you will not be assessed a penalty. However, an organization that fails to file required e-Postcards for three consecutive years will automatically lose its tax-exempt status.

After the first e-Postcard has been filed, if you do not file your e-Postcard on time, the IRS will send you a reminder notice

This is an important return for all Chapters and Districts to file online annually. This is not a function of AHEPA Headquarters.

e-postcard – Form 990-N

The e-Postcard is a simple, Internet-based form that asks a few identifying questions about your organization.

You can only file the e-Postcard online – there is no paper form. All you need is access to a computer and an e-mail address.

No special software is necessary, and there is no cost to file an e-Postcard. It’s free!

e-postcard – Form 990-N

To file the e-Postcard, go to www.irs.gov/eo, and click on “Annual Electronic Filing Requirement for Small Exempt Organizations – Form 990-N (e-Postcard),” where you’ll find a link to the e-Postcard filing system.

Clicking on the link will take you to the e-Postcard form through the Web site of the IRS’s trusted partner, the Urban Institute.

e-postcard – Form 990-N

The e-Postcard is easy to complete. It only requires the following information about your organization:

1. Organization’s legal name, (Order of AHEPA) 2. Any other names the organization uses, (Chapter/District

Number) 3. Organization’s mailing address, (Chapter/District address ) 4. Organization’s Web site address - if it has one, (Chapter/District) 5. Organization’s employer identification number (also referred to

as a taxpayer identification number), 6. The name and address of a principal officer of the organization, 7. Organization’s annual tax year, and 8. Answers to the following questions: • o Are your gross receipts normally $25,000 or less? • o Has your organization terminated or gone out of business?

That’s it!

e-postcard – Form 990-N

1. What is the Chapter’s EIN (Employer Identification Number) ?

If you do not know the EIN, please contact AHEPA or DOP Headquarters

2. What is the Chapter’s tax period? Each Chapter is different. The tax period was

established when the EIN number was issued by the IRS

If you know the EIN, when you process the online Form 990-N the tax period will be shown automatically

E-postcard – Questions ??

3. When I attempted to file the e-Postcard, I received an error message indicating that the EIN was incorrect.  What should we do?

Contact AHEPA or DOP Headquarters

4. Is the Chapter State sales tax exempt? Each state is different, but usually a 501(c) 10 status

does not get a chapter sales tax exemption

Always, consult a tax advisor if need

ConclusionE-postcard – Questions ??

For Informational Purposes OnlyPresented by:

Patrice Farish

AHEPA Controllerpatrice@ahepa.org

1909 Q Street NW, Suite 500Washington DC 20009

202-232-6300 ext. 103