1 Tax Issues for National Parent Club Treasurers By Edmund R. Sledzik Delegate: American Lhasa Apso Club.

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Presentation transcript:

1 Tax Issues for National Parent Club Treasurers By Edmund R. Sledzik Delegate: American Lhasa Apso Club

2 I. Importance of the position 1. Financial control of the club 2. A record keeper 3. Disbursement of Checks 4. Overseer of all events 5. Reports financial health of Organization, Annual club invoices/expenses, Special events that may include more than one year Budget Person 6. The responsible person in the club.

3 II. Filing IRS tax return Forms 1120 or Form 1120, if not exempt the Club must report no matter how much you make. Even if a loss. i. Use Form 1120 if a corporation. - Pay state taxes. ii. 10 % rule for charities iii. Loss carryovers iv. How many states? - Wherever you do business. For Example: A Virginia club holds a show in Maryland. Two state returns must be filed.

4 2. Form 990 – Except for CA, IN, and NY you only file one Form. Form 990 i. Annual reports are different ii. What if annual report is missed? - No longer a corporation iii. Some states require that a copy of the Form 990 be sent to them.

5 III. Record Keeping 1. Cash basis or accrual bases Taxpayer – Which one? 2. What program are you using? 3. Year opens Jan 1 and closes Dec 31 – Calendar year taxpayer 4. Year opens the 1st of any month and closes on the last day of the month before the next year. Fiscal year taxpayer.

6 5. Reconciliation – outstanding checks etc. A. Outstanding checks at the end of the year B. Transfers from one account to another. i. What I see ii. What the Treasurer sees C. Depreciation i. Already taken ii. Not taken iii. Example ring equipment 7 years

7 IV. Tax Returns 1. Form Form (990 and 990-T (Schedule (A) for (C) (3) clubs.) 3. Form 1065 Partnership

8 V. Type of Entities for Clubs Recognized by the IRS 1. Corporation 2. LLC 3. Association 4. Trust

9 VI. Differences Between Types of 501 (C)’s for clubs - 3, 4 and 7 1. Social clubs – (C) (7) – Taxes on interest etc. Form 990-T i. 35% rule ii. 15% rule iii. Unrelated business income iv. Taxes on interest and dividends. (1). Set aside rule.

10 2. Section 501(C) (3) Clubs A. Schedule A – 5 year look at (C) (3) income i. Disqualified persons. ii. Schedule B donors of $5,000 or more. B. Public charity versus private foundation i. Requirement of giving away income by year end if a foundation. ii. Public charities can accumulate their income.

11 C. Formed usually for prevention of cruelty to dogs, education, health, and other Charitable activities. i. No 10% limit. D. State requirements for filing a copy of the return plus a list of contributors. E. Other state requirements such as paying a rescue fee.

12 3. Section 501 (C) (4) Clubs – Public good organization A. No 990-T on interest and dividends B. No schedules as in (3) C. No 5 year look back to determine if the club is a public or private foundation. D. No limit on charitable contributions.

13 VII. Special Rules to consider: 1. When to File? 2. Due dates 3. What happens if you miss filing? $20 a day rule or a percent of your income. 4. Gross income of $100,000 or more. A required statement on dues notice.

14 5. Unrelated business income items i. Magazines ii. Adds in catalogues iii. Catalogue sales iv. Ways and means sales v. Sales tax (1). On sales (2). On purchases (3). Depends on state law

15 VIII. Audits: 1. Clubs – Internal Audits – Use of members 2. IRS - Intent may be to take away your exemption – Records.

16 IX. New issues: 1. Clubs making less than $25,000. New rules for Dissolution of a Club. 3. Forms 1099 and 1096.

17 4. Spinning off of rescue, health, education or other parts of the Club. a. Limited Liability. b. Insurance c. Control of the entity. 5. Beware of White Elephants and similar gifts.

18 X. Questions Concerning Taxes and Exemptions for Your Club:

19 XI. Conclusion: 1. The treasurer is the key to a successful operation of a parent club. 2. It is essential that you keep accurate records. 3. Stay on the cash basis method of operations. 4. Keep permanent records on Quicken etc. 5. File the Form 990 on time or get an extension. 6. When you leave “you” are responsible for the return of the club for the last year “you” were treasurer.

20 Edmund R. Sledzik 1704 Shagbark Circle Reston, VA (703) Home/Office (703) Fax –