IMPORTANT NOTE This PowerPoint was developed as an integral part of a face-to-face, interactive educational session. When using it as a standalone reference item, some portions of the material may be unclear and/or may require interpretation or explanation. Please contact Randy Welch with any questions.

THE “E-POSTCARD” BROUGHT TO YOU BY YOUR FRIENDS AT THE IRS

OVERVIEW  Tax-Exempt status  Taxpayer ID number  Prior filing requirements  The “E-Postcard”  Filing deadlines  What information is needed in order to file?

OVERVIEW (Cont’d)  Various filing issues  What if we don’t file?  IEA role/Current status of efforts  Final recap  How do I verify my local’s status?  Info on IEA website  Questions

TAX-EXEMPT STATUS  Labor unions are “exempt” under IRC 501(c)(5)  NOT the same exemption as school districts, churches, etc. –They are exempt from sales tax –Contributions to them are tax-deductible  “Exempt” means you don’t pay income taxes  Price: restrictions on how you can spend your money

EXEMPTION PROCESS  All IEA locals are automatically exempt under the IEA’s “Group Exemption”  Saves the paperwork of having to file the exemption paperwork for each new local  Taxpayer ID number must be set up correctly!

TAXPAYER ID NUMBER (TIN)  All new locals must apply for a TIN (also referred to as Federal ID Number/FEIN or Employer ID Number/EIN)  Must apply on Form SS-4  SS-4 requires designation of a fiscal year-end- Default is June

TAXPAYER ID NUMBER (Cont’d)  Need a TIN to open a bank account  For new locals or others that need a new TIN, the IEA will apply for you. See your UD or contact the Director of Business Services.

PLEASE DON’T….  When opening bank accounts, some locals have…… –Used their school district’s TIN –Used someone’s Social Security number  Neither approach is legal  If your local has done this, you should contact your UD or the IEA Director of Business Services to assist with filing for your own TIN

IRS REPORTING REQUIREMENTS  Based on “Normal Gross Receipts”  “Normal”= Average of preceding 3 years  “Gross Receipts”= All cash taken in EXCEPT IEA-NEA dues

PRIOR FILING REQUIREMENT  Gross receipts > $100,000: Form 990 –Less than 5% of locals  Gross receipts $25,000- $100,000: Form 990-EZ –Less than 5% of locals

PRIOR FILING REQUIREMENT (cont’d)  Gross receipts < $25,000: NO REQUIREMENT –90+% of IEA locals never had to file

PROBLEM: INVISIBLE ENTITIES  IRS had no way to keep track of you  Can’t accumulate data  Can’t ensure compliance  Don’t know if you’re still out there  Don’t have current contact info

SOLUTION: THE “E-POSTCARD”  Gross receipts < $25,000: Form 990-N (the “E-Postcard”)  Passed as part of the Pension Protection Act of 2006  Must be filed electronically- No paper version available

SOLUTION (Cont’d)  Info required is simple and basic (For Now!)  Must be filed every year

EFFECTIVE DATE  Effective for “Years beginning after December 31, 2006”  So, the first locals affected were those whose fiscal year (per the records of the IRS) ended December 31, 2007

FILING DEADLINE  E-Postcard must be filed by the 15 th day of the 5 th month after the end of the fiscal year  December year-end= May 15 deadline  June year-end= November 15 deadline  Return must be filed annually  Return can’t be filed until after fiscal year is complete

WHAT INFO IS NEEDED IN ORDER TO FILE  TIN  Fiscal year-end  Both must match IRS database or you can’t file!

INFO NEEDED (cont’d)  Local’s legal name  Mailing address and website address  Name/Address of a “Principal Officer”  Confirmation that your normal gross receipts are < $25,000

TIN ISSUES  Over 100 IEA locals are not in IRS database because… –IRS classified as “dormant” –Local uses TIN of employer or leader –No bank account/No TIN –Local filled out SS-4 incorrectly  IEA is in the process of straightening these out with the IRS  Can’t file E-Postcard with a TIN not in IRS database!

FISCAL YEAR ISSUES  Fiscal year determines filing timeframe  IEA has access to IRS database, including fiscal year info  Most locals don’t know their fiscal year, or what they are using is not in agreement with the IRS

FISCAL YEAR ISSUES( cont’d)  It is OK to use one fiscal year for internal purposes and another for your IRS filing  If you want to change your fiscal year in the IRS database, contact the IEA Director of Business Services

FILING ISSUES  The filing process is fairly simple, but…. –Still fairly time-consuming –A few quirks, e.g.,  The name of all locals must be “Illinois Education Association” in order to provide tax-exempt status. Local name is registered as a “DBA”  Mailing address issue

FILING ISSUES (cont’d)  We prefer to file the return for you –Simple authorization process –Saves you the time involved in the “learning curve” –Ensures that return is filed in a way that does not jeopardize your tax- exempt status

FILING ISSUES (cont’d)  If you prefer to file yourself, we will provide instructions  Some locals got the impression that by providing some information that was requested through the IEA website, that they had filed the E- Postcard. THIS IS NOT THE CASE.

“SUBSIDIARY ORGANIZATION” ISSUE  If “subsidiary organizations” file their annual financial information as a consolidated return with the “parent organization,” they do not have to file the 990-series forms  This is not practical for the IEA’s 1,000 locals- more bookkeeping for both locals and IEA  IRS is giving incomplete information on this

CONSEQUENCES FOR NOT FILING  After three years, you lose your tax- exempt status  It is reasonable to assume that the IRS will use the first three years to flush out all of the thousands of organizations that no longer exist, then will make the consequences more onerous  It’s important to start filing as required and make it a routine

IEA ROLE IN TRANSITION  Numerous communications sent to regions and locals to explain the IRS letters and minimize confusion  Info presented at “Financial Procedures” training sessions  Sessions at WAC and SLA devoted to E-Postcard  “Webinars”

IEA ROLE (Cont’d)  Info posted on IEA website  Sending reminders to local presidents, based on due dates  Reconciling info provided by locals with TIN and fiscal year info in the IRS database

IEA ROLE (Cont’d)  Making sure that all locals that are required to file actually do so  Filing E-Postcards on behalf of locals  Resolving TIN/Fiscal year discrepancies with the IRS

SUMMARY OF DUE DATES

CURRENT ACTIVITIES  Working with a few “December” locals to get their returns filed  Sending s to Presidents of the “June” locals, offering to file on their behalf  Working with the IRS and locals to clear up the 100+ discrepancies

COMMUNICATION ISSUES  Hard to find the right person  addresses out of date  Communication with IRS is spotty  No response from locals that think that by responding to the IEA request for information, they had already filed the E-Postcard

FINAL RECAP

“YES”

“NO”

HOW DO I VERIFY MY LOCAL’S STATUS?  See me after the session  Contact me at  Fill out online request form

INFO ON IEA WEBSITE: Choose “RESOURCES”…

RESOURCES (Cont’d) Then “FINANCIAL PROCEDURES”

RESOURCES (Cont’d)

QUESTIONS??