Chapter Tax Filings Requirements Prepared by: Vincent Howell, CMfgE Chapter Enhancement Committee

Purpose of Document Provide guidance to chapter officers regarding requirement for yearly tax filling Provide guidance regarding senior chapter alignment with student chapters and the related implications for tax filings

Contents Overview Senior Chapter Filing Requirements Student Chapter Filing Requirement TBD

Overview Due to Federal Tax Requirements, SME and its chapters are required to file the required tax form in order to maintain non-profit status –This typically is Federal Form 990 or 990-N This must be done yearly, and filling is typically initiated as part of completing yearly Chapter Financial form. As such, NOT filing the Chapter Financial Form has significant tax and tax liability implications.

Requirements The required form for filling are based on chapter income –Chapters with income <$50,000 are to use Form 990-N –Chapters with income >$50,000 are to use Form 990 The IRS looks at a 3 year average gross receipts for the senior chapter and its subordinate student chapters to determine the $50,000.

Requirements The majority of the Chapters file the simple Federal Form 990-N (e-postcard). SME is still willing to file on behalf of the chapters but the chapter must give headquarter permission –Permission is granted by checkbox on the annual Chapter Financial form –A Senior chapter can choose to file on their own

Requirements Chapters that do not file on their own or as part of SME’s return for 3 consecutive years automatically lose their not for profit status – there are no exceptions – it is automatic from the IRS. –SME cannot amend their tax return to reinstate the status once it has been lost. The Senior Chapter is responsible for filing all their own tax returns – including the missing years. Any chapter that has lost their non-profit status must be officially closed by SME so that SME’s corporate non-profit status is not lost.

Actions Each Senior chapter should verify that it has completed its tax filing requirement via completion of the yearly Chapter Financial form, and take steps to complete any missing filings –The Senior Chapter is responsible for filing all their own tax returns – including the missing years.

Critical Notes Any chapter that has lost their non- profit status must be officially closed by SME so that SME’s non-profit status is not lost. –Once closed, the chapter will need to start over as a new chapter

Critical Note to Chapter Leaders  When Senior Chapters fail to complete their tax filing (or authorize HQ to act on their behalf), and once non-profit status is lost, the IRS will hold the last officer of record accountable for filing the appropriate tax return (form 1120) for their chapter and sponsored student chapter(s)

Student Chapter Alignment Still to be added

Key actions for chapter leaders TBD