1. LEGAL PITFALLS FACING CHAMBERS OF COMMERCE September 28, 2018
J. Patrick Plunkett
Attorney at Law
(651)

2. LEGAL STRUCTURE

3. NONPROFIT VERSUS TAX-EXEMPT
Entity Status Under State Law
Tax-Exempt
Exempt From Certain Taxes

4. NONPROFIT STATUS Check Minnesota Secretary of State
Name
Address

5. NONPROFIT STATUS (cont.)
Bylaws
Members
Board of Directors
Officers

6. MEMBERS Description Admission of Members Designated Representative
Duties/Rights of Members
Expulsion of Members
Government Units May Not Be Members

7. BOARD OF DIRECTORS Number Terms Method of Election Qualifications
Removal
Vacancies

8. MEETINGS OF THE BOARD Frequency/Notice Requirements Voting Quorum
Written/Electronic Action
No Proxies
Guests/Minutes

9. COMMITTEES Method of Appointment Power and Authority Take Action
Recommend Action

10. OFFICERS Chair & Vice-Chair Recommended
President and Treasurer Required
Method of Election
Duties
Removal

11. _________________________________ Day-to-Day Operations
LEGAL RELATIONSHIP
BOARD
Oversight/Planning
_________________________________
STAFF
Day-to-Day Operations

12. FUNCTIONAL RELATIONSHIP
BOARD STAFF

13. TAX STRUCTURE

14. FEDERAL TAX-EXEMPTION
501(c)(6) Chamber
501(c)(3) Chamber Foundation
Receive Charitable Contributions
Retain Lottery Proceeds
Not Support Candidates

15. STATE TAX-EXEMPTION
Sales Taxes
Real Estate Taxes

16. SALES TAX EXEMPTION § 501(c)(3) Foundation Sales Purchases
§ 501(c)(6) Chamber

17. REAL ESTATE TAX EXEMPTION
Institution of Purely Public Charity
Support from Wide-range of Donors
Provide Goods or Services at Reduced Price

18. EMPLOYEES

19. EMPLOYEES v. CONTRACTORS
Advantage to Worker
Advantage to Chamber
Reporting Requirements
IRS Form W-2 (Employees)
IRS Form 1099 (Contractors)
IRS Form SS-8 (Optional)

20. OVERTIME REQUIREMENTS
Application
Federal = 40 Hours/Week (>$500k)
State = 48 Hours/Week (<$500k)
Annual Compensation of $23,466.00
Executive, Professional, Administrative
Comp Time Only in Same Week

21. PROGRAMS & ACTIVITIES

22. LOBBYING Not Primary Activity Deduction of Dues Allocable to Lobbying
Reporting of Non-Deductible Portion
Pick-Up Tax
In-House <$2,000
Registration Requirements

23. CERTIFICATES OF ORIGIN
Potential Liability
Do Not Pre-Sign
Do not Authorize Member to Sign

24. FUNDING

25. SPONSORSHIPS Acknowledgment Not Advertising No Call To Action
No Product Comparison
No Pricing
Web-Site Links

26. AUCTIONS §501(c)(3)/ §501(c)(6) Sponsor Deduction of Donor Equals FMV
No Deduction for Services
No Deduction for Use of Property
Deduction for Buyer Equals FMV above Cost

27. CHAMBER BUCKS No Expiration Date Unless: Distributed Without Charge
Sold Below Face Value for Fundraising
Given as Employee Recognition
Taxed to Employee Unless:
Low FMV and Not Convertible into Cash

28. RAFFLES Resource: www.gcb.state.mn.us Exempt Permit
< $50, in Prizes
Permit Not Required
< $1500 if Conducted by Chamber
< $5000 if Conducted by Foundation

29. RAFFLES Use of Net Proceeds By a §501(c)(3) for §501(c)(3) Purposes
To a §501(c)(3) for §501(c)(3) Purposes
To a §501(c)(4) Festival

30. RAFFLES (cont) Sale of Tickets Requirements Fixed Price
Cash, Check or Debit Card
May Not Be Sold via Website
May Not Be Sent via U.S. Mail
May Not Be Sold After Drawing Begins

31. RAFFLES (cont) Theatre Style Tickets Sequential Numbers Required
List of Prizes Must be Available
The Tickets are Sold Only at the Event
Must Meet Price Requirements

32. RAFFLES (cont) Permissible Raffles Wine Pull Cow-a-Bunga Duck Pond
Golf Ball Drop
Heads or Tails

33. RAFFLES (cont) Prohibited Raffles Car Through Ice Chicken Bingo
Diamond Melt
Mouse Hole
Puzzle Piece

34. RAFFLES (cont) House Rules Must be Posted
The Method of Selecting Winners
A Statement that the Winner need not be Present
Payment Methods
Record Retention Requirements