Tax Exempt Guidelines
Every new Kiwanis club should be aware of these details. You must 1) get an EIN, 2) incorporate in your state, and 3) register with the IRS for tax exempt status. FYI, for members who want to know.
EIN (Employer Identification Number) – This is the equivalent of the Social Security number for corporations or taxable entities other than individuals. You obtain one for your club by filing with the IRS. See https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/How-to-Apply-for-an-EIN
An EIN is usually required before you can open a bank account.
New regulations in December, 2015, require that organizations that plan to function as 501(c)4's (see below), notify the IRS within 60 days. See https://www.irs.gov/Charities-&-Non-Profits/New-notification-requirements-for-social-welfare-and-community-benefit-organizations-501c4
Incorporation. Kiwanis clubs incorporate in their state by filing Articles of Incorporation, usually with the Secretary of State in your state capital. Incorporation protects club members from lawsuits, and it allows filing with the IRS for exemption from Federal income taxes. In some states incorporation allows exemption from sales taxes. Clubs must decide if they want to be 501(c)3 or 501(c)4.
501(c)4 clubs are tax exempt but donations to them are not tax deductible. The IRS calls them Social Welfare organizations.
501(c)3 clubs are official charities recognized by the IRS. They are tax exempt and donations to them are tax deductible. They usually have the word “Foundation” in their name. In recent times, it has been difficult to get 501(c)3 applications approved. Usually approval requires an educational (or historical preservation) mission for the organization. Kiwanis International applied and was denied. See IRS Publication 557 or https://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Exemption-Requirements-Section-501(c)(3)-Organizations
Some Kiwanis clubs have both 501(c)3 foundations for charitable giving and 501(c)4 corporations. Because they are difficult to get, if you have a 501(c)3, it’s best to maintain it; new clubs often choose 501(c)4.
Kiwanis International has a blanket registration for 501(c)4 with the IRS. Your club can be added under this registration once you have an EIN and incorporation papers. Contact the Finance Department at Kiwanis International (1-800-Kiwanis) for details. As an alternative, the letter you receive from the IRS assigning your EIN has instructions (in the fine print) to register your 501(c)3 or 501(c)4 with the IRS. (File Form 1023 or Form 1024) Registration must be completed to make your tax exempt status official.
In the St. Louis area, Region IV maintains Kiwanis Gateway Foundation as a 501(c)3. If your club is not 501(c)3, but a donor requires one, you can arrange for donation to the Gateway Foundation, who will then distribute funds to charities of your choice (for a modest 0.5% service fee). For details contact the current Region IV Trustee.
Income Taxes. All Kiwanis clubs are required to file annual income tax returns, usually in February using Form 990. 501(c)4's can file Form 990N on line through the IRS website, irs.gov. See https://www.irs.gov/Charities-&-Non-Profits/Annual-Electronic-Filing-Requirement-for-Small-Exempt-Organizations-Form-990-N-e-Postcard. Also see a recent summary from MO-ARK. Click here.
Once you register with the IRS, they will send you an annual reminder. If you fail to file for three consecutive years, the IRS will revoke your tax exempt status. See: https://www.irs.gov/Charities-&-Non-Profits/Automatic-Exemption-Revocation-for-Non-Filing:-Organization-Not-Filing-Exemption-Application-Will-Not-Be-on-List-of-Revoked-Organizations
Then your club is required to file corporate income tax forms (which limit the deductions of charitable contributions to a fraction of your taxable income).
For years, 501(c)4 clubs were not required to file income tax forms. Congress changed the law in 2006. Some clubs were slow to comply with the new requirement. They may learn they have been revoked when they first attempt to file Form 990N. If revoked, you must file a long 17 page form (including 4 yrs of financial data) with the IRS and pay fees of $400 or $850 to be reinstated. The Finance Department at Kiwanis International has a webinar on how to get reinstated. They can assist you. Contact Kiwanis International’s Finance Department by email at email@example.com.
States also require informational forms with the Secretary of State to keep your incorporation in force. The return typically certifies that your corporation still exists and reports its current mailing address and the names of an officers and directors. The return can be filed on paper but in some states online filings are accepted. You will be notified by mail at your address of record when the return is due. Most are due annually, but Missouri allows two year fillings.
By-Laws. Your club is governed by its Board of Directors by procedures specified in your By-Laws. If important issues are to be decided, consult your By-Laws for requirements. Your club Secretary has a copy of your By-Laws, or you can obtain a copy from Kiwanis International.
Who can sign a legal contract for a Kiwanis club? Under state law, anyone authorized by the club Board of Directors.
Insurance. $17/member of the annual dues paid to Kiwanis International for your club provides liability insurance for your members, officers and directors. Your club Secretary receives an Insurance booklet with the latest details every year. It includes a Certificate of Insurance (sometimes requested by landlords at your events or fundraisers). It also contains sample forms for Liability Release, Hold Harmless Agreement, Waiver of Subrogation, an Incident Investigation Report, a Loss Prevention Worksheet, and Kiwanis contacts for follow-up: firstname.lastname@example.org.
These guidelines are not intended as legal or tax advice. For assistance, contact a professional.