-staff contact, Jessica Wall, Director of Development & Programs
Did you yawn when you read the word Governance? Well, stay tuned. There’s lots of great information in this section.
Skip to: AMBUCS Group Tax Exemption, Check with IRS.gov, Proving Your Tax Satatus, Sales Tax Exemptions, Annual Reporting, Charitable Registration in States, Risk Management, Big Hat Status, Gaming Laws, Governance Conclusions
AMBUCS Group Tax Exemption
In 1996 National AMBUCS changed from a 501c4, a civic service organization like Lions or Rotary, and became a 501c3, a nonprofit charitable organization like the American Red Cross. Some members have not fully understood the significance of this change.
501c3 Tax Status. Public charities enjoy unique tax status via the 501c3 designation.
Most AMBUCS chapters qualify under the National AMBUCS 501c3 Group Tax Exemption – #8069.
A few chapters have their own 501c3 status and are not included in the group tax exemption. Chapter officers should be aware of their chapter tax status.
Member dues are tax deductible, but must not include meal expenses.
501c4 Tax Status. Civic service league/service club organizations do not enjoy the same benefits as public charities.
A few chapters opted not to be included in the conversion to public charity status in 1996. These remain a 501c4. They should not issue tax deductible receipts – or represent themselves as being a part of AMBUCS group tax exemption.
Dues and contributions to these entities are not tax deductible.
Because of this change, please no longer use the words civic and service when describing your chapter and replace with nonprofit charitable organization. This change is also why we call a group of members a chapter rather than a club – to make it clear that we are legally no longer part of the service club movement but, instead, are now allowed to write grants, seek contributions, accept tax-deductible donations, etc.
Check with IRS.gov
You can check your official chapter status with the IRS on IRS.gov (Search EO Select Check). Scroll down and click on the blue “Exempt Organizations Select Check Tool” button. It will list three search criterion:
- If you choose the first option, only National AMBUCS will appear. None of the chapters will show since they are under National AMBUCS’ tax exemption umbrella. This is where the bona fide subsidiary memo comes into play. It proves that your chapter belongs under the umbrella. They call this a Group which they define as: “Generally a central organization holding a group exemption letter, whose subordinate units covered by the group exemption are also eligible to receive tax-deductible contributions, even though they are not separately listed.”
- If you choose the second option and search by EIN, chapters that have had their exempt status revoked will show – along with the date revoked.
- If you choose the third option and search by EIN, chapters that filed the 990-N (e-Postcard) will show. Those that filled out the 990 or 990-EZ will not appear. If you fill out the 990-N you will find a complete list of every filing.
Proving Your Tax Status
You will probably be asked to prove your chapter’s tax status when opening a chapter bank account and sometimes when seeking funding through grants, foundations, etc. Here are the documents they may ask for:
Determination Letter. Chapters within AMBUCS Group Tax Exemption do not have their own determination letter from the IRS. They should use the National AMBUCS tax determination letter.
Bona fide subsidiary memo. The ARC prepares a special memo for third parties that explains chapter tax status and the group tax exemption for donors. Chapters may request a copy of this memo from the ARC.
Affiliation Agreement. Your chapter filled out and sent a copy to ARC as a part of the charter packet. If you no longer have the original, we can give you a copy.
Articles of Incorporation. ARC files with your state. Your state may have sent documents to you or to the ARC. If you don’t have them, check with your state.
Sales Tax Exemptions
Sales tax exemptions are issued individually by states. Chapters are not usually automatically exempt from sales tax. Chapters must research the law in their respective state to see if they qualify.
It may not be worth the bother, unless the chapter has considerable expenses that qualify as tax exempt.
Handling Amtryke Transactions:
Most chapters are not charged sales tax for Amtryke purchases. However, for example, North Carolina chapters are not tax exempt.
If chapters have families who purchase Amtrykes, the transaction should be directed to Amtryke, LLC rather than through the chapter accounts. This avoids putting the chapter in a reseller position and the need to collect and pay sales tax on the activity.
To the IRS through Form 990 – tax return for nonprofits
Due four and a half months from the close of your fiscal year. Historically, the chapter fiscal year has been June 1 – May 31 but some chapters moved their fiscal year to the calendar year in recent months. Either is permissible. For chapters on a June 1 – May 31 year, the annual tax return is due on October 15. For those on the calendar year (January 1 – December 31), the annual tax return is due on May 15.
990-N e-Postcard Return. If your chapter’s gross receipts are $50,000 or less, your chapter can file with the e-postcard. Directions on IRS.gov. The IRS has recently changed the url to file the e-Postcard. If you have issues logging in, try shutting your computer down and then only having the browser open. Here are some troubleshooting tips and a contact number.
990 or 990-EZ. Chapters with greater financial activity (consistently over $50,000 annually) must file either a Form 990 or 990-EZ.
Note: Some chapters with gross receipts under $50,000 still choose to file a 990-EZ (rather than the e-Postcard) so they can perform an audit for fundraising purposes. Grants and foundations often require an audit.
To National AMBUCS through form 135/136
Form 135/136. Online annual report and report of charitable giving – submitting this form is required annually by the AMBUCS Board of Directors. It is used to insure good chapter governance and for the annual Group Exemption Report the ARC files with the IRS. Below is an explanation of the elements the form asks about. Due November 15 (extended to Feb 15, 2019).
Corporate status. National AMBUCS files articles of incorporation papers for all new chapters. This is an important part of the chapter’s risk management. It helps to insulate chapters and officers from personal liability. Chapters often must report or file annually to the Secretary of State to maintain their corporate status. What does your state require? Chapter officers should keep up-to-date with their state requirements to keep their status active.
Charitable giving. The 135/136 form collects data about the scope of chapter operations. This reflects financial data as well as estimates of member and volunteer hours and activity. Chapters can use this data for their own PR – for example, posting this activity to social media or when speaking to potential donors.
Basic financial reporting. ARC collects basic financial data from all chapters to measure the scope, impact and outcomes of the entire organization.
Charitable Registration in States
Charitable registration allows chapters to fundraise in their state. National AMBUCS registers in every state we have chapters. Some states require an additional registration by individual chapters.
What does your state require?
Some states have on-going fees or other requirements. Fees are sometimes nominal and sometimes based on annual budget.
If chapters use professional fundraisers (hired consultants or other 3rd party) they almost certainly are required to register in the state.
Check with the ARC if you are not sure what is required by your state.
There are several layers to covering all potential liabilities and protecting chapters and members/volunteers.
Chapters must keep their corporate status with their state as a nonprofit active and up-to-date.
Volunteer Protection Acts.
These acts of Congress do provide some protection for chapters, members and volunteers.
AMBUCS Liability Insurance.
Administered by National AMBUCS for the organization, chapters, members/volunteers.
The national organization provides a blanket liability policy for all chapters and members for:
Program activities. These include community service projects, Amtryke giveaways, ramp building and many other community service activities.
Fundraisers. Many chapters hold special events as fundraisers. Often these events are covered, but there are exclusions in the policy. We recommend you fill out a Proof of Insurance Request for each of your events (even if they are established) to ensure all activities are covered.
Liability insurance protects and defends chapters and members from liability for covered AMBUCS related activity. Generally, it protects AMBUCS chapters for accidents and injuries at chapter sanctioned events. (see the policy explanation and how to mitigate the chapter’s risks).
Normal exclusions do apply and may require your chapter to purchase additional specific coverages. See a list of exclusions.
Chapter Cost – $104 per chapter per year – billed quarterly at $26 on the chapter’s account.
- Product liability. Amtryke, LLC maintains a product liability insurance.
- Therapists. AMBUCS provides a professional liability coverage for volunteer evaluation of riders for Amtryke evaluations. Therapists also generally have their own liability policies.
Note: Because of this protection for Therapists who perform Amtryke evaluations and to limit your personal and chapter liability, always have a therapist perform every Amtryke evaluation. If you are not a therapist or other health professional, do not perform an Amtryke evaluation/fitting.
- Directors and Officers Liability. Most chapters do not utilize this kind of coverage. Chapters with significant programs may seek to add this coverage, but it is rare in AMBUCS volunteer based chapters.
- Treasurer Bonds. Chapters may decide to provide bond for their Treasurers. This depends on the financial scope of chapters, and should accompany sound financial practices by the chapter.
Big Hat Status
The Big Hat Club:
- It is not legally considered a separate entity – and is not recognized as a separate nonprofit.
- The BHC is considered part of the chapter and reports under the chapter EIN.
- The BHC activity is included as part of the chapter financial statement and annual tax return.
Are you Affected? Gaming includes such fundraising activities like raffles, bingo, monte carlos, etc.
State laws vary greatly about gaming laws. Chapters must research their own state’s gaming laws to see if they comply.
Use the AMBUCS officer’s calendar to help you anticipate and comply with the various reporting and tax return deadlines through the year.
Reporting is important! It protects chapters and their officers and members.
Risks? Chapters will lose their tax status after three years of non-reporting to the IRS. Chapters can also lose their AMBUCS chapter status for non-reporting and non-compliance.
AMBUCS chapter status is a valuable asset – be sure and protect it by diligent reporting and paying due diligence to governance issues.