Untitled 1

IRS Update

USA, PUERTO RICO and US VIRGIN ISLANDS ROTARY CLUBS AND DISTRICTS AND THE IRS

From Club and District Support - Pan America Department

Rotary International, 1560 Sherman Avenue, Evanston, Illinois 60201 USA

Telephone: (847)-866-3000; Fax: (847)-866-3072

What follows is not tax advice, but general information, which may be useful. Questions regarding any tax matters need to be referred to local counsel, your tax adviser or to the IRS. (http://www.irs.ustreas.gov or 1-800-829-1040)

On 13 May 1958, the Internal Revenue Service declared that Rotary International (RI) and its clubs and districts are entitled to exemption from federal income tax under Section 501(c)(4) of the Internal Revenue Code. While Rotary districts and clubs are exempt from paying federal income tax, the law does require Rotary clubs and districts to file an annual information return on IRS Form 990, on or before the 15th day of the 5th month following the close of the annual accounting period (15 November). Certain organizations, other than private foundations, that do not normally receive more than $25,000 in gross receipts in each taxable year are not required to file Form 990.

Starting in 2008, clubs or districts with gross receipts of $25,000 or less were required to file Form 990-N, which is an electronic e-Postcard report. This report is required annually. Failure to meet the annual filing requirement for three consecutive years will result in revocation of the tax-exempt status of the club or district in question. To learn more about this requirement, and to obtain the necessary e-Postcard report form, visit the US Treasury website at: www.irs.gov/eo, or call the toll-free number: (877) 829-5500.

Numbers: RI’s Group Exemption Number (referred to as “GEN” on Form 990), is 0573, which applies to RI as well as all USA, Puerto Rico and Virgin Islands clubs and districts. At the same time, every club and district in the USA, Puerto Rico and Virgin Islands is required to have its own Employer Identification Number (EIN). This 9-digit number is essentially a tax ID number, and has nothing to do with whether the club or district has any employees. As RI must report annually the EINs of all districts and clubs in the USA, Puerto Rico and Virgin Islands, the RI secretariat maintains a list of those EIN tax numbers for reference. New Rotary Clubs, however, must apply directly to the IRS for an EIN number to be assigned to the new Rotary club. Please contact your Club and District Support (CDS) representative at Rotary International headquarters if you have any questions about the EIN number for your club or district.

Tax Deductible Status: Contributions to clubs and districts are generally not tax deductible as charitable contributions. Clubs and districts that have gross annual receipts that normally exceed $100,000 generally must include a disclosure statement regarding the non-deductibility of contributions during fundraising solicitations (IRC Sec. 6113). Note that this includes invoices for payment of dues. See IRS Notice 88-120 for more details and acceptable disclosure language. Contributions to any club or district charitable fund that has obtained tax exemption under Section 501(c) (3) of the Internal Revenue Code may be tax deductible as charitable contributions. Membership dues may be deductible for some Rotarians as business expenses.

Other Taxes: Clubs or districts may be required to file IRS Form 990-T if they have “unrelated business income.” An unrelated trade or business is defined as any trade or business that is regularly carried on, and that is not substantially related to the organization’s exempt purpose or function. (IRC Sec. 513). Federal Social Security and withholding taxes, and local state income taxes may be required from a club or district that has one or more paid employees. Please contact the IRS or your tax consultant or attorney for guidance on this issue.

The laws of individual states vary in regard to state income tax, sales tax, other taxes and special licenses. The 501(c) (4) status applies only to federal income tax and does not necessarily have any bearing on state or local taxes. IRS interpretation of its Code also can vary slightly in different US Treasury districts.

October 2009

Anna's Thanksgiving Update

Submitted by Linda Logan, Claremont

Editor’s note: As we progress through the Rotary Youth Exchange year, we will chronicle Anna’s exchange in Argentina. Here is another of her priceless writings.

Find out more about Youth Exchange at www.RYE5300.org

Hello to all,

Happy Thanksgiving, somewhat belatedly. I planned ahead of time in order to cook a Thanksgiving meal here, so I had canned cranberry sauce and ingredients for pumpkin pie that my parents sent me. All that I needed was a turkey.

Well, turns out that getting a turkey in Argentina at this time of year is very difficult, if not impossible. I almost got one the morning of Thanksgiving, through a connection of one of my friends, but turned out it was a) still alive that morning and b) old, thus apparently non-yummy, and so it was decided better not to try to eat it. Anyway, in the end we had two Thanksgiving chickens, which I told everyone were very very small turkeys, and we feasted a Thanksgiving dinner with my host mom, her mother and cousin, a neighbor/friend, and three of my friends. They seemed to like the cranberry sauce and most liked the pumpkin pie.

Healthwise, things are looking good. I am continuing to take iron daily and go to biweekly control (a little pinch to the thumb) and have had thus far positive results of the red blood cell count. I actually just got back from a rather long walk, nearly up to what I was walking before all of this...

One thing I keep on forgetting to mention is how hard it is to answer a commonly asked question... What does your Dad do for a living?

This question is hard enough to answer in English to people who live in Claremont, so imagine trying to explain that your Dad is the CEO (which I have yet to find the translation for) of a consortium (I have to explain to most people in the US what this is) of the Claremont Colleges (liberal arts colleges don’t exist here). Thanks Dad.

Last Friday I experienced a classic “things like this are why I am aware that I am not in the US” moment. I went to the local theatre to see a performance of a community aerobics/dance type thing, because my good friends’ cousins were performing. The show was “Tinkerbell” which means it was full of glitter, ribbons, and wings. A part of the dance performance came where it was supposed to be dramatic, kind of an uh-oh moment in the story, and through the speakers came music from “Psycho,” shortly followed by music from “Halloween.” Never in my life did I think I would see ten-year-old fairy princesses dancing to the most classic horror-movie-getting-stabbed-in-the-shower music, and I couldn’t help but to laugh, but of course no one else in the theatre seemed the least bit amused, because they were unaware of the significance of the music.

Now that Thanksgiving has passed, I also feel completely and strangely non-bombarded with Christmas advertising and materialism. I never thought I would say this, but I kind of miss it. Sadly, it just doesn’t feel like the Christmas season...

I hope that all of you are well in the many things you are doing and experiencing in your lives. I am quite content here, and happy that I was able to stay, but I do miss and love you! And by the way, I love getting e-mails from you all and reading about how you are, so don’t be afraid to respond to my e-mails or just write me whenever the mood strikes!

Much love,

Anna

The Highlighter