Nonprofits have been getting increased press lately as the Internal Revenue Service has recently published a list of 275,000 nonprofits whose tax-exempt status has been revoked after failing to file required documents for three consecutive years. As Member Associations and Districts of Washington Youth Soccer are required to maintain 501(c)(3) status through the IRS per WA Youth Soccer bylaws, this public conversation about the tax status of nonprofits is especially important to our membership. Today we’ll cover some of the basic background about nonprofit requirements for our Member Associations and how that may affect your local club(s) as well as steps to take now to ensure your organization is in proper standing.
The first place to start:
“Is my local Association recognized as a 501(c)(3) tax-exempt organization by the IRS?” (if you are a Club, check your Club and Association’s bylaws to see if your club is required to obtain 501(c)(3) status). Take a look at the list of nonprofits in Washington State that have had their status revoked; the list is posted on the Charities & Non-Profits section of IRS.gov and can be viewed in both Adobe PDF and Microsoft Excel formats for each individual state. If your Association is on the list of automatic revocation, your 501(c)(3) status is not current and you must apply to have the Association’s status reinstated. The IRS has put together a short PDF about what steps should be taken to get your status reinstated and the PDF can be accessed here.
Awareness and planning for the future:
If your Association is not on the list of automatic revocation, now is a good time to talk with your board members to make sure your organization is in good standing with the IRS and the State of Washington for all business and tax requirements of your nonprofit. Additionally, making plans and assembling lasting records for future board members to maintain your organization’s 501(c)(3) status is an important step in maintaining your organization’s health. In order to be recognized as a tax-exempt organization by the IRS, your organization must be recognized as a nonprofit by your state. There are multiple types of nonprofit structures but most organizations in WA Youth Soccer will be nonprofit corporations. In Washington State, an organization will be recognized as a nonprofit corporation through the Secretary of State’s office.
If your Association solicits donations from the community as part of your Association’s funding, your organization may also need to register as a charitable organization with the Secretary of State’s Charities Program. Your organization may find it easier to register with the Charities Program after it has registered with the State of WA and the IRS, as much of the information used for those registrations is required for the Charities Program application. That being said, the organization does not have to wait to be granted a 501(c)(3) status by the IRS before applying with the Charities Program.
This is a lot of information to digest and it’s all a bit overwhelming at first, but it is important that we begin (or continue) addressing these topics and issues for the long term success and sustainability of our organizations I’ve been researching the requirements over the past few weeks and I’ve found some great online resources that have helped me along the way:
- The IRS has created a website specifically for tax-exempt organizations called StayExempt.irs.gov that has free online resources, including short virtual workshops that give an overview of how an organization can maintain their tax-exempt status in a user-friendly format. I took the first video course about tax-exempt status and found the information useful and easy to understand.
- The Washington Secretary of State website has extensive information and application forms for both nonprofit corporations and charities. I’ve also emailed staff in the Secretary of State’s office and they have been extremely helpful with my questions on the steps to take as a nonprofit just starting out.
When you start to dive into the requirements around taxes and nonprofits, it can get more complicated and the StayExempt website is specifically directed at people like us that may not be accountants or tax law specialists. I highly recommend that all board members of your Club, Association, and District go through the IRS’ StayExempt virtual courses. It’s a free resource and you can do it on your own schedule; all you need is an internet connection.
Do you have any recommendations for resources on tax exemption? Questions? Let me know what they are and we will help get the answers!
Happy 4th of July everyone!