Reports are rolling in from our state associations and units that their 990N filings are being accepted. If you haven’t yet filed, time is running out. A handful of members have offered tips for making the process as painless as possible. Texas member Carol Habgood, PRP, provided step-by-step guidance in an article she wrote for her state association’s newsletter. She also encourages those who have not yet filed to be proactive and call the IRS to get the association’s status changed before filing to save time and frustration.

Remember, if you filed a 990 and the IRS rejected it, it’s because they don’t know how to classify your association. When you talk to the IRS you will need to explain that:

  • Your tax return was rejected because your parent organization no longer has a group exemption letter in force.
  • Your governing documents include the necessary provisions to be tax-exempt under 501(c)(3) and this hasn’t changed since you qualified under the group exemption letter.
  • Your gross receipts are less than $5,000 and therefore in accordance with Section 508(c)(1). You are exempt from filing Form 1023 or 1023-EZ for recognition of your tax-exempt status and you’d like your record to be updated to reflect this.

Form 1023 or Form 1023-EZ is not applicable to your organization as your tax-exempt status was not revoked because you failed to file, but because the parent organization no longer has a group exemption letter. You independently qualify for the tax-exempt status as a 501(c)(3) since your governing documents meet the criteria established in Publication 557 and Section 508(c)(1) exempts you from the Form 1023/1023-EZ application process.

The above is part of the guidance provided to association unit presidents and treasurers in a letter from NAP Treasurer Evan Lemoine. Once the IRS has corrected their files you’ll need to wait about six weeks before you can refile.