- Tax-exempt status options – A majority of GCSAA-affiliated chapters are designated as 501c6 or 501c3 organizations. A section 501c6 covers professional membership and trade organizations. Contributions made to 501c6 organizations are not deductible as charitable contributions.
A section 501c3 covers charitable, education and scientific organizations. Dues paid to 501c3 organizations may be deductible as a business expense, except to the extent they support certain political or lobbying activities.
A tax exempt determination is filed with the IRS. Once the IRS grants this status, a chapter with more than $25,000 in gross annual revenue is required to file a tax return with the IRS. View this chart (link to s:/chapter/extranet/2006redesign/tax exempt organization chart) for an explanation of the different types of tax-exempt organizations.
- Unrelated business income tax (UBIT) – Activities unrelated to the chapter’s purpose or mission are regularly carried on and are considered a trade or business, according to the IRS. This may result in unrelated business income tax (UBIT) by the IRS. If unrelated revenues subject to UBIT rise within 30-40% of the chapter’s annual budget, the IRS may question the chapter’s tax-exempt status.
Lobbying and Political Activity Allowances
Please refer to this chart for an explanation of lobbying practices allowed by tax-exempt organizations.
Sources: Managing Chapter Funds by Susan S. Vowell, CPA, Professional Practices in Association Management by John B. Cox, CAE and Association Law Handbook Third Edition by Jerald A. Jacobs.
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