ClassCreator.com | Blockbuster sites, amazing reunions

Share Tips

New Topic Reply Subscription Options  

Form of organization - IRS regulations

Forums: Questions and Answers About Building Your Site
Created on: 09/20/15 03:16 PM Views: 1598 Replies: 4
Sunday, September 20, 2015 at 3:16 PM

On another thread I asked a question about obtaining a federal ID number. Since I want to get practical answers to my question, I didn't want to include this discussion in that thread. If you would rather discuss this offline, that's OK too.


I just finished reading finished the IRS's actual publications related to our type of activities, and it seems to me that reunion organizations fall under the IRS code section of 501(C)(7) - Social Clubs.

Does anyone see it differently or are we really just talking about expedience and risk?

Under that Code Section the organization files a Form 1024 - Application for Recognition of Exemption Under Section Section 501(a).

While I understand why it might be a little involved to go through the process of setting up a 501(C)(7), it certainly is a lot less involved than setting up a 501(C)(3), which is used by organizations that can collect funds where the donor can get a tax deduction.

I was just wondering if anyone else has felt a little bit squeamish acting as a fiduciary and using a personal ID number for credit card collections and for their bank account?

If I am missing something, please let me know.

Reply
Edited 09/21/15 8:33 AM
Sunday, September 20, 2015 at 4:46 PM - Response #1

I ran funds for our reunion 5 years ago through my personal premier PayPal account to be able to accept online payments. This year, I opened an account with an EIN number. Go HERE Monday to get one. It does not take long and you'll be good to go. (The site is not open to applications on the weekend.)

Thanks for the info on the 501(c)7. Will be looking into that. We did not know about it and received the EIN without a problem.


Reply
Sunday, September 20, 2015 at 4:49 PM - Response #2

Art- I understand your concern but perhaps you're looking at this with undo caution. I really don't think the IRS wants to put us in the federal penitentiary. I think they'd rather issue a hefty fine to help bail the country out of the trillions of $$ in debt we have.
I saw many reasons for caution with accepting classmates payments, not the least of which was the inevitable accounting that would be involved.
We have opted for payments to be mailed directly to us without the need for Paypal, credit cards, etc. We've done it this way for 20 years & none of us has done time in the joint yet.Wink
Good Luck with your decision.

Reply
Sunday, September 20, 2015 at 11:27 PM - Response #3

Personally, I will not recommend my class go for 501(C)(7) status. We would not gain significant enough benefit to justify the amount of record keeping and due diligence the status would require. We are simply not a large enough group and this does not begin to touch on the cost of the application for the status.


Reply
Wednesday, September 23, 2015 at 7:24 PM - Response #4

I agree with Gwen...pain in the butt. You have to have your books audited every 3 yrs..follow IRS guideline..plus you have to incorporate as a social club.
Our old committee has a EIN#, but we disbanded and a new committee took over and form a corp...a social club...they had to pay to do that..but it was nominal.

We have a lawyer pro bono (a fellow classmate) who does all our legal stuff..none has come up since we started in 2009-2013. We had a CPA on board too.thru our treasurer who resigned when they formed a corp. I can still use it..but I am forming a new committee since the corp one is disbanding..I know confusingRolling Eyes I use PayPal(my biz account with my SS#)for donations to the website. My website crew has access to it. I use CC for our reunion tickets and mdse sales...works seamlessly with the old reunion planner. We might just use them again for our website/committee donations.

You can get a bank account for community organizations ie: social clubs, boy/girl scout troupes, etc etc at most banks. TCF Bank is where we are thinking about opening up an account. The PaPpal account is actually better because it is accepted anywhere...the downsize is you have to pay a transaction fee.

I hope this helpsVery Happy

Gwen Corey wrote:

Personally, I will not recommend my class go for 501(C)(7) status. We would not gain significant enough benefit to justify the amount of record keeping and due diligence the status would require. We are simply not a large enough group and this does not begin to touch on the cost of the application for the status.

Reply
New Topic Reply  
Subscription Options: Have all new forum posts sent directly to your email.
Subscription options are available after you log in.