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Author Topic: Amateur radio club IRS NTEE classification?  (Read 802 times)
N8OXQ
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Posts: 35




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« on: May 20, 2019, 07:07:20 AM »

Our club just last month got approved by the State of Ohio to be classified as a corporation. We have an IRS "Employer Identification Number" (EIN) with which we opened a checking account. Our next step is to become an 501 (c) (3).  IRS has a list of National Taxonomy of Exempt Entities (NTEE) codes and I don't know which one to use. Did some research online and found different clubs using different codes. One used (A34) one used (N50) one used (M99) along with (B90) and (W99)! We want to get this right the first time. Has anyone else gone thru the process before? Is there ONE right answer? Our Articles of Incorporation list a number of IRS acceptable activities like educational, public service, training, emergency communications, social etc. So as long as we pick one of the listed items will we be OK?

Thanks for your input.
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N8AUC
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Posts: 643




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« Reply #1 on: May 23, 2019, 05:49:42 AM »

Generally, amateur radio clubs fall under "educational and scientific" organizations.

Because of the recognized public service that Amateur Radio provides, the IRS grants 501c3 status to ham radio clubs with little resistance.

If you do apply for, and get your 501c3 status, make absolutely sure to file your form 990 on time, every year.
Failure to do that will lead to the revoking of your tax exempt status, and you'll have to pay another fee to reapply.
One of the clubs I belong to just went through that. The fee to reapply was $275.

If I remember right, all you have to do on the form 990 is certify your club's gross receipts don't exceed some amount.
I think it was $25,000. If your club's gross receipts were under that, you didn't have to fill out anything else.
If it's over $25,000, then there is considerably more work required to certify your continued tax-exempt status.
Both of the clubs I belong to live off of membership dues. We easily fall under the $25,000 gross receipts level.



« Last Edit: May 23, 2019, 05:53:47 AM by N8AUC » Logged
KA4GFY
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Posts: 34




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« Reply #2 on: May 23, 2019, 11:34:54 AM »

I just filed several tax returns for exempt organizations.  As long as your gross receipts don't exceed $50,000, you can file the form 990-N, the online electronic "postcard."  Its fairly easy.  Just be sure to file by May 15 each year. 

You will need to provide IRS with 3 years of tax returns or 2 years of estimated tax returns.  Form 1023 is the form you need to apply for 501(c)3 status.  IRS publication 557 has all the details on applying.  You will also be required to submit a user fee, which is $275 this year.

I don't recall seeing IRS asking too much about the NTEE numbers, but they DO ask if you how you qualify for 501(c)3 status, so be sure to have a well-written explanation of what your club does.  Look at other ham radio clubs to get ideas for wording.  Like N8AUC said, IRS is pretty good about granting non-profit status as long as you meet the conditions.  You won't go wrong using the education or public service angle.

The ARRL website has a good video explaining the process given by a ham who also happens to be a CPA.  I am also a CPA and have advised several organizations on the process.  Once you are approved, be sure to keep good records.

73,
Rich, KA4GFY



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N8AUC
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Posts: 643




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« Reply #3 on: May 23, 2019, 01:36:29 PM »

Once you are approved, be sure to keep good records.

Absolutely true, and excellent advice. KA4GFY is obviously very good at what he does.

Your club treasurer needs to be held to task on record keeping.
Although they don't bother with little bitty ham radio clubs very much, an audit is always a possibility, even if the chance is remote.
And if you are audited, you'd better have records.

An audit isn't anything to be scared of, especially if you have records that support your assertion made on the 990 form.
Basically, they're just checking to make sure everything is on the "up and up".

Also, it's a good idea to have an annual internal financial audit written into your club's by-laws.
It doesn't have to be fancy, but having another set of eyes that aren't your treasurer's look over the books, it sound management practice.
It's also a good idea to retain a written record of such an audit. Finding records like that put a real auditor at ease pretty quickly.

Good luck with your club!

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N9LCD
Member

Posts: 125




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« Reply #4 on: May 23, 2019, 05:43:41 PM »

And above all, DUAL CONTROL!

Two persons to handle ALL funds received, cash or checks.

Two persons to sign all checks.

Bank account(s) either reconciled or reviewed and approved by someone other than the treasurer.

As a finance man -- BS & MBA -- and retired banker, I seen too many organizations fall apart from poor handling of the finances.  It doesn't have to be theft, just the suggestion  of impropriety.

N9LCD
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