[TriLUG] Upcoming vote on TriLUG non-profit status

Aaron Joyner aaron at joyner.ws
Tue Feb 1 10:24:50 EST 2011


Based on my experience when I was on the SC and talking at the time w/
Jeremy Portzer who was our Treasurer, and later in trying to validate
if we are or are not a 501(c)(3) organization so that I could donate
money, I don't think we are.  My opinion doesn't really matter,
because the IRS doesn't believe we are.  The form to search charities
registered with the IRS: http://www.irs.gov/app/pub-78/, and a handy
link to the search for 'linux' in all of North Carolina (note, there
aren't any such institutions): http://goo.gl/Gny1m.  It's safe to say
that if we're going to advertise and operate that we're a non-profit
for federal tax purposes, particularly the designation of 501(c)(3)
which is the federal tax exempt status, we need to properly register
as such.

I believe we are registered with the State as a non-profit, but I do
not believe the federal 501(c)(3) registration has ever been made.
Indeed, a few clicks turns up our NC incorporation status as a
Non-Profit corporation:
http://www.secretary.state.nc.us/corporations/Corp.aspx?PitemId=4745209

We're not required by North Carolina to file annual reports (as noted
at that link).  It looks like if we register as a 501(c)(3) the only
annual filing that will be required (assuming our budget does not grow
substantially) would be 990-N electronic filing.  Details (from most
specific to more general) are available in the following links:
http://www.irs.gov/charities/article/0,,id=177783,00.html
http://www.irs.gov/charities/charitable/article/0,,id=123310,00.html
http://www.irs.gov/charities/charitable/index.html

Basically all you have to do is file a 990-N "e-Postcard" once a year
to certify that you didn't deal in more than $25k (or now $50k) worth
of receipts:
http://www.irs.gov/charities/article/0,,id=218162,00.html

The penalties for setting up 501(c)(3) and then botching the annual
e-Postcard report are basically nil:
"If you do not file your e-Postcard on time, the IRS will send you a
reminder notice but you will not be assessed a penalty for late filing
the e-Postcard. However, an organization that fails to file required
e-Postcards (or information returns – Forms 990 or 990-EZ) for three
consecutive years will automatically lose its tax-exempt status. The
revocation of the organization’s tax-exempt status will not take place
until the filing due date of the third year."

The process for setting up the 501(c)(3)exception is relatively
straight forward, I believe just one form 1023, and an application fee
of $400 (assuming we do less than $10k of receipts in a year):
http://www.irs.gov/charities/article/0,,id=96109,00.html

If we don't have a federal EIN setup yet, we might also have to apply
for that.  I believe there's no charge for that, and it's relatively
quick and painless.  Yep, quick, easy, free:
http://www.irs.gov/businesses/small/article/0,,id=102767,00.html

The big scary "life cycle of a public charity" doc has all of the
details, most of which aren't problems we face currently (like writing
bylaws, ensuring you meet your state's requirements, etc):
http://www.irs.gov/charities/charitable/article/0,,id=122670,00.html

To me, it seems like a few hours of work by one member of the SC, or
even a regular TriLUG member with good reading comprehension skills,
can get the necessary forms filled out, and write up a wiki to be
followed annually by anyone who can type and click to satisfy the
e-Postcard filing requirement.  I'd suggest that it's the first
official act done by the new Steering Committee every May, at the
meeting, under supervision of the previous SC.  Bake that into the
bylaws, and it's nice and future-proof.  That meeting will always be
just before the deadline date for the 990-N, which is May 15th,
assuming our tax year is a calendar year.

Aaron S. Joyner


On Tue, Feb 1, 2011 at 9:49 AM, Joseph Mack NA3T <jmack at wm7d.net> wrote:
> On Tue, 1 Feb 2011, matt at noway2.thruhere.net wrote:
>
>> I am also getting the impression that the current SC is feeling at least a
>> bit overwhelmed with the amount of work involved
>
> AFAIK we are a 501(c)(3). From postings from that time, I remember someone
> at IBM helped with the setup. Presumably the people who setup the 501(c)(3)
> are no longer around (Jos in CA?), leaving techies to handle the whole
> thing.
>
> The amount of work to become a 501(c)(3) is enormous compared to the work to
> maintain the 501(c)(3) status (at least to my non-lawyer, non-accountant
> mind). If we can't maintain our status as a 501(c)(3), because we don't have
> the knowledge/skills/resources, then unincorporating will be irreversible -
> we won't have the resources to reincorporate.
>
> So as well as "how big are we?" another question is "do we have/can we
> get/how much do we have to spend, to have the resources to maintain our
> 501(c)(3) status?". If we don't, and I presume this is the problem the SC
> has been dealing with, then we don't have any choice in the matter. How much
> does it cost to have someone external do our books and submit our tax return
> each year? I'd assume it's in the 1k$ range. Do we have that much money to
> spend on maintaining our status?
>
> I don't know Matt's skills here that are relevant to maintaining the
> 501(c)(3) status. Are there other people in TriLUG with relevant skills?
>
> Joe
>
> --
> Joseph Mack NA3T EME(B,D), FM05lw North Carolina
> jmack (at) wm7d (dot) net - azimuthal equidistant map
> generator at http://www.wm7d.net/azproj.shtml
> Homepage http://www.austintek.com/ It's GNU/Linux!
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