Council IRS requirements, Part 1 – IRS 990

QUICK GUIDE:

Numerous requests have come in regarding council requirements to send in the appropriate IRS form.You need to put this is your officer handoff guide so the Grand Knight and Financial Secretary who will follow you do not lose your council’s IRS tax exempt status for council fundraisings for charitable or fraternal purposes [this is NOT State Tax Exemption]:

• “fraternal lodges” for purposes of the tax exemption granted to fraternal benefit societies under Section 501(c)(8) of the Internal Revenue Code
• each council must provide its Employer Identification Number (EIN) to the Home Office Legal Department, which in turn will report the EIN to the IRS for inclusion in the Order’s group exemption listing

Dates due:

• EIN must be reported to Supreme:
  • When:
    • When 1^st obtained - use Add to Master List form & IRS EIN letter
    • Reinstated EIN by IRS - use Add to Master List form & IRS EIN letter
    • Name change, need to obtain a new EIN for any reason, or rejected 990N e-Postcard - contact Supreme at tax.ein@kofc.org
  • If a council’s accounting period ends on December 31, it must file by the following May 15; if its accounting period ends on June 30, it must file by November 15.
• Form 990N e-Postcard filing (use IRS online) –
• Every council & assembly is required to file an annual 990 return (amount of gross receipts determines which 990 form must be used)
• The returns are due to be filed by the fifteenth day of the fifth month following the end of the council’s annual accounting period. If an organization fails to file a required return by the due date (including any extensions of time), it must pay a penalty of $20 a day for each day the return is late. The same penalty applies if the organization does not give all the information required on the return or does not give the correct information.
• If the council/assembly does not qualify to file the 990N e-Postcard it is suggested they hire a qualified tax professional to prepare the 990-EZ or full 990.

• December 31 — May 15^th
• June 30 — November 15th

IRS Form 990N (e-Postcard) filing link [https://sa.www4.irs.gov/eauth/pub/login.jsp?Data=VGFyZ2V0TG9BPUI%253D&TYPE=33554433&REALMOID=06-000ca231-ad53-16bc-8663-483c0adb40e7&GUID=&SMAUTHREASON=0&METHOD=GET&SMAGENTNAME=-SM-m5OrA%2b7FvbGU%2bgLgvTS4wrt26VgObWqx%2b78E5Bj5nDRoJHeUNEeLTNGiERDz%2bh%2fE&TARGET=-SM-http%3a%2f%2fsa%2ewww4%2eirs%2egov%2fepostcard%2fsecure%2fhome%2f]

FULL GUIDE:TO READ THE ODR FOR YOURSELF SEE BELOW:

From the Officer Desk reference - (need a username and password which can be obtained by calling customer service at 1-800-380-9995)

https://www.kofc.org/applicationportal/AuthorizeUser.action

TAX COMPLIANCE FOR ALL COUNCILS IN THE UNITED STATES

From the Officer Desk reference:

https://www.kofc.org/au/apps/oo/cm/en/odr/Tax_Issues/index.html#1

The Internal Revenue Service (IRS) requires the Supreme Council and each of its subordinate councils, assemblies, and chapters in the United States (referred to collectively as councils) to file an annual informational tax return (IRS Form 990, 990EZ, or 990N). For purposes of tax compliance, the Knights of Columbus encompasses not only the Supreme Council, but also its subordinate units. Accordingly, all councils in the United States may be recognized by the IRS as “fraternal lodges” for purposes of the tax exemption granted to fraternal benefit societies under Section 501(c)(8) of the Internal Revenue Code. This means that revenues received by a council for fraternal, recreational, or charitable purposes are not subject to federal income tax. Although the filing requirement is relatively simple, many tax exempt organizations in the United States have neglected to comply with it, resulting in the revocation of their tax exempt status.

In order to be recognized as a tax exempt entity under Section 501(c)(8), each council must provide its Employer Identification Number (EIN) to the Home Office Legal Department, which in turn will report the EIN to the IRS for inclusion in the Order’s group exemption listing. Thus, a council must do three things to comply with the IRS filing requirement: 1) obtain an EIN from the IRS; 2) register its EIN with the Home Office Legal Department; and, 3) file an annual return with the IRS.

Each council must meet all of these requirements. The IRS will accept a council’s annual return only if the council has a valid EIN that has been registered with Supreme.

Every year, the IRS sends Supreme a list of councils that are currently registered under our Group Exemption (the Master List). The Home Office Legal Department, working cooperatively with the IRS, manually maintains and updates the Master List by adding councils that have registered their EINs with Supreme. If a council complies with IRS rules by filing a return every year, it will remain on the Master List. If a council fails to file a return for three consecutive years, the IRS will remove that council from the Master List, which has the effect of revoking the tax exempt status of that council.

In recent years, the IRS has been enforcing the group exemption rules more aggressively. Over the past few years, the Home Office Legal Department has worked closely with councils to help them fulfill their obligation to file timely and accurate tax returns with the IRS.

It is very important that all councils comply with the annual IRS filing requirements. Failure to comply with the IRS filing requirement will ultimately lead to the revocation of a council’s tax-exempt status. Those councils that have had their tax exempt status revoked should apply for reinstatement as quickly as possible to avoid potential tax liabilities. From the date of the IRS revocation notice to the date of IRS reinstating the council’s tax exempt status, the council will be considered a taxable entity and therefore liable for any taxes accrued during that period of time.

State officers, Grand Knights, and Financial Secretaries should carefully review the other entries in the Tax section of the Officers’ Desk Reference for more detailed information and instructions on council tax compliance. If you have additional questions or would like to obtain a reinstatement package, please contact the Home Office Legal Department via email at tax.ein@kofc.org.

*Unless otherwise expressly stated, the guidance set forth in the Officers’ Desk Reference does not constitute tax advice on which any individual member of the Knights of Columbus or any subordinate unit may rely in determining his or its obligations and liabilities under the revenue laws of any jurisdiction. Council and assembly officers are responsible for ensuring compliance with all applicable tax laws and regulations and the accuracy of all returns filed with any taxing authority. To this end, we encourage all subordinate units to consult with a competent tax advisor if they have any questions or concerns about their obligations and liabilities under the revenue laws.

WHAT TO DO IF YOUR COUNCIL HAS FAILED TO REPORT ON THE 990?

From the ODR:

Reinstatement of Tax-Exempt Status for Councils and Assemblies

Councils and assemblies that have not filed a Form 990 for three consecutive years will automatically have their tax-exempt status revoked by the IRS. If your council or assembly's tax-exempt status is revoked, immediately fill out the Supreme Council Request for Reinstatement Package.

Once you have filled out this form, email it to tax.ein@kofc.org to request a reinstatement package. This package will assist the council/assembly through the reinstatement process.

*Unless otherwise expressly stated, the guidance set forth in the Officers’ Desk Reference does not constitute tax advice on which any individual member of the Knights of Columbus or any subordinate unit may rely in determining his or its obligations and liabilities under the revenue laws of any jurisdiction. Council and assembly officers are responsible for ensuring compliance with all applicable tax laws and regulations and the accuracy of all returns filed with any taxing authority. To this end, we encourage all subordinate units to consult with a competent tax advisor if they have any questions or concerns about their obligations and liabilities under the revenue laws.