Texas State Council Legal FAQS

See Officer Online – Officer Desk Reference(ODR) (Supporting Applications)

Tax Issues

Tax Compliance For All Councils In The United States

• 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.
• 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 EIN Authorization Form, which may be obtained as a fillable PDF document by clicking HERE. Once you have filled out this form, email it to tax.ein@kofc.org to request a reinstatement package. If you have any questions, please email tax.ein@kofc.org.
• ODR has a Step by Step Guide
• ODR has a Step by Step Guide
• Coverage under the Officer Bonding Program is only available to State Councils, Local Councils, and Assemblies that have completed and submitted their two most recent Semi-Annual audits to the Council Accounts Department at the Supreme Office.
• Before conducting a raffle, sweepstakes, bingo bash, casino night, or any other fundraiser involving games of chance, a council should consult its state, county, and/or local gaming enforcement office and/or speak with a locally licensed attorney to make sure that applicable legal rules are being followed. A council also should consider whether its fundraiser upholds the teaching of the Catholic faith and the good name of the Knights of Columbus.
• Federal law prohibits depositing, sending or delivering raffle tickets by United States mail. The law is designed to protect the integrity of raffles and other gambling activities, and to guard against illegal gambling schemes that may be carried out through the mail. Many states have similar laws. It is legally permissible to advertise raffles or send out promotional information by mail, but the raffle tickets should be delivered in person. Ideally, raffle tickets should be distributed to members during a council meeting or related council event.
• Before conducting a raffle, the council should review all relevant laws and regulations and should take steps to ensure compliance.

Reinstatement Of Tax-Exempt Status Of Councils And Assemblies

A Step By Step Guide: Applying for Your EIN Online

A Step By Step Guide to Filing Your 990-N e-Postcard

Financial Officer Bonding Program

RAFFLES (ODR Section Raffles)

As of April 22, 2022, - - check the appropriate State of Texas sites for any changes

Charitable Gaming in the U.S.

Guidelines For Raffles

Texas Law

OCCUPATIONS CODE

TITLE 13. SPORTS, AMUSEMENTS, AND ENTERTAINMENT

SUBTITLE A. GAMING

CHAPTER 2002. CHARITABLE RAFFLES

Sec. 2002.051. RAFFLE AUTHORIZED. A qualified organization may conduct a raffle subject to the conditions imposed by this subchapter.

Acts 1999, 76th Leg., ch. 388, Sec. 1, eff. Sept. 1, 1999

Sec. 2002.052. TIME AND FREQUENCY RESTRICTIONS.

(a) In this section, "calendar year" means a period beginning January 1 and ending on the succeeding December 31.

(b) A raffle is not authorized by this chapter if the organization sells or offers to sell tickets for or awards prizes in the raffle in a calendar year in which the organization has previously sold or offered to sell tickets for or awarded prizes in two or more other raffles.

(c) The organization may not sell or offer to sell tickets for a raffle during a period in which the organization sells or offers to sell tickets for another raffle. If an organization violates this subsection, neither of the raffles is authorized.

(d) Before selling or offering to sell tickets for a raffle, a qualified organization shall set a date on which the organization will award the prize or prizes in a raffle. The organization must award the prize or prizes on that date unless the organization becomes unable to award the prize or prizes on that date.

(e) A qualified organization that is unable to award a prize or prizes on the date set under Subsection (d) may set another date not later than 30 days from the date originally set on which the organization will award the prize or prizes.

(f) If the prize or prizes are not awarded within the 30 days as required by Subsection (e), the organization must refund or offer to refund the amount paid by each person who purchased a ticket for the raffle.

See also TITLE 13. SPORTS, AMUSEMENTS, AND ENTERTAINMENT

SUBTITLE A. GAMING

CHAPTER 2002. CHARITABLE RAFFLES

The Attorney General of Texas Opinion:

[updated: 5/10/2010]

We have become aware of a proliferation of illegal raffle activity in Texas. It is important for Texans to be familiar with the law before conducting or participating in a raffle.

Examples of unlawful raffles include any raffle that is:

conducted by an individual

conducted by a for profit business

conducted by a charity that does not qualify

Texas law allows only certain charitable and nonprofit organizations to conduct raffles to support their charitable causes. Only the following entities which meet certain qualifications are permitted to hold raffles:

• religious societies
• volunteer emergency medical service providers
• volunteer fire departments
• qualified nonprofit organizations

In order to conduct a raffle legally, a nonprofit organization must have, among other criteria, an exemption from federal taxes under Section 501(c) of the Internal Revenue Code. A qualified nonprofit must also have been in existence for three years. The law permits only

two raffles per calendar year, requires several disclosures printed on tickets, and limits the value of prizes purchased by the organization to $50,000, or $250,000 if the purchased prize is a residential dwelling.

It is also against the law to hold a raffle in which cash, or anything readily convertible to cash, is offered as a prize, or which is promoted statewide or through paid advertising, including television, radio or newspapers.

An unlawful raffle could be considered illegal gambling, which may carry criminal penalties.

A county attorney, district attorney or the attorney general may also shut down an illegal raffle.

The Office of the Attorney General is prohibited by law from providing legal advice to

individuals. If you contemplate conducting a raffle for fundraising purposes, you should read the Charitable Raffle Enabling Act (which went into effect January 1, 1990) carefully and consult a private attorney with any questions. You should also avoid participating in an illegal raffle. For more information, you can visit our Web site and read our online consumer protection brochure on charitable raffles.

Practical Catholicity - Section 168.1 (ODR)

Section 168.1 of the Laws of the Order provides that “[a]ny member of this Order shall, ipso facto, forfeit his membership in the Order . . . [w]ho shall fail to remain a practical Catholic in union with the Holy See.” At its meeting in San Antonio, Texas, on August 8, 2013, the Supreme Council unanimously passed a resolution, submitted by the State of Louisiana, confirming the Order's longstanding practice of deferring to the judgment of priests and bishops to determine the practical Catholicity of members of the Knights of Columbus.

Priests and bishops, by virtue of their training and experience, understand that determining a member’s practical Catholicity is a pastoral decision that requires consideration of numerous factors. It has been the longstanding practice of the Knights of Columbus that in questions relating to a member’s practical Catholicity, Council officers recognize and defer to the judgment of appropriate ecclesiastical authorities, in most instances that of their Council Chaplain.

Accordingly, in applying Section 168.1 of the Laws of the Knights of Columbus, the Knights of Columbus will respect and defer to the judgment of priests and bishops in determining the practical Catholicity of such member.

INSURANCE

ODR under Council and Assembly Issues, 8. Insurance

Here is the contact information for Lockton Insurance, which will issue the parish and Diocese Certificate of Insurance, naming the parish and Diocese as additional insured.

The Supreme Council encourages all state and local councils to consider this program carefully. For more information or for a free, no-obligation quote please contact Lockton Affinity at 1-800-496-0288 or visit us online at CouncilInsuranceProgram.com.

For more information, or for a free, no-obligation quote please contact Lockton Affinity at 1-800-496-0288. You may also contact them by email at CouncilInsurance@locktonaffinity.com or visit them online at http://councilinsuranceprogram.com/

Available Coverages

Property, Liability. Hired and Non-Owned Auto, Liquor Liability. Workers Compensation, Business Auto, Employee Dishonesty, Crime Coverage, Special Events Coverage, Umbrella Liability,