A Bulletin for Rotary Clubs and Districts in the USA, Puerto Rico, US Virgin Islands, Guam, American Samoa, and Northern Mariana Islands
What follows is not tax advice, but general information, which may be useful. Questions regarding any tax matters need to be referred to local counsel, your tax adviser or to the IRS. (http://www.irs.ustreas.gov or 1-800-829-1040) General questions about this bulletin can be answered by your Club and District Support representative atwwwRotary.org/ClubDistrictReps
On 13 May 1958, the Internal Revenue Service declared that Rotary International (RI) and its clubs and districts are entitled to exemption from federal income tax underSection 501(c)(4) of the Internal Revenue Code. While Rotary districts and clubs are exempt from paying federal income tax, the law does require Rotary clubs and districts to file an annual information return on IRS Form 990, on or before the 15th day of the 5th month following the close of the annual accounting period (15 November). Certain organizations, other than private foundations, that do not normally receive more than $25,000 in gross receipts in each taxable year are not required to file Form 990.
Clubs or districts with gross receipts of $25,000 or less are required to file Form 990-N, which is an electronic e-Postcard report. This report is required annually. Failure to meet the annual filing requirement for three consecutive years will result in revocation of the tax-exempt status of the club or district in question. To learn more about this requirement, and to obtain the necessary e-Postcard report form, visit the US Treasury website at: www.irs.gov/eo, or call their toll-free number: (877) 829-5500.
Numbers: RI’s Group Exemption Number (referred to as “GEN” on Form 990), is 0573, which applies to RI as well as all USA, Puerto Rico, Virgin Islands, Guam,American Samoa, and Northern Mariana Islands clubs and districts. At the same time, every club and district in these areas are required to have its own Employer Identification Number (EIN). This 9-digit number is essentially a tax ID number, and has nothing to do with whether the club or district has any employees. As RI must report annually the EINs of all districts and clubs in these areas, the RI secretariat maintains a list of those EIN tax numbers for reference. New Rotary Clubs, however, must apply directly to the IRS for an EIN number to be assigned to the new Rotary club. Please contact your Club and District Support (CDS) representative at Rotary International headquarters if you have any questions about the EIN number for your club or district.
Tax Deductible Status: Contributions to clubs and districts are generally not tax deductible as charitable contributions. Clubs and districts that have gross annual receipts that normally exceed $100,000 generally must include a disclosure statement regarding the non-deductibility of contributions during fundraising solicitations (IRC Sec. 6113). Note that this includes invoices for payment of dues. See IRS Notice 88-120 for more details and acceptable disclosure language. Contributions to any club or district charitable fund that has obtained tax exemption under Section 501(c)(3) of the Internal Revenue Code may be tax deductible as charitable contributions. Membership dues may be deductible for some Rotarians as business expenses.
Other Taxes: Clubs or districts may be required to file IRS Form 990-T if they have “unrelated business income.” An unrelated trade or business is defined as any trade or business that is regularly carried on, and that is not substantially related to the organization’s exempt purpose or function. (IRC Sec. 513). Federal Social Security and withholding taxes, and local state income taxes may be required from a club or district that has one or more paid employees. Please contact the IRS or your tax consultant or attorney for guidance on this issue.
The laws of individual states vary in regard to state income tax, sales tax, other taxes and special licenses. The 501(c)(4) status applies only to federal income tax and does not necessarily have any bearing on state or local taxes. IRS interpretation of its Code also can vary slightly in different US Treasury districts.