Newsgroups: bit.listserv.seds-l
Date:         Thu, 5 Nov 1992 15:09:03 PST
From:         "(Irwin Kenneth Horowitz)" <IRWIN@CITJULIE.BITNET>
Subject:      repost of 501(c)3 message

Folks,
        Since I first sent this message to seds-l, there has been ZERO
discussion of this issue.  I am reposting this, in an attempt to hopefully
get some feedback from everyone, especially on the specific points that
are raised below.
        I remind everyone, that as far as the IDM program is concerned, w/o
the reinstatement of our 501(c)3 status the program will not succeed.  This
is because we need the enticement of a tax deduction to encourage people to
contribute to SEDS through this program.
                                        Irwin
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Folks,
        What follows in this post is my attempt to make a concise summary of
the steps we'll need to implement and follow in reinstating the tax-exempt
501(c)3 status for SEDS National (please note the extreme irony with which I
use the term "concise" in the above sentence :-).
        First, there are a few issues that the National Exec Board will need
to resolve before we can proceed to the actual application process.  The first
and most important issue is whether we should apply for a group exemption
letter which will cover individual chapters and regions of SEDS-USA.  This
group exemption application will cost $500 over and above the $150 filing fee
for the exemption for SEDS National.  Should we proceed with applying for a
group exemption?  Should SEDS National pay the fee, or should the chapters/
regions that will benefit divide the cost amongst themselves?  Are chapters
already tax-exempt as a result of a school affiliation?  Should we just table
this item until later, when the application for SEDS National has been
completed?
        Next, should SEDS-USA apply as a new organization or as one who had
previously held tax-exempt status but later lost it?  I realize our knee-jerk
reaction is just to apply as a new organization, but we must make sure that
we aren't circumventing any US tax laws that can come back to haunt us at a
later date.  I believe that the old 501(c)3 status was under the SEDS name,
not SEDS-USA.  I don't know if this is a sufficient difference to permit us
to apply as a new organization (which would be a much easier application to
submit and get approved).  I want to make quite certain that we aren't
placing ourselves in any liability/perjury position by claiming that SEDS-USA
never previously applied for an exemption letter (or else I will not put my
name anywhere near these documents :-).  This may be a subject best discussed
with our lawyer contact, but it would help us here if the MIT folks can get
us any info concerning our old exemption status (or maybe Bob S. might have
some recollections on this matter).
        Third, we need to discuss the address that will be filed as the
current address for the group.  Again, knee-jerk reaction is to put down the
MIT address, but there are some legitimate concerns with doing so.  Primarily,
we are concerned with the possibility of once again losing the exemption
status, as happened in 1989, after MIT had failed to file the necessary
returns for three straight years (or so I recall).  There is going to be a
great deal of work involved in doing these annual filings, and the current
track record out of MIT, I am sorry to say, has not been exemplary.  Lisa,
please don't take this as a personal indictment, but the people here in
California and elsewhere in the US have a legitimate concern with the lack
of response that we occasionally receive from the National HQ.  I hope that
folks here are aware of just how much I want MIT SEDS to be a strong and
forceful presence in our organization (remember, I am an alum of that group :-)
but we must be prepared to at least discuss the issue of where we will file
these returns (MITer's would have to file in Brooklyn, N.Y., we'd be filing
here in Los Angeles...that's where the appropriate IRS offices are located).
In addition, since our lawyer contact, who is working with us pro-bono, is
located here in CA (in the SF Bay area), it is easier for us to be in contact
with him on a regular basis (plus we'll be developing a personal relationship
with him).  Next, the incorporation papers that we are currently putting
together for SEDS-USA will be filed here in California (again, by our lawyer).
Note, we are aware of the recent incorporation carried out for SEDS (ie: SEDS
International) by folks in DC...this will be different.  While I'd predict
that in the end we'll file with the MIT address, I still feel that having
this debate among the board now will be a healthy activity, IF WE CAN KEEP TO
THE ISSUES THAT CONCERN US AND AVOID PERSONAL ATTACKS!
        Fourth, we need to determine the effective date when the exemption
will take place.  According to what I've read, it is possible to apply this
exemption retroactively...however, I believe that it will be simplest just
to have the exemption take effect upon the filing of the application.
        Finally, we need to determine what fiscal year the group is going to
follow.  Will it coincide with the calendar year?  With the election of new
National officers?  With the start of the school year?  The date for filing
of the tax forms will depend on this choice.
        OK, now that I've summarized the short list of issues that the board
needs to address prior to the application process, let me run down what is
required from SEDS National for inclusion in the application.
        First, we need to apply for an Employer Identification Number (EIN)
on Form SS-4.  This is a pretty standard form, full of bureaucratese and
similar forms of BS.  The only point of importance is that for a group
exemption, each chapter/region covered by the exemption will need to file a
separate Form SS-4 and get their own EIN.
        Next, we'll need to supply the IRS with a copy of our Constitution/
Articles of Incorporation, as well as any by-laws we may have (I am not aware
of any, but we might decide to draw them up).  We must also give a description
of the purposes and activities of SEDS-USA.  In addition, if we file as an
old organization, we need to supply financial info for the current FY, as well
as the past three FY's...if we file as a new organization, we'll need to
estimate a budget for the next two fiscal years.  We need to describe the
fundraising activities of SEDS-USA as well as provide any info from previously
filed tax returns (if filing as an "old" organization).
        The user fee for the application is $150 if our average annual gross
receipts are less than $10,000 over the past four years (or estimated over
the next two years).  The fee is $375 if the average receipts exceed $10,000.
The fee for the group exemption letter is $500, and will cover any number of
subordinate units (chapters/regions).
        For group exemptions, there is somewhat more involved in the
application as well as the annual filing of the return.  First of all, before
we can start with the group exemption, we need to complete the application
process for the exemption for SEDS-USA.  Once that has been accomplished, then
for each chapter/region (hereafter "unit") that wishes to be covered by the
group exemption, we will require an EIN (Form SS-4) as well as the following
information:
        1) a letter from a National officer stating that the unit is
                a) affiliated with SEDS National;
                b) subject to the supervision and control of SEDS National;
                c) eligible to qualify as a 501(c)3 organization;
                d) not a private foundation; and
                e) on the same FY as SEDS National.
        2) a detailed description of the purposes and activities of the unit,
           including sources of receipts and the nature of expenditures.
        3) a chapter constitution.
        4) a statement that each unit has authorized SEDS National to include
           them in the group exemption letter.
        5) a list of the names, addresses and EINs of each unit.

        In addition, on an annual basis, SEDS National will need to do the
following to keep the group exemption in force:
        1) provide IRS with info regarding any changes in the purpose,
           character or method of operation of any units
        2) a list with the names, addresses and EINs for any units that:
                a) have changed their name or address during the year;
                b) have been dropped from the group exemption; or
                c) are to be added to the group exemption.
        3) the information listed above as being required for each unit that
           is covered by the group exemption when they are added to the list.
        4) the filing of an information return if required (note: we'll need
           to file if we have gross receipts in excess of $25,000/yr).  If
           our receipts are under $100,000/yr and our assets are under $250,000
           then we can file Form 990EZ, else we need to file Form 990.
Comments: Gated by NETNEWS@AUVM.AMERICAN.EDU