X-Mailer: ELM [version 2.3 PL11]
Newsgroups: bit.listserv.seds-l
Date:         Fri, 6 Nov 1992 19:46:36 EST
From:         "(Moreley Nelles)" <mnelles@LYNX.DAC.NORTHEASTERN.EDU>
Subject:      Re: repost of 501(c)3 message
              5, 92 3:09 pm

Hi Irwin.
  Please see my nested questions below
Thanks

Drew


>         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?

Do we have any money set aside to pay for any of this?  If "no", what
do you propose to do about this (ie any fundraising ideas?, what is your
timeline proposal for all this?)

>         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.

If I am not mistaken there is an organization incorporated in D.C.
called "SEDS" which is SEDS Int'l.  Can we actually reincorporate with
501c3 , given the time and the existance of this "other" organization?

  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.

Do you have a proposed filing date?

>         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).

Since we changes cause more paperwork later, ie we have to send in a new
constitution  and bylaws later, I propose that any amendments we need to
make be made prior to filing.  Also, there is still the question of what
we do about our current violations of our bylaws.

  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.
>
My initial reaction to a group exemption is that it is a lot of work,and
it is expensive.  What are the options for filing singly now, and for
group extensions within a few years?

Also, with regards to the $10,000 thing.  If we exceed $10000 gross
and don't estimate it (ie we put on a couple of good conferences)
what happens?

For a date to file for501c3, I propose March 1, 1993.  Shortly after the
conference.  Incidently, is there any cheap way that you are aware of
for SEDS Exec to fly out there?

Well...How's this for something Irwin?
Comments: Gated by NETNEWS@AUVM.AMERICAN.EDU