The first order of business is to decide under what exemption the club would best fit under. After doing some extensive reading over the past couple of days I have determined that Razorback Reef has already accomplished the majority of the requirements for filing for tax exemption and paying an attorney or paralegal the $1500-3000 to duplicate the work that we have already done just to have a turn key exemption approved is to high a price to pay. I am confident in the knowledge that our members have and our ability to succeed. I currently believe that Razorback Reef best fits under the Aquaculture provisions of 501 (c)(5) as the example of the Garden Club illustrates. My next question to answer is are there any additional benefits for qualifing as a 501 (c)(3) over a (c)(5)? If tax exemption is tax exemption no matter how you look at it then this catagory I believe best fits our purposes. Read More About 501 (c)(5) Status I found the following statement in the history of the 501 (c)(5) tax exemption. [TABLE][TR][TD] In 1976, IRC 501(g) was added to the Code to define "agriculture" as the art or science of cultivating land, harvesting crops or aquatic resources, or raising livestock. The provision was enacted to clarify that harvesting aquatic resources should be recognized as an agricultural pursuit. The legislative history indicates that organizations engaged in harvesting aquatic food were encountering difficulty in qualifying for reduced postal rates. See S. Rep. No. 94-938 at 419, 420, reprinted in 1976-3 C.B. (vol. 3) 457-458. [/TD][/TR][/TABLE]
In order to file under 501 (c)(5) as an agricultural organization we will need to file IRS Form 1024. I am currently compiling a check list for the forms, documents, budgets and policies required for application. I really feel like going through this process will strengther club imeasurably. IRS Form 1024
http://www.irs.gov/charities/nonprofits/article/0,,id=163402,00.html We need to be 501(c)(3) or there's no point.Look here at the link for Publication 78 and do a search for "reef". You'll find a number of reef clubs. http://www.irs.gov/charities/article/0,,id=96102,00.html
I am curious as to why the description that you have sighted is so vague. It says that donations are "generally" not allowed and uses the phrase "may be" alot. Doesn't seem typical of the IRS when things tend to be black and white to them. Can you find anything more specific relating to the 501 (c) deductions for contribution between (3) & (5)? Why would clubs want to obtain 501 (c) status if you couldn't accept tax deductable donations? I was initially concerned that (3) status would not allow the club to lobby but the following statement I feel would allow the club to lobby bills and participate in politics: "Organizations may, however, involve themselves in issues of public policy without the activity being considered as lobbying. For example, organizations may conduct educational meetings, prepare and distribute educational materials, or otherwise consider public policy issues in an educational manner without jeopardizing their tax-exempt status."
I was just contacted by the DFWMAS stating that their exempt status resides under article (7) as a social club. Interesting? So far it looks like we can file under (3), (5) & (7).
I found this that spelled out the idea of incorperating other groups under the Razorback Reef Club. This would give another club a reason or incentive to want to come under Razorback Reef. Come to think of it I do not know why MASNA doesn't offer this to clubs as a way to bolster their organization. I may suggest it to them in Atlanta. What is a group exemption letter? [FONT=Arial,Arial]The IRS sometimes recognizes a group of or- [FONT=Arial,Arial]ganizations as tax-exempt if they are affiliated with a central organization. This avoids the need for each of the organizations to apply for exemption individually. A group exemp[/FONT][FONT=Arial,Arial]-[/FONT][FONT=Arial,Arial]tion letter has the same effect as an individualexemption letter except that it applies to more than one organization. [/FONT][/FONT] What is the reason for group exemptions? [FONT=Arial,Arial]Group exemptions are an administrative convenience for both the IRS and organiza [FONT=Arial,Arial]-[/FONT][FONT=Arial,Arial]tions with many affiliated organizations. Sub[/FONT][FONT=Arial,Arial]-[/FONT][FONT=Arial,Arial]ordinates in a group exemption do not have to file, and the IRS does not have to process, separate applications for exemption. Conse[/FONT][FONT=Arial,Arial]-[/FONT][FONT=Arial,Arial]quently, subordinates do not receive individual exemption letters.[/FONT][/FONT] What types of organizations can qualify for group exemptions? [FONT=Arial,Arial]Exempt organizations that have or plan to have related organizations that are very similar to each other may apply for a group exemption. Example: [FONT=Arial,Arial]X is a national, fraternal organization exempt under Internal Revenue Code ("IRC") section 501(c)(8). X has several state and hundreds of local chapters that have nearly identical articles of incorporation, by-laws, pur[/FONT][FONT=Arial,Arial]-[/FONT][FONT=Arial,Arial]poses, and activities. As the national organization, X is considered the central organization; the state and local chap[/FONT][FONT=Arial,Arial]-[/FONT][FONT=Arial,Arial]ters are subordinate organizations and are covered under X’s group exemption. [/FONT] [/FONT] [FONT=Arial,Arial] [/FONT]
