Service club tax filing: Kiwanis, Rotary and Lions clubs

Club and foundation: often two organizations

Many service clubs keep two organizations side by side:

• The club holds meetings, collects dues and runs the membership. Clubs are often exempt as social welfare organizations under section 501(c)(4), though some are 501(c)(3) charities and others are organized another way. Your exemption letter says which.
• The foundation (or charitable fund) receives tax-deductible gifts and makes grants and scholarships. It is usually a separate 501(c)(3) organization with its own EIN.

Each organization files its own annual return, based on its own gross receipts and assets. For example, a club that takes in $15,000 a year in dues files a 990-N, while its foundation, which normally raises $80,000 a year and holds well under $500,000, files a 990-EZ.

Which return

• Gross receipts normally $50,000 or less: Form 990-N, the e-Postcard.
• Gross receipts under $200,000 and total assets under $500,000 at year end: Form 990-EZ (or the full Form 990).
• Above either limit: Form 990. 990.tax does not file the full Form 990.

The IRS defines gross receipts as the total amounts received from all sources, without subtracting costs or expenses. A pancake breakfast, a golf outing or a holiday tree lot counts at what it took in, not at what it netted. "Normally" is an average: for an organization three years old or more, the average over the current year and the two before it.

Group exemptions and international organizations

Some international and district organizations hold a group exemption that covers the clubs they list with the IRS; others leave each club to get its own exemption. Either way, IRS Publication 4573 says "A group exemption letter does not change the filing requirements for exempt organizations." A covered club still files its own return.

The only exception is a group return: a single Form 990 a central organization files on behalf of its subordinates. A club included on a group return does not file separately. The central organization decides who is covered, so ask your district or international office whether your club is on its list and whether it files a group return that includes you.

You can also look up your club's EIN in the IRS Tax Exempt Organization Search or the 990.tax nonprofit lookup.

501(c)(4) clubs: Form 8976

Section 506 requires an organization that intends to operate under section 501(c)(4) to notify the IRS on Form 8976, generally within 60 days after it is formed. Clubs that filed a Form 990-series return or a Form 1024 on or before July 8, 2016 do not have to. The notice is separate from the annual return, is filed once and only online through Pay.gov, and carries a $50 IRS fee. 990.tax does not file it.

When it is due

The return is due on the 15th day of the 5th month after the tax year ends. A club whose tax year runs July 1 to June 30 files by November 15; a calendar-year club files by May 15. If that day falls on a weekend or legal holiday, the next business day counts. Form 8868 extends a 990-EZ by six months; see the Form 8868 due date guide. The 990-N has no extension.

Missed years

There is no IRS penalty for a late 990-N. A late 990-EZ can be charged $25 a day, up to the lesser of $13,000 or 5% of gross receipts, unless there is reasonable cause. Any organization that files nothing for three consecutive years loses its exemption automatically, effective on the due date of the third return. Club officers often change every year, so confirm that the outgoing treasurer filed for both the club and the foundation. See automatic revocation and reinstatement.