IMPORTANT NOTE

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IMPORTANT NOTE

• This PowerPoint was developed as an integral part
  of a face-to-face, interactive educational
  session. When using it as a standalone reference
  item, some portions of the material may be
  unclear and/or may require interpretation or
  explanation. Please contact Randy Welch with any
  questions.

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THE E-POSTCARD

• BROUGHT TO YOU BY YOUR FRIENDS AT THE IRS

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OVERVIEW

• Tax-Exempt status
• Taxpayer ID number
• Prior filing requirements
• The E-Postcard
• Filing deadlines
• What information is needed in order to file?

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OVERVIEW (Contd)

• Various filing issues
• What if we dont file?
• IEA role/Current status of efforts
• Final recap
• How do I verify my locals status?
• Info on IEA website
• Questions

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TAX-EXEMPT STATUS

• Labor unions are exempt under IRC 501(c)(5)
• NOT the same exemption as school districts,
  churches, etc.
• They are exempt from sales tax
• Contributions to them are tax-deductible
• Exempt means you dont pay income taxes
• Price restrictions on how you can spend your
  money

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EXEMPTION PROCESS

• All IEA locals are automatically exempt under the
  IEAs Group Exemption
• Saves the paperwork of having to file the
  exemption paperwork for each new local
• Taxpayer ID number must be set up correctly!

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TAXPAYER ID NUMBER (TIN)

• All new locals must apply for a TIN (also
  referred to as Federal ID Number/FEIN or
  Employer ID Number/EIN)
• Must apply on Form SS-4
• SS-4 requires designation of a fiscal year-end-
  Default is June

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TAXPAYER ID NUMBER (Contd)

• Need a TIN to open a bank account
• For new locals or others that need a new TIN, the
  IEA will apply for you. See your UD or contact
  the Director of Business Services.

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PLEASE DONT.

• When opening bank accounts, some locals have
• Used their school districts TIN
• Used someones Social Security number
• Neither approach is legal
• If your local has done this, you should contact
  your UD or the IEA Director of Business Services
  to assist with filing for your own TIN

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IRS REPORTING REQUIREMENTS

• Based on Normal Gross Receipts
• Normal Average of preceding 3 years
• Gross Receipts All cash taken in EXCEPT
  IEA-NEA dues

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PRIOR FILING REQUIREMENT

• Gross receipts 100,000 Form 990
• Less than 5 of locals
• Gross receipts 25,000- 100,000 Form 990-EZ
• Less than 5 of locals

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PRIOR FILING REQUIREMENT (contd)

• Gross receipts
• 90 of IEA locals never had to file

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PROBLEM INVISIBLE ENTITIES

• IRS had no way to keep track of you
• Cant accumulate data
• Cant ensure compliance
• Dont know if youre still out there
• Dont have current contact info

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SOLUTION THE E-POSTCARD

• Gross receipts E-Postcard)
• Passed as part of the Pension Protection Act of
  2006
• Must be filed electronically- No paper version
  available

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SOLUTION (Contd)

• Info required is simple and basic (For Now!)
• Must be filed every year

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EFFECTIVE DATE

• Effective for Years beginning after December 31,
  2006
• So, the first locals affected were those whose
  fiscal year (per the records of the IRS) ended
  December 31, 2007

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FILING DEADLINE

• E-Postcard must be filed by the 15th day of the
  5th month after the end of the fiscal year
• December year-end May 15 deadline
• June year-end November 15 deadline
• Return must be filed annually
• Return cant be filed until after fiscal year is
  complete

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WHAT INFO IS NEEDED IN ORDER TO FILE

• TIN
• Fiscal year-end
• Both must match IRS database or you cant file!

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INFO NEEDED (contd)

• Locals legal name
• Mailing address and website address
• Name/Address of a Principal Officer
• Confirmation that your normal gross receipts are
  

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TIN ISSUES

• Over 100 IEA locals are not in IRS database
  because
• IRS classified as dormant
• Local uses TIN of employer or leader
• No bank account/No TIN
• Local filled out SS-4 incorrectly
• IEA is in the process of straightening these out
  with the IRS
• Cant file E-Postcard with a TIN not in IRS
  database!

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FISCAL YEAR ISSUES

• Fiscal year determines filing timeframe
• IEA has access to IRS database, including fiscal
  year info
• Most locals dont know their fiscal year, or what
  they are using is not in agreement with the IRS

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FISCAL YEAR ISSUES( contd)

• It is OK to use one fiscal year for internal
  purposes and another for your IRS filing
• If you want to change your fiscal year in the IRS
  database, contact the IEA Director of Business
  Services

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FILING ISSUES

• The filing process is fairly simple, but.
• Still fairly time-consuming
• A few quirks, e.g.,
• The name of all locals must be Illinois
  Education Association in order to provide
  tax-exempt status. Local name is registered as a
  DBA
• Mailing address issue

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FILING ISSUES (contd)

• We prefer to file the return for you
• Simple e-mail authorization process
• Saves you the time involved in the learning
  curve
• Ensures that return is filed in a way that does
  not jeopardize your tax-exempt status

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FILING ISSUES (contd)

• If you prefer to file yourself, we will provide
  instructions
• Some locals got the impression that by providing
  some information that was requested through the
  IEA website, that they had filed the E-Postcard.
  THIS IS NOT THE CASE.

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SUBSIDIARY ORGANIZATION ISSUE

• If subsidiary organizations file their annual
  financial information as a consolidated return
  with the parent organization, they do not have
  to file the 990-series forms
• This is not practical for the IEAs 1,000 locals-
  more bookkeeping for both locals and IEA
• IRS is giving incomplete information on this

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CONSEQUENCES FOR NOT FILING

• After three years, you lose your tax-exempt
  status
• It is reasonable to assume that the IRS will use
  the first three years to flush out all of the
  thousands of organizations that no longer exist,
  then will make the consequences more onerous
• Its important to start filing as required and
  make it a routine

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IEA ROLE IN TRANSITION

• Numerous communications sent to regions and
  locals to explain the IRS letters and minimize
  confusion
• Info presented at Financial Procedures training
  sessions
• Sessions at WAC and SLA devoted to E-Postcard
• Webinars

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IEA ROLE (Contd)

• Info posted on IEA website
• Sending e-mail reminders to local presidents,
  based on due dates
• Reconciling info provided by locals with TIN and
  fiscal year info in the IRS database

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IEA ROLE (Contd)

• Making sure that all locals that are required to
  file actually do so
• Filing E-Postcards on behalf of locals
• Resolving TIN/Fiscal year discrepancies with the
  IRS

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SUMMARY OF DUE DATES
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CURRENT ACTIVITIES

• Working with a few December locals to get their
  returns filed
• Sending e-mails to Presidents of the June
  locals, offering to file on their behalf
• Working with the IRS and locals to clear up the
  100 discrepancies

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COMMUNICATION ISSUES

• Hard to find the right person
• E-mail addresses out of date
• Communication with IRS is spotty
• No response from locals that think that by
  responding to the IEA request for information,
  they had already filed the E-Postcard

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FINAL RECAP
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YES
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NO
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HOW DO I VERIFY MY LOCALS STATUS?

• See me after the session
• Contact me at randy.welch_at_ieanea.org
• Fill out online request form

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INFO ON IEA WEBSITEChoose RESOURCES
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RESOURCES (Contd)Then FINANCIAL PROCEDURES
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RESOURCES (Contd)
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QUESTIONS??