logo
Kiwanis
New York District
logo
 Serving the Children of the World ™

Main Page

2017-18 Year

Clubs

District

Foundation

Kamp Kiwanis

Kiwanis International

Foundation/Charitable Status/Taxes for Kiwanis Clubs

Kiwanis Clubs have both requirements and options with regard to their operations in order to comply with federal and state requirements, including required filings, tax exemptions and sales tax requirements.

This discussion is an overview of the subject designed to give New York Kiwanians a basic understanding of the requirements and options, with links to federal and state web sites and forms which will be useful. This is not intended as legal advice; clubs should contact lawyers and/or accountants for advice as needed.

Links

Kiwanis International
Form 990 information
Creating a Foundation

IRS
EIN application
990 EZ
990 EZ Instructions
Form 990
Form 990-N
Form 990 Instructions
Exempt Organization Search
IRS Forms and Publications

New York Charities Bureau
New York State Charities Bureau Registration Search
Registration Filing Information

New York Sales Taxes
Sales Tax Guide for Exempt Organizations
Sales Tax Exemption Information
Sales Tax Exemption Form Application
Club Incorporation

All Kiwanis clubs are incorporated as 501(c)4 corporations under Internal Revenue Service rules. This means that Kiwanis clubs do not have to pay income tax on their revenue.

Requirements for 501(c)4 Corporations:

As a 501(c)4, Kiwanis clubs are required to file an IRS Form 990 each year. Because the Kiwanis fiscal year ends on Sept. 30, the filings are due by Feb. 15 of the following year.

The form clubs need to file is based on the revenues in their 501(c)4 corporation:

The Form 990-N can only be filed online

What Happens if Clubs Don't File?

If a club fails to file a Form 990 for three years, its tax exempt status may be revoked. At that point, all club revenue would be taxable.

How is a Club Foundation Different?

Kiwanis clubs have the option of creating a club foundation which provides additional advantages and responsibilities.

The foundation is incorporated separately from the Kiwanis club. Kiwanis requires that the club's Board of Directors serve as the Foundation's Board of Directors as well.

Once you have the new corporation in place, you can begin the process of making it a 501(c)3 non-profit.

What's the difference between 501(c)3 and 501(c)4?

A 501(c)4:

A 501(c)3:

Note: Creating a foundation does not eliminate the Kiwanis distinction between your club's Administration and Project accounts. The Administration account remains a 501(c)4 which must report annually to the IRS. The Project account becomes the Club Foundation, which must file its own IRS 990 as well as the state CHAR500 form.

Creating a Foundation
  1. Kiwanis International has a document detailing the steps a club must take to create a club foundation. Here are the basic steps:

    1. Club drafts the proposed Certificate of Incorporation and sends it to Kiwanis International for approval.
    2. Kiwanis International approves submission of Certificate of Incorporation.
    3. Club sends Certificate of Incorporation to the NYS Department of State.
    4. NYS reviews and approves the Certificate of Incorporation.
    5. For exemption from state and local sales taxes, the foundation must submit Form ST-119.2, Application for Exempt Organization Certificate (two pages, no fee). Information and forms at https://www.tax.ny.gov/bus/st/exempt.htm.
  2. Apply to the IRS for an Employer Identification Number.
  3. File an application with the IRS to become a 501(c)3. Use Form 1023 or Form1023-EZ which can be found at IRS Forms. To pay the application fee, you have to register at pay.gov and pay electronically. Form 1023-EZ requires a $275 fee.
  4. File a Registration Statement (CHAR410) with the New York State Charities Bureau. Requires a $25 fee. See https://www.charitiesnys.com/charindex_new.html#filing for forms and instructions.

Critical: All paperwork will require contact information such as a name and address, and maybe a password. Make sure the Club Officers all know what information is used, and who does what paperwork, and when. This information will need to be updated as officers and responsibilities change. If not, you may lose your 501(c)(4) and/or 501(c)(3) status, if the IRS loses contact with you!

Sales Taxes
Sales Taxes for 501(c)4 Organizations:

Any 501(c)4 organization, either a club with no foundation or a club's Administration Account, is required to pay sales taxes when making a purchase for club operations. For example, if a club purchased frames for awards to be presented to members, tax would have to be paid.

If a 501(c)4 organization, for example a Kiwanis club which does not have a foundation, has a fund-raising event which involves selling items to the public, sales taxes need to be collected on those sales.

Sales Taxes for 501(c)3 Organizations:

A 501(c)3 foundation is not required to pay sales taxes when making a purchase for foundation operations. For example, if a club foundation purchased equipment or supplies to be used for pancake breakfast fund-raising events, no tax would have to be paid. Vendors should be given a copy of the ST 119-1 form which shows the foundation's tax exemption. The ST 119-1 can only be obtained from the state but it can be copied and used as often as necessary.

If a foundation has a fund-raising event which involves selling items to the public, sales taxes need to be collected.

If Clubs are Tax Exempt, Why Must they Collect Sales Taxes?

Many find this confusing -- why would a tax-exempt organization have to collect sales tax? But when it comes to sales taxes any exemption is with the buyer, not the seller. Any items sold to the public must have sales taxes collected, regardless of the tax status of the seller. Publication 843 from the state Department of Taxation and Finance covers this subject.

Club as Tax Collector

In order to collect sales taxes, clubs must apply to the state Department of Taxation and Finance to register as a sales tax collector. Once registered, regular reports are necessary and the sales taxes collected must be paid to the state.

Once you are registered as a sales tax collector, you do not need to pay sales taxes when you purchase items for re-sale to the public. (This applies to 501(c)3 and 501(c)4 corporations.) For example, if you purchase coloring books for re-sale, you can give your supplier a re-sale certificate stating that you will be re-selling the items and collecting and remitting the sales taxes yourself.

Thanks to Bruce Pivetz of the Kiwanis Club of Ken-Ton for much of the research used to assemble this information. If you have additional information or comment regarding the information on this page, e-mail the webmaster.