Reprinted with permission of A.A.W.S. Inc. from the A.A. Guidelines on Finance (MG-15)
Question: How do we obtain an Employer Identification Number (EIN) for our group checking account?
Answer: Local U.S. entities can obtain an EIN from the IRS. To get this number, fill out IRS Form SS-4, “Application for Employer Identification Number,” or apply online at www.irs.gov. This number applies even though the group is not an employer. Look for the section about obtaining an EIN for banking purposes only. The form asks if there is one group exemption number that applies to all — there is not. Be sure to ask your financial institution about their specific requirements
Taxes, Group Exemptions, Etc.
GSO is in no way attempting to give tax advice for single A.A. groups or other entities. This information relates to the United States only and does not apply to Canada.
Achieving tax-exempt status is different from obtaining an EIN for banking purposes. Becoming a nonprofit organization recognized by state and federal government is a process that very few groups undertake. You may want to read IRS Publication 557, “Tax-Exempt Status for Your Organization.” As rigorous reporting may be required, an accountant or tax lawyer can be helpful in this process.
Question: What about local/state/province taxes? Do I have to register my group with the secretary of state?
Answer: We suggest that you talk to a local professional or CPA. Some comments we have recently received include:
“I have heard that the laws have changed and our group is automatically exempt from taxes.”
“I have heard that because we have not filed the postcard and three years have passed, we are automatically not tax exempt.”
“I have heard that contributions to my group are (are not) tax deductible because we did (did not) file the postcards.”
“My group does not want to take the time and expense to comply with the new rules.”
“My group does not take in enough money to bother with the rules.”
Question: What do groups use for articles of incorporation or bylaws? Our group is not incorporated or formally organized, and it looks like the IRS instructions or banks require such information — what shall we do?
Answer: The information required by the IRS calls for organizing documents. We understand that on occasion some A.A. groups or other entities have used the short form of the Traditions as their governing documents.
Question: What should I do if my group takes in more than $5,000 USD but does not think it is important to file the appropriate paperwork?
Answer: Try to have a discussion at a business meeting that explains that as good members of society, the group should be mature enough to comply with appropriate laws.
Question: Why have these rules changed, and why must we do this?
Answer: Tax rules are always evolving and will probably always continue to do so. Not-for-profit organizations — mostly charities — have received a lot of attention in recent years, in part because some organizations abused the rules and were operating for the personal benefit of certain individuals who controlled them. In addition, the tax benefit of deducting charitable donations means that the federal government has an important interest in ensuring that charities are formed, operated, and dissolved in an appropriate and legal manner.
Excerpted from IRS Publication 557, page 24 (Rev. Feb. 2021)
Organizations Not Required to File Form 1023 (Application for Exemption)
Some organizations are not required to file Form 1023. These include “any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 USD.” These organizations are exempt automatically if they meet the requirements of Section 501(c)(3), which covers charitable, educational, religious, and scientific organizations.
Required Annual Filings
Question: Is an organization required to file an e-Postcard (annual return) if it was not required to file an application for tax exemption?
Answer: Yes. Certain organizations do not have to apply for tax exemption but still have an e-Postcard filing requirement. If your organization did not file an application for tax exemption because it is a Section 501(c)(3) organization whose gross receipts in each taxable year are normally not more than $5,000 USD, or because it is exempt under another code section such as 501(c)(4), an officer of the organization should call Customer Account Services at 1-877-829-5500 (toll-free) and ask that the organization be set up to allow filing of the e-Postcard.
An e-Postcard contains the following information: taxpayer identification number; tax period; legal name and mailing address; any other names the organization uses; name and address of principal officer; website address if the organization has one; confirmation that the organization’s annual gross receipts are normally $50,000 USD or less; and if applicable, a statement that the organization has terminated or is terminating (going out of business).
Organizations with gross receipts normally in excess of $5,000 USD that wish to be considered tax exempt should file the appropriate paperwork. Organizations having done so with gross receipts up to $50,000 USD may still file the e-Postcard Annual Return discussed above. Organizations with gross receipts from $50,000 USD to $200,000 USD may file Form 990-EZ, and those with gross receipts over $200,000 USD or assets more than $500,000 USD are required to file Form 990.
