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.

IMPORTANT NOTEIMPORTANT NOTE

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

THE “E-POSTCARD”THE “E-POSTCARD”

BROUGHT TO YOU BY BROUGHT TO YOU BY YOUR FRIENDS AT THE IRSYOUR FRIENDS AT THE IRS

OVERVIEWOVERVIEW

Tax-Exempt statusTax-Exempt status Taxpayer ID numberTaxpayer ID number Prior filing requirementsPrior filing requirements The “E-Postcard”The “E-Postcard” Filing deadlinesFiling deadlines What information is needed in order What information is needed in order

to file?to file?

OVERVIEW (Cont’d)OVERVIEW (Cont’d)

Various filing issuesVarious filing issues What if we don’t file?What if we don’t file? IEA role/Current status of effortsIEA role/Current status of efforts Final recapFinal recap How do I verify my local’s status?How do I verify my local’s status? Info on IEA websiteInfo on IEA website QuestionsQuestions

TAX-EXEMPT STATUSTAX-EXEMPT STATUS

Labor unions are “exempt” under IRC Labor unions are “exempt” under IRC 501(c)(5)501(c)(5)

NOT the same exemption as school NOT the same exemption as school districts, churches, etc.districts, churches, etc.– They are exempt from sales taxThey are exempt from sales tax– Contributions to them are tax-deductibleContributions to them are tax-deductible

““Exempt” means you don’t pay income Exempt” means you don’t pay income taxestaxes

Price: restrictions on how you can spend Price: restrictions on how you can spend your moneyyour money

EXEMPTION PROCESSEXEMPTION PROCESS

All IEA locals are automatically All IEA locals are automatically exempt under the IEA’s “Group exempt under the IEA’s “Group Exemption”Exemption”

Saves the paperwork of having to file Saves the paperwork of having to file the exemption paperwork for each the exemption paperwork for each new localnew local

Taxpayer ID number must be set up Taxpayer ID number must be set up correctly!correctly!

TAXPAYER ID NUMBER (TIN)TAXPAYER ID NUMBER (TIN)

All new locals must apply for a TIN All new locals must apply for a TIN (also referred to as Federal ID (also referred to as Federal ID Number/FEIN or Employer ID Number/FEIN or Employer ID Number/EIN)Number/EIN)

Must apply on Form SS-4Must apply on Form SS-4 SS-4 requires designation of a fiscal SS-4 requires designation of a fiscal

year-end- Default is Juneyear-end- Default is June

TAXPAYER ID NUMBER (Cont’d)TAXPAYER ID NUMBER (Cont’d)

Need a TIN to open a bank accountNeed a TIN to open a bank account For new locals or others that need a For new locals or others that need a

new TIN, the IEA will apply for you. new TIN, the IEA will apply for you. See your UD or contact the Director See your UD or contact the Director of Business Services.of Business Services.

PLEASE DON’T….PLEASE DON’T….

When opening bank accounts, some When opening bank accounts, some locals have……locals have……

– Used their school district’s TINUsed their school district’s TIN– Used someone’s Social Security numberUsed someone’s Social Security number

Neither approach is legalNeither approach is legal If your local has done this, you If your local has done this, you

should contact your UD or the IEA should contact your UD or the IEA Director of Business Services to Director of Business Services to assist with filing for your own TINassist with filing for your own TIN

IRS REPORTING IRS REPORTING REQUIREMENTSREQUIREMENTS

Based on “Normal Gross Receipts”Based on “Normal Gross Receipts” ““Normal”= Average of preceding 3 Normal”= Average of preceding 3

yearsyears ““Gross Receipts”= All cash taken in Gross Receipts”= All cash taken in

EXCEPT IEA-NEA duesEXCEPT IEA-NEA dues

PRIOR FILING REQUIREMENTPRIOR FILING REQUIREMENT

Gross receipts > $100,000: Form 990Gross receipts > $100,000: Form 990– Less than 5% of localsLess than 5% of locals

Gross receipts $25,000- $100,000: Gross receipts $25,000- $100,000: Form Form 990-EZ990-EZ– Less than 5% of localsLess than 5% of locals

PRIOR FILING REQUIREMENT PRIOR FILING REQUIREMENT (cont’d)(cont’d)

Gross receipts < $25,000: NO Gross receipts < $25,000: NO REQUIREMENT REQUIREMENT – 90+% of IEA locals never had to file90+% of IEA locals never had to file

PROBLEM: INVISIBLE ENTITIESPROBLEM: INVISIBLE ENTITIES

IRS had no way to keep track of youIRS had no way to keep track of you Can’t accumulate dataCan’t accumulate data Can’t ensure complianceCan’t ensure compliance Don’t know if you’re still out there Don’t know if you’re still out there Don’t have current contact infoDon’t have current contact info

SOLUTION: THE “E-POSTCARD”SOLUTION: THE “E-POSTCARD”

Gross receipts < $25,000: Form 990-Gross receipts < $25,000: Form 990-N N (the “E-Postcard”)(the “E-Postcard”)

Passed as part of the Pension Passed as part of the Pension Protection Act of 2006Protection Act of 2006

Must be filed electronically- No paper Must be filed electronically- No paper version availableversion available

SOLUTION (Cont’d)SOLUTION (Cont’d)

Info required is simple and basic (For Info required is simple and basic (For Now!)Now!)

Must be filed every yearMust be filed every year

EFFECTIVE DATEEFFECTIVE DATE

Effective for “Years beginning after Effective for “Years beginning after December 31, 2006”December 31, 2006”

So, the first locals affected were So, the first locals affected were those whose fiscal year (those whose fiscal year (per the per the records of the records of the IRS) ended December IRS) ended December 31, 2007 31, 2007

FILING DEADLINEFILING DEADLINE

E-Postcard must be filed by the 15E-Postcard must be filed by the 15thth day of day of the 5the 5thth month after the end of the fiscal month after the end of the fiscal yearyear

December year-end= May 15 deadlineDecember year-end= May 15 deadline June year-end= November 15 deadlineJune year-end= November 15 deadline Return must be filed annuallyReturn must be filed annually Return can’t be filed until after fiscal year Return can’t be filed until after fiscal year

is completeis complete

WHAT INFO IS NEEDED IN WHAT INFO IS NEEDED IN ORDER TO FILEORDER TO FILE

TINTIN Fiscal year-endFiscal year-end Both must match IRS database or Both must match IRS database or

you can’t file!you can’t file!

INFO NEEDED (cont’d)INFO NEEDED (cont’d)

Local’s legal name Local’s legal name Mailing address and website addressMailing address and website address Name/Address of a “Principal Officer”Name/Address of a “Principal Officer” Confirmation that your normal gross Confirmation that your normal gross

receipts are < $25,000receipts are < $25,000

TIN ISSUESTIN ISSUES

Over 100 IEA locals are not in IRS Over 100 IEA locals are not in IRS database because…database because…– IRS classified as “dormant”IRS classified as “dormant”– Local uses TIN of employer or leaderLocal uses TIN of employer or leader– No bank account/No TINNo bank account/No TIN– Local filled out SS-4 incorrectlyLocal filled out SS-4 incorrectly

IEA is in the process of straightening these IEA is in the process of straightening these out with the IRSout with the IRS

Can’t file E-Postcard with a TIN not in IRS Can’t file E-Postcard with a TIN not in IRS database!database!

FISCAL YEAR ISSUESFISCAL YEAR ISSUES

Fiscal year determines filing Fiscal year determines filing timeframetimeframe

IEA has access to IRS database, IEA has access to IRS database, including fiscal year infoincluding fiscal year info

Most locals don’t know their fiscal Most locals don’t know their fiscal year, or what they are using is not in year, or what they are using is not in agreement with the IRSagreement with the IRS

FISCAL YEAR ISSUES( cont’d)FISCAL YEAR ISSUES( cont’d)

It is OK to use one fiscal year for It is OK to use one fiscal year for internal purposes and another for internal purposes and another for your IRS filingyour IRS filing

If you want to change your fiscal year If you want to change your fiscal year in the IRS database, contact the IEA in the IRS database, contact the IEA Director of Business ServicesDirector of Business Services

FILING ISSUESFILING ISSUES

The filing process is fairly simple, The filing process is fairly simple, but….but….– Still fairly time-consumingStill fairly time-consuming– A few quirks, e.g.,A few quirks, e.g.,

The name of all locals must be “Illinois The name of all locals must be “Illinois Education Association” in order to provide Education Association” in order to provide tax-exempt status. Local name is registered tax-exempt status. Local name is registered as a “DBA”as a “DBA”

Mailing address issueMailing address issue

FILING ISSUES (cont’d)FILING ISSUES (cont’d)

We prefer to file the return for youWe prefer to file the return for you– Simple e-mail authorization processSimple e-mail authorization process– Saves you the time involved in the Saves you the time involved in the

“learning curve”“learning curve”– Ensures that return is filed in a way Ensures that return is filed in a way

that does not jeopardize your tax-that does not jeopardize your tax-exempt status exempt status

FILING ISSUES (cont’d)FILING ISSUES (cont’d)

If you prefer to file yourself, we will If you prefer to file yourself, we will provide instructionsprovide instructions

Some locals got the impression that Some locals got the impression that by providing some information that by providing some information that was requested through the IEA was requested through the IEA website, that they had filed the E-website, that they had filed the E-Postcard. THIS IS NOT THE CASE.Postcard. THIS IS NOT THE CASE.

““SUBSIDIARY ORGANIZATION” SUBSIDIARY ORGANIZATION” ISSUEISSUE

If “subsidiary organizations” file their If “subsidiary organizations” file their annual financial information as a annual financial information as a consolidated return with the “parent consolidated return with the “parent organization,” they do not have to file the organization,” they do not have to file the 990-series forms990-series forms

This is not practical for the IEA’s 1,000 This is not practical for the IEA’s 1,000 locals- more bookkeeping for both locals locals- more bookkeeping for both locals and IEAand IEA

IRS is giving incomplete information on IRS is giving incomplete information on this this

CONSEQUENCES FOR NOT CONSEQUENCES FOR NOT FILINGFILING

After three years, you lose your tax-After three years, you lose your tax-exempt statusexempt status

It is reasonable to assume that the IRS will It is reasonable to assume that the IRS will use the first three years to flush out all of use the first three years to flush out all of the thousands of organizations that no the thousands of organizations that no longer exist, then will make the longer exist, then will make the consequences more onerousconsequences more onerous

It’s important to start filing as required It’s important to start filing as required and make it a routineand make it a routine

IEA ROLE IN TRANSITIONIEA ROLE IN TRANSITION

Numerous communications sent to Numerous communications sent to regions and locals to explain the IRS regions and locals to explain the IRS letters and minimize confusionletters and minimize confusion

Info presented at “Financial Info presented at “Financial Procedures” training sessionsProcedures” training sessions

Sessions at WAC and SLA devoted to Sessions at WAC and SLA devoted to E-PostcardE-Postcard

““Webinars”Webinars”

IEA ROLE (Cont’d)IEA ROLE (Cont’d)

Info posted on IEA websiteInfo posted on IEA website Sending e-mail reminders to local Sending e-mail reminders to local

presidents, based on due datespresidents, based on due dates Reconciling info provided by locals Reconciling info provided by locals

with TIN and fiscal year info in the with TIN and fiscal year info in the IRS databaseIRS database

IEA ROLE (Cont’d)IEA ROLE (Cont’d)

Making sure that all locals that are Making sure that all locals that are required to file actually do sorequired to file actually do so

Filing E-Postcards on behalf of localsFiling E-Postcards on behalf of locals Resolving TIN/Fiscal year Resolving TIN/Fiscal year

discrepancies with the IRSdiscrepancies with the IRS

SUMMARY OF DUE DATESSUMMARY OF DUE DATESDecember (due 5/15) 132April (due 9/15) 2June (due 11/15) 627July (due 12/15) 6August (due 1/15/09) 70September (due 2/15/09) 5

Total in Database 842

Not in Database 116

Total Locals 959

CURRENT ACTIVITIESCURRENT ACTIVITIES

Working with a few “December” Working with a few “December” locals to get their returns filedlocals to get their returns filed

Sending e-mails to Presidents of the Sending e-mails to Presidents of the “June” locals, offering to file on their “June” locals, offering to file on their behalfbehalf

Working with the IRS and locals to Working with the IRS and locals to clear up the 100+ discrepanciesclear up the 100+ discrepancies

COMMUNICATION ISSUESCOMMUNICATION ISSUES

Hard to find the right personHard to find the right person E-mail addresses out of dateE-mail addresses out of date Communication with IRS is spottyCommunication with IRS is spotty No response from locals that think No response from locals that think

that by responding to the IEA request that by responding to the IEA request for information, they had already for information, they had already filed the E-Postcardfiled the E-Postcard

FINAL RECAPFINAL RECAP

Are your average annual cash receipts, EXCLUDING IEA-NEA dues, greater than $25,000?

““YES”YES”YES No further action needed;

please notify the IEA Director of Business Services.

Are you filing Form 990 or Form 990-EZ every year? NO

You need to start filing one of these forms immediately. Contact a local tax professional or the IEA Director of Business Services for assistance.

““NO”NO”You must begin filing Form 990-N, the E-Postcard, sometime in 2008 or 2009. Your filing deadline depends on the fiscal year-end per the IRS's records. So you are in one of these groups:

December year-end (132 locals). Must file between 1/1/08 and 5/15/08

April year-end (2 locals). Must file between 5/1/08 and 9/15/08.

June year-end (627 locals). Must file between 7/1/08 and 11/15/08.

July year-end (6 locals). Must file between 8/1/08 and 12/15/08.

August year-end (69 locals). Must file between 9/1/08 and 1/15/09.

September year-end (5 locals). Must file between 10/1/08 and 2/15/09.

Not in IRS database of tax-exempt organizations (113 locals). Cannot file until this is resolved.

HOW DO I VERIFY MY LOCAL’S HOW DO I VERIFY MY LOCAL’S STATUS?STATUS?

See me after the sessionSee me after the session Contact me at Contact me at

randy.welch@ieanea.orgrandy.welch@ieanea.org Fill out online request formFill out online request form

INFO ON IEA WEBSITE:INFO ON IEA WEBSITE:Choose “RESOURCES”…Choose “RESOURCES”…

RESOURCES (Cont’d)RESOURCES (Cont’d)Then “FINANCIAL PROCEDURES”Then “FINANCIAL PROCEDURES”

RESOURCES (Cont’d)RESOURCES (Cont’d)

QUESTIONS??QUESTIONS??