CHAPTER CHARTER FEE, END OF THE YEAR REPORTS AND GWRRR/FINANCES AND THE IRS Chapter Directors and Treasurers it is that time of year again where we begin to think of great motorcycle riding weather, holidays, chapter charter fees and closing financial reports. I will take chapter charter fees at any time now. The fee covers the annual insurance premium that provides the GWRRA officer and their designated third party with a one million dollar liability insurance coverage. The policy is effective immediately on approval of an Officer and receipt of the annual chartering fee. The $50.00 check is made out to GWRRA TEXAS and is mailed to me. Pamela Meyer Texas Treasurer & Newsletter Editor 20906 Auburn Trace Court Katy, Texas 77450 713-823-4053 treasurer@gwrra-tx.org Next the District will need the following Year End Financial Reports, FINANCIAL REPORT COVER SHEET (OCTOBER 2003), FINACIAL REPORT (OCTOBER 2003, I-14 & I- 15), EQUIMENT LIST (OCTOBER 2003) and all 12 months of 2009 Bank Statement from each chapter. The Financial Cover Sheet requires a few checks and initials. Under THIS IS A, check Chapter Financial Report for chapter whatever name and place the year it is for. And check whether this is our yearly financial report or this is a change of officer financial report. Next read and initial statements A & B, the rest of the form is for the District and Region. The Financial Report (October 2003, I-14 & I-15) contains information about the chapter, such as the dates the report is from. Enter the Region, District and the Chapter. Enter the Officer s name, (not the Treasurer s name), and the Position (such as Chapter Director). Enter the City, State and Zip Code (this all correlates to the Chapter Director, the Officer of the chapter). Then enter the Federal Tax Id Number (this number should match the previous financial report and previous Chapter Director s EIN). The Prior Period Ending Balance is the last Current Balance from the previous Financial Report. Whether it was from the previous year or from the previous director, the numbers must match. The Income Summary segment, Deposits From columns is what the chapters took in as income. The columns can be used for different things. The Rallies column can be used for any function the chapter puts on to raise money for THE CHAPTER, such as garage sales, bake sales, yard sales, mall shows and get-togethers. The Poker Run column can be used to raise money for THE CHAPTER also, such as dice runs, progressive dinners, things done on the motorcycle and/or cars. The 50/50 column can be used for auctions, raffles and any small games of chance held for the membership. The Goodies Sales column can be used for any item such as patches, pins, hats, shirts, and keys chains that have the chapter and GWRRA logo s on it. These first four columns are GWRRA BUSINESS RELATED INCOME. The next four columns are Advertising, Non-Logo Items, and Exhibitor Fees. These three columns may or may not be Unrelated Business Income. UBI is defined as income from a trade or business that is regularly
carried on by an exempt organization and that is not substantially related to the performance by the organization of its exempt purpose or function, except that the organization uses the profit derived from this activity. (See page 10 for more information) Deposits placed in the Other Income Column must be listed in the Adjustment Detail Column on the second page. The Expense Summary page is similar to the Income Summary page except it lists the expenses that the chapter has. The Expense Summary relates to all expenses of the CHAPTER, not for any other business or charity. All Expenses must have verifiable receipts. The Adjustment Detail columns are to list Other Income and Other Expenses. Please include a description of what the Other Income or Other Expense is, and the total for the month. The Financial Summary is the Previous Bank Balance and the Total Income minus the Total Expense equals the Current Bank Balance. The Chapter Director and the Chapter Treasurer must sign the form. The Equipment List is a list of what each chapter has purchased with GWRRA funds. This may include computers, software, Rider Education tapes, copy and fax machines, banners, scrapbooks, mascots etc. Complete this form even if the chapter has no equipment. Chapter Director must sign this form. All 12 months of 2009 bank statements will be needed with the closing financial reports. If the chapter has access to their banking information on line, just print out the statement. Treasurers think about closing out the chapter s financial year about the middle of December, say after the Chapter Christmas party. This will give you time to do the closing financial reports and have them mailed to me before the end of the year. At the latest bring the reports to the Mid Winter Round Up at the Killeen Civic Center in Killeen Texas, January 9, 2010. The Annual Financial Report should reflect the separation of chapter and charity funds. The raising and donating of funds to a charity should not be included in Chapter Financial Reports. ONLY GWRRA CHAPTER FUNDS SHOULD BE INCLUDED. If there is a chapter director change, closing financial reports (Financial Cover Sheet, Financial Report and Equipment List) must be turned in by the out going chapter director. The incoming chapter director will need to submit a Financial Cover Sheet, Financial Report (with the prior period ending balance same as the current bank balance from the outgoing chapter director) and Equipment List (with the list of equipment received from the previous chapter director). The Financial Cover Sheet, Financial Report and Equipment List can be found on the GWRRA Texas website www.gwrra-tx.org. If there are any questions, please call or email me. This is a very simple process but it has to be perfect for GWRRA, Inc.
THIS NEXT INFORMATION IS FROM WWW.GWRRA.ORG UNDER OFFICER RESOURCES Transacting Business with a Financial Institution For the purposes of transacting business with a financial institution, please refer to the following information: Chapters, Districts and Regions are affiliates of GWRRA Inc. Chapters, Districts and Regions are separate from GWRRA Inc. The sole purpose of the relationship is to allow affiliates to receive not-for-profit tax treatment on various activities if they chose to take advantage of it. GWRRA Inc. has its own organizational documents, not for use by an affiliate. A letter of introduction may be helpful, stating the purpose of the transaction and signed by the person transacting business on behalf of the affiliate. (Sample letters A, B, C attached) A financial institution may request identification. Forms of identification may be: 1. Affiliate s Employer Identification Number (EIN), obtained from the IRS 2. Photo ID and social security number 3. Officer Appointment Certificate 4. Chapter Charter Certificate Opening a New Checking Account (sample letter A): Request an account in the name of the Chapter, District or Region i.e. Chapter AZ-1, District AZ, Region F. Many accounts are being opened with the IRS and financial institutions under various names such as, GWRRA of Arizona, Arizona GWRRA, AZ-A GWRRA. (Please note: the above is just an example and does not reflect any actual accounts Arizona has opened.) When an Officer of GWRRA opens any type of account, they should be requesting the account in the name of the Chapter, District or Region. Here are some examples of the format that should be used. Example 1: Garry Woo, the CD of AZ-A, would request an account in the name of Chapter AZ-A Example 2: Diane Lumpkin, the DD of AZ, would request an account in the name of District AZ Example 3: Melissa Eason, the RD of Region F, would request an account in the name of Region F
Please be sure Officers are using the above format. We are hoping that by becoming consistent, this will alleviate some of the problems the IRS is having when trying to identify certain Chapters, Districts and Regions. Chapter Directors you will need to change the name of your Checking Account when you are changing bank and or when you are changing Chapter Directors. Opening a New Account with Funds from another Account (sample letter B): A check for the balance of the account that is closing (less any outstanding checks) should be made payable to the depository institution selected by the new Officer. Changing a Signatory on a Checking Account (sample letter C): State the name of the signatory to be removed from the account and the name of the signatory to be added to the account. These are only a few suggestions. Each financial institution has specific requirements.
OPENING A NEW CHECKING ACCOUNT (Sample Letter A) (Date) To Whom It May Concern: Please open a checking account in the name of (Chapter, District or Region). Attached is a photocopy of my appointment certificate showing that I am a volunteer officer of this entity. The Chapter s EIN is (##). If you require further information, I will be glad to oblige. Thank you for your assistance in this matter. Sincerely, (Name of Person Transacting Business) Attachment
OPENING A NEW ACCOUNT WITH FUNDS FROM AN ACCOUNT AT ANOTHER INSTITUTION (Sample Letter B) (Date) To Whom It May Concern: Please open a checking account in the name of (Chapter, District or Region). Attached is a check made payable to (financial institution) to be deposited in the checking account. (Name of the incoming officer) is authorized to open this account in the name of (Chapter, District or Region) with these funds. Attached is a photocopy of his appointment certificate showing that he is a volunteer officer of this entity. The (Chapter, District or Region) EIN is (##). If you require further information, I will be glad to oblige. Thank you for your assistance in this matter. Sincerely, (Name of Outgoing Officer) Attachment
SIGNATURE CHANGE (Sample Letter C) (Date) Re: Account # To Whom It May Concern: Please change a signatory on the above-mentioned checking account in the name of (Chapter, District or Region). Please remove (name) as a signatory on the account, and add (name) as a signatory on the account. If you require further information, I will be glad to oblige. Thank you for your assistance in this matter. Sincerely, (Name of the Signatory on the Account)
GWRRA/Finances and the IRS Special Note: This document contains general information that relates to the IRS. For specific questions relating to UBI, please consult your local tax expert. General Information There are 25 different types of non-profit 501 organizations. GWRRA is recognized as exempt from federal income tax under section 501(c)4 of the Internal Revenue Code. Our not-for-profit status does not mean we are not allowed to make a profit. It simply means that certain parts of our income are exempt from being taxed. 501(c)3 is a charity, and donations to these organizations are tax deductible. Donations to GWRRA may be a legitimate business expense, but they are not tax deductible contributions. The 501(c)4 is a different type of organization, mostly concerned with social welfare such as education. GWRRA qualifies for the 501(c)4 as a result of Rider Education, Leadership Training and the variety of seminars and opportunities for education that we provide. Checking Accounts II As a subordinate to an exempt association, a Region, District, or Chapter is required to acquire a Federal EIN. This number is used for banking and identification purposes. All checking accounts must be non-interest bearing. Checking accounts should have at least three signatures on the bank card the Director, the Treasurer, and the Director s appointing Officer. Two of the signatures are required on the check. If the parties are not in close proximity, each check written by any of the signatories on this account must have prior written approval from one other signatory, and this document must be kept on file. Contact from the IRS If Form 990 is mailed to you by the IRS, you must fill it out and return it regardless of the amount of your gross receipts. If gross receipts are less than $25,000, the box indicating annual gross receipts are $25,000 or less should be checked; sign and return to the IRS. Form 990 is an informational form and, as such, does not require payment of taxes. If you receive a letter stating GWRRA notified the IRS that you are no longer a subordinate, call the Home Office at 800-843-9460. This situation can typically be resolved with a phone call to the IRS.
EIN s An EIN (Employer Identification Number) is simply the business equivalent of a social security or tax ID number. An EIN means you are registered with the IRS and intend to collect income or have expenses that are not related to GWRRA. Each subordinate must acquire their own EIN, but all subordinates should use GWRRA s Group Exemption Number (GEN) on all forms submitted to the IRS. The GWRRA GEN is 7196. Use IRS form SS-4 to obtain a new EIN. www.irs.gov. If the Chapter, District or Region already has an EIN, it stays with it and NEVER changes. E-Postcard Form 990-N The IRS requires that the e-postcard (Form 990-N) must be filed annually by all subordinates (Chapters, Districts, and Regions) of GWRRA whose gross receipts are $25,000 or less for the tax year. Your tax year must have ended before you can file an e-postcard. It is absolutely necessary that the e-postcard be filed with the IRS. Failure to do so can cause penalties and fines or even the loss of GWRRA s not-for-profit status. It is the responsibility of the Officer to be sure this form is filed on-line by May 15 of each year. However, it may be filed by the Assistant Chapter Director or the Treasurer under the direction of the Chapter Director. To access the e-postcard site go to http://epostcard.form990.org. Once there, you will need to complete a three-step process: 1. Register as a new user. If you have filed in the past, go to step 2. You will be assigned a login ID based on your EIN. The first login ID will be your EIN plus the number 01. You can have more than one login ID to allow others to access the site. Subsequent IDs will be 02, 03, and so on. 2. Create the Form 990-N (e-postcard) 3. Submit your Form 990-N (e-postcard) E-Postcard Rejection If your e-postcard is rejected, there is an explanation on the screen as to why it was not accepted. It could be you entered the EIN incorrectly, or the EIN you entered does not belong to your Chapter. Double check your entry to be sure it is correct. You can call the Home Office to verify the EIN we have on file for your Chapter. Another reason for rejection may be that you are not recognized as a subordinate of GWRRA. This is likely due to Form 8822 (Address Change) not being filed with the IRS when the new Officer was instated. It is extremely important that all incoming Officers fill out this forma and mail it to the IRS as soon as possible. This form may be obtained at www.irs.gov. Information Needed to File the e-postcard 1. Your Employer Identification Number (EIN) sometimes known as a Taxpayer Identification Number (TIN). 2. The tax year. 3. Legal name and mailing address. Example: Chapter AZ-A; District AZ; Region F
4. Name and address of a principal Officer. (The Chapter, District, or Region Director) 5. Website address if the subordinate has one. 6. Confirmation that the subordinate s annual gross receipts are normally $25,000 or less. Receipts and Audits Receipts are the only way to justify debts or withdrawals from a Chapter, District, or Region checking account. The IRS could demand records be submitted at anytime for any subordinate of GWRRA. At the Home Office, we conduct random research to assure accuracy and that policies are being followed. It is important for all Officers to protect themselves from undo scrutiny. The policies in the Officers Guide Book are there for the Officer s protection. Related Business Income Related Business Income must be Regularly carried On. Examples of Related Business Income: Rallies, poker-runs, dice runs, hobo stew runs, 50/50 drawings, raffles, white elephant auctions (small games of chance held at organizational gatherings mainly for the membership), Goodie sales (GWRRA-related items: includes Chapter jackets, hats, shirts, all items with the logo on them etc.) Subordinate Information Regions, Districts and Chapters have no exempt status of their own and are recognized by the IRS as subordinates of GWRRA. As a subordinate, they are required to follow certain guidelines. Being exempt does not mean they do have to file a return, nor does it necessarily mean they will not be required to pay taxes. Taxes and Gross Receipts Subordinates must follow the guidelines put forth by the Federal Code for 501(c)4 non-profit organizations. Subordinates with annual gross receipts of more than $25,000 are required to file the Form 990 Return of Organization Exempt From Income Tax. Keep all receipts! All Chapters, Districts and Regions are required by both the IRS and by the GWRRA to track and keep receipts of all income and expenses. Unrelated Business Income UBI is Gross Unrelated Business Receipts minus expenses. Unrelated Business Income is income from a trade or business that is regularly carried on by an exempt organization and that is not substantially related to the performance by the organization of its exempt purpose or function, except that the organization uses the profits derived from this activity.
To produce UBI the activity must meet 3 tests: Trade or Business Any activity carried on for the production of income from selling goods or performing services. Regularly Carried On Must show a frequency and continuity and are pursued in a manner similar to comparable commercial activities of non-exempt organizations. Not Substantially Related A business activity is not substantially related to an organization s exempt purpose if it does not contribute importantly to accomplishing that purpose (other than through the production of funds). Whether an activity contributes importantly depends in each case on the facts involved. Excluded Trade or Business Activities The following activities are specifically excluded from the definition of unrelated trade or business. Volunteer workforce Any trade or business in which substantially all the work is performed for the organization without compensation is not an unrelated trade or business. Qualified sponsorship activities Soliciting and receiving qualified sponsorship payments. Payments are not subject to unrelated business income tax. Qualified sponsorship payments Payment made by a person engaged in a business or trade. No substantial benefit received other than the use or acknowledgement of the business name, logo, or product lines in connection with the organization s activities. May not include advertising the sponsor s products or services Example In return for a sponsorship payment an organization promises to use the sponsor s name or logo acknowledging support for an educational or fund raising event The payment is qualified and not subject to UBI tax. A payment is not a qualified payment if it is made in connection with any qualified convention or trade show activity. It is, however, still excluded from UBI. A payment is not a qualified payment if, in return the organization advertises the sponsor s products or services.
Advertising includes: Messages containing qualitative or comparative language, price information, or other indications of savings or value, Endorsements, and Inducements to purchase, sell, or use the products or services. Convention or Trade Show A qualified convention or trade show is any activity of a kind traditionally carried on by a qualifying organization in conjunction with an international, national, state, regional, or local convention annual meeting or show if: One of the purposes of the organization in sponsoring the activity is promoting and stimulating interest in, and demand for, the products and services of that industry or educating the persons in attendance regarding new products and services or new rules and regulations affecting the industry, and The show is designed to achieve its purpose through the character of the exhibits and the extent of the industry products that are displayed. A qualifying organization must regularly conduct, as one of its substantial exempt purposes, a qualified convention or trade show activity. The rental of display space to exhibitors is not UBI even if the exhibitors are permitted to sell or solicit orders. If UBI is greater than $1,000, Form 990T must be filed with the IRS. Because UBI is complicated, please check with your local tax advisors to determine if your income is taxable UBI. Volunteers GWRRA is unique in that all Officers and staff are volunteers and are not compensated. Activities are considered Regularly carried On if they show a frequency, continuity, and are pursued in a manner similar to a comparable commercial activity of non-exempt organizations. An activity or sale in which substantially all of the work is preformed for the organization without compensation is exempt from the UBI definition. These two points exempt most Region, District, and Chapter income from the UBI category.
Summary All subordinates of GWRRA must obtain an EIN from the IRS and must also send the IRS an address update when Officers change Form 8822. If gross receipts are more than $25,000, Form 990 must be filed. If UBI is more than $1,000, Form 990T must be filed. All information can be found in the Officers Guide Book section D. Please ask your appointing Officer if you have any further questions or call the Home Office at 800-843-9460 or in Phoenix 623-581-2500. Forms can be downloaded at www.irs.gov. References: Social Welfare Organizations http://www.irs.gov.charities/nonprofits/article/0,,id=96178.html Publication 598 (Rev. March 2009) http://www.irs.gov/pub/irs-pdf/p598.pdf Gold Wing Road Riders Association 21423 N 11th Ave. Phoenix, AZ 85027 Copyright 2008-09 GWRRA. All Rights Reserved Pamela Meyer Texas District Treasurer