Tax information
How is my Alumni Chapter affiliated with the Virginia Tech Alumni Association (VTAA)?
Alumni chapters play a vital role in hosting events and helping recruit alumni and friends of Virginia Tech. Each alumni chapter is a separate, independent entity from VTAA.
What does the Virginia Tech Foundation, Inc. (VTF) have to do with VTAA and the alumni chapters?
VTAA works with VTF to receive, manage, and disburse all contributions made to the VTAA.
Is my alumni chapter a separate corporation?
Maybe. If your chapter completes and files the necessary paperwork with your state every year to be considered a separate legal entity, then it is. However, most alumni chapters are unincorporated associations.
Does my alumni chapter have to become a separate corporation?
No. It may remain an unincorporated association. However, your chapter should consider incorporating to help protect the chapter members from any potential personal liability. Please note that no matter how it is organized, your club is required to have governance documents.
Does my alumni chapter have to pay taxes?
Probably not, but it will still have to file a tax return. Some alumni chapters are 501(c)(3) organizations, but most alumni chapters are considered 501(c)(4) organizations. This means they are exempt from paying income taxes. If your alumni chapter is neither classification, then it probably has tax obligations on income generated.
How do I know how my alumni chapter is classified for tax purposes?
Your alumni chapter must have filed an application form (Form 1023 or Form 1023 E-Z) for 501(c)(3) status (unlessexempt) and the IRS will send a letter approving your application. For 501(c)(4) status, it is a little different.
While the IRS tends to assume that an exemption application (Form 1024-A) for a 501(c)(4) will be filed, an application is not required. Form 8976 is required for all 501(c)(4) organizations created after December 2015.
Is money donated or paid to my alumni chapter tax deductible?
Checks written directly to the chapter are NOT tax deductible unless the chapter has filed for and obtained 501(c)(3) status. Checks to VTF may be tax deductible if they are for charitable purposes. However if the donation is related to attending events, then part of the donation may not be tax deductible. Please consult IRS regulations for more information on the deductibility of charitable contributions. Contributions made to 501(c)(4) organizations are not tax deductible by the donor.
Can a sponsor get a tax deduction for its donation to an alumni chapter event?
A sponsor may not claim a deduction for a donation to a charity unless your Alumni Chapter has 501(c)(3) status. However, a sponsor may be able to deduct the cost of items provided as a business expense. Please tell any sponsors with such questions to speak to their tax accountant.
Does my alumni chapter have to file a tax return?
Yes, all organizations, with some limited exceptions, must file some sort of tax return with the IRS. For annual federal income tax purposes, if the annual gross receipts of the chapter are normally below $50,000, then the organization may file a Form 990-N (e-Postcard).
Otherwise, the organization will be required to file either a Form 990EZ or 990. Your annual tax return is due every year by the 15th day of the 5th month after the close of your tax year. For example, if your tax year ends on Dec. 31, 2018, then your tax return is due May 15, 2019. Failure to file may result in the revocation of the organization’s tax exempt status .In addition, your state may impose annual filing and tax requirements.
We would encourage you to speak to a tax accountant in your area that is familiar with similar organizations if you have any questions.
Can my alumni chapter use the VTAA or VTF Taxpayer Identification Number (TIN)?
No, IRS reporting requirements do not allow any other group or organization to use the VTAA or VTF TIN.
How can my alumni chapter get its own TIN?
Getting a TIN is very simple. You can apply online, fax or even U.S. Mail. A TIN for an entity is also known as an Employer Identification Number (EIN).
Does my alumni chapter have any liability insurance?
It depends on the alumni chapter tax status. Alumni chapters with a 501(c)(3) status are responsible for their own liability insurance. All other alumni chapters have liability insurance coverage through the Commonwealth of Virignia and the VTAA. There are limits and exceptions to this coverage so please contact the regional engagement team if you have any questions.
The two most frequent issues chapters experience when submitting the 990-N e-postcard:
1. A chapter officer has not contacted the IRS to verify tax –exempt status
a. An officer of the local chapter MUST contact the IRS prior to the first e-postcard submission (see step 3 below).
b. The officer will need to supply the IRS official with the chapter’s EIN/TIN (see step 1 below).
c. The officer will need to supply their name and officer title to the IRS official.
d. The IRS official will be able to verify via the EIN/TIN whether or not the chapter is categorized with tax-exempt status in the IRS database. Key Point: if a chapter officer has not gone through this process, the chapter cannot submit the 990-N e-postcard.
2. Requesting tax-exempt status
a. On the same phone call from above, the IRS official will ask the officer if the chapter has a legal document proving organization (this is the signed Roles and Responsibilities document; contact your chapter liaison for your latest copy if you don’t have it).
b. The IRS official will ask the officer if they have revenues of $50,000. Answer “yes” or “no.”
c. The IRS official will ask you the purpose of your organization. The officer will need to describe their mission (community service, university events, etc.) and that the chapter is operating as a 501(c)(4).
d. After this process is complete, it will take up to 60 days for the IRS to issue tax-exempt status to the chapter’s EIN/TIN. Once status is attained, the chapter will be able to file their 990-N e-postcard (see step 5 below).
These questions and answers are intended to be used for informational purposes only and should not be construed as tax or legal advice. You should consult with your own tax and/or legal professional on your particular situation.