How are Chapters Structured?


Should our Chapter Incorporate?


Chapters are organized in two different ways; (1) Voluntary Non-incorporated Organizations; or (2) Incorporated Organizations. Within this latter structure, Chapters may wish to operate under so they can offer tax exemption to those who wish to donate, and avoid paying sales tax on items purchased for the Chapter’s use.
Incorporated FNPS Chapters can operate as a 501(c)(3) organization by applying to the IRS; all Chapters, regardless of classification, can elect to participate in the Group Exemption 501(c)(3) status of the Society. The group exemption is known as “GEL” which stands for Group Exemption Letter. Chapters also may elect not to participate in the 501(c)(3) program at all.

The following table may help make this clearer.
Chapter Type
501(c)(3) Tax Exempt Status
Voluntary Non-incorporated Not-for-profit Organizations
Non-501(c)(3) Chapter OR
Group Exemption 501(c)(3) Letter (GEL) Program
Incorporated Not-for-profit Organizations
Chapter-level 501(c)(3) Tax Exempt Status OR
Group Exemption 501(c)(3) Letter (GEL) Program
Each configuration has repercussions for Chapter operations. The primary operations affected are financial bookkeeping, payment of sales tax, accepting donations, and routine reporting to the State, IRS and to the Society. We will walk through this below.

FNPS Chapters as Voluntary Non-incorporated Organizations

Fictitious name. At the most basic level, the FNPS Chapter must file a fictitious name application with the Florida Department of State if the FNPS Chapter does not incorporate. The fictitious name is good for 5 years; then the Chapter must renew.

The EIN Number. Upon approval of the fictitious name from the Department, the FNPS Chapter may apply on-line for an IRS Employer Identification Number (EIN). Why do you need this? Your bank will ask for your organization to get a “Employer Tax Number” (or they many call it a “Tax ID number” or even an “IRS ID number”). It’s officially called an Employer Identification Number (EIN). This number is similar to a Social Security Number for a business or organization. Even though your Chapter may have no employees and no business with the IRS, you need to get an EIN to open a bank account. And you need a bank account to receive FNPS Chapter membership support checks! They now have an “interview style” option for getting the number; they ask you questions, you tell, they fill out the form.

Links you’ll need

Get your Fictitious Namehttp://form.sunbiz.org/fic_form.html
Get your EIN:
Interview: http://www.irs.gov/businesses/small/article/0,,id=102767,00.html
Quick form: http://www.irs-ein-online.com/.
Tax Info for Charitable Organizations: http://www.irs.gov/charities/charitable/index.html

FNPS Chapters as Florida Not-for-Profit Corporations

Incorporation is a legal process that recognizes the FNPS Chapter as a separate legal entity with the powers and responsibilities of a natural person (Chapter 617, Florida Statutes). The incorporation process begins by contacting the Florida Department of State, Division of Corporations for instructions and copies of two forms, "Articles of Incorporation” and “Transmittal Letter."

There is a $35 filing fee, and $35 fee for Designation of Registered Agent (i.e., a business or individual designated to receive service of process (SOP) when a business entity is a party in a legal action). If you want a Certified Copy, you pay $8.75, and Certificate of Status is also $8.75. If you file and choose both the options the total will be $87.50.
The minimum requirements for incorporation are three directors, a registered agent, and the Articles of Incorporation, and a street address By laws are also required.

An incorporated chapter doesn’t ordinarily need to file for fictitious name registration because they have a registered corporate name. However, incorporated FNPS Chapters may still need to file a fictitious name application with the Florida Department of State, if the FNPS Chapter operates under a name VERY DIFFERENT from the corporate name. Explain the name the FNPS Chapter will be doing business as (DBA) and ask the Department if a fictitious name is required. If so then, upon approval of the fictitious name from the Department, the FNPS Chapter may apply for a Federal Identification Number (EIN).

So why would you Incorporate? So you could apply to be a 501(c)(3) organization of course! And so that you could learn all about Florida Statute Title XXXVI, Chapter 617.

Links you’ll need

Florida Corporation Forms: http://form.sunbiz.org/cor_form.html
File Your Annual Report: https://efile.sunbiz.org/ubr001.html
Florida Statutes governing non-profit incorporation: http://www.leg.state.fl.us/Statutes/

How do we get 501(c)(3) Tax Exempt Status?


FNPS chapters can operate as a 501(c)(3) organization by applying to the IRS, or by participating in the Group Exemption (GEL) 501(c)(3) status of the Society.

Applying to the IRS 501(c)(3)

Incorporated FNPS Chapters that plan to for apply for a ruling of tax exemption from the Internal Revenue Service, better known as a 501(c)(3), should contact the US Internal Revenue Service for forms and instructions. It is a lengthy process and normally not completed until a FNPS Chapter has reached a certain sustainable membership and annual revenue. Until an incorporated FNPS Chapter has the IRS tax exempt status, documented by an IRS Determination Letter, donations to that Chapter are NOT tax deductible.
If you do establish your Chapter as a 501(c)(3), you will also need to apply for a Consumer’s Certificate of Exemption (Form DR-5 to be exempt from sales and use tax on purchases and rentals of tangible personal property if that property is used in carrying out the organization's not-for-profit activities.

Links You’ll Need

Instructions for Applying for 501(c)(3): http://www.irs.gov/charities/article/0,,id=96210,00.html
Application form for Certificate of Exemption (DR-5): http://dor.myflorida.com/dor/forms/

Group Exemption Letter (GEL) Program

Through the GEL program, FNPS extends its 501(c)(3) umbrella over participating Chapters. Basically, the benefits of Group Exemption are that the Chapter will be able to function as a 501(c)(3) without having to complete the application process or paperwork (although there are some additional reporting requirements). Key advantages are that Chapters can:
1. solicit tax-deductible contributions,
2. apply for grants, and
3. avoid paying sales tax on items bought for the Chapter’s use (Chapters are never exempt from collecting and remitting Florida sales tax for sales to the public: See Sales Tax below).

Links You’ll Need

Checklist for the GEL Program
Sample Chapter Description Template

Let’s add the requirements and benefits of each status to our table.

Chapter Type
Required
Pros
Cons
Voluntary Non-incorporated
Not-for-profit Organizations
Non-501(c)(3) Chapter
• Apply for a fictitious name
• Apply for an EIN
• Apply for FL sales tax number for submitting sales tax.
• Do not need to file articles of incorporation with the state, or annual report and fees.
• Do not need to submit annual registration to Dept of Ag. Consumer Services
• Do not need to submit financials to state
• Can conduct charitable gaming, e.g., raffles
• Contributions are not tax deductible
• Can only apply for grants that do not require 503(c)3 status
• Not eligible for FL sales tax exemption on purchases.
Voluntary Non-incorporated Not-for-profit Organizations
Group Exemption 501(c)(3) Letter (GEL) Program
• Apply for a fictitious name
• Apply for an EIN
• Apply for FL sales tax number for submitting sales tax.
• Annual registration with FL Dept of Ag, Consumer Services under Solicitation of Contributions
• Do not need to file articles of incorporation with the state, or annual report and fees.
• Able to solicit tax-deductible contributions
• No sales tax on items bought for chapter’s use
• Able to apply for grants
• Do not need to file IRS forms – For one-time application submitted to FNPS Treasurer
• Must file annual financial report to Society
• Charitable gaming is prohibited which includes raffles
Incorporated Not-for-profit Organizations
Chapter-level (independent) 501(c)(3) Tax Exempt Status
• File Articles of Incorporation with the state
• Apply for an EIN
• Apply to the IRS for not-for-profit 501(c)(3) status
• Apply for FL sales tax number for submitting sales tax.
• Apply for FL sales tax exemption (good for 5 years)
• File an annual corporation report and fee with the state
• Annual registration with FL Dept of Ag, Consumer Services under Solicitation of Contributions Act
• IRS forms to retain 501(c)(3) status annually
•Able to solicit tax-deductible contributions
•No sales tax on items bought for chapter’s use
•Able to apply for grants
• Must apply for 501(c)(3) status, and file forms with IRS annually, requiring extensive documentation
• Charitable gaming is prohibited which includes raffles
Incorporated Not-for-profit Organizations
Group Exemption 501(c)(3) Letter (GEL) Program
• File Articles of Incorporation with the state
• Apply for an EIN
• Apply for FL sales tax number for submitting sales tax.
• Annual registration with FL Dept of Ag, Consumer Services under Solicitation of Contributions Act
• Able to solicit tax-deductible contributions
• No sales tax on items bought for chapter’s use
• Able to apply for grants
• Do not need to file IRS forms – one-time application to FNPS Treasurer
• Must file annual financial report to Society
• Charitable gaming” is prohibited which includes raffles