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Admin
 
Non Profit Youth Sports Organizations
Kathi Judkins
3729 Byrd Drive
Mesquite, Texas
75150
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 Discussion Topics: What if I claim to be Non Profit without filing stuff? |
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What if I claim to be Non Profit without filing stuff?
You can actually be a Non Profit for federal purposes if (1)you meet all the requirements in your organizing documents including By Laws and (2)have a Board of Directors structure WITHOUT filing with IRS for recognition. This only applies to an Organization with an IRS approved purpose and under $5,000 in gross receipts per year. Please note that term "gross receipts" relates to your banking deposits and includes the gross sales price of items sold (not just the profit!) plus donations etc. Therefore this would apply to formally organized and operated groups with fairly small financial operations.
Once you go over that amount of gross receipts, you must apply to IRS for Non Profit status to be granted.
IRS can assess stiff fines for claiming Non Profit status when you have not qualified for it. Only the IRS knows how hard a line they would take in each individual case. I do believe they would be kinder to you if you voluntarily tried to get straight with them.
As for your state and local sales taxes, claiming a Non Profit exemption when you have not met their qualification for it leaves you liable for those taxes plus penalties and interest until paid. It is a misdemeanor to sign a form claiming the exemption if you do not actually have it unless the tax avoided goes over $750 which makes it a felony. Texas also has a daily fine for operating without a valid sales tax permit and other states probably have a similar rule. I also believe the sales tax people will take a harsher stance than the IRS would with anyone that wasn't qualified. Translation: Fear them the most.
Last but not least, your kind donors have the problem of having their tax deductions bounced back if audited by IRS.
****************DISCLAIMER****************
The author is a CPA but not an attorney and is not qualified to render legal services. Check with an attorney to verify the correct information for your state.
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