Hello and thanks for trusting me to help you today. I am a tax adviser with over 15 years of experience.
Your club will need an EIN to open a bank account.
You will obtain this from the IRS.
You may want to register your club as a nonprofit with the IRS. Most likely a 501c7
A social club must be organized for pleasure, recreation, and other similar purposes. A club will not be recognized as tax exempt if its charter, by laws, or other governing instrument, or any written policy statement provides for discrimination against any person based on race, color, or religion. A club may, however, in good faith limit its membership to members of a particular religion in order to further the teachings or principles of that religion and not to exclude individuals of a particular race or color.
But you will need the EIN to start any process.
You can apply for the EIN here on the IRS.gov sitehttp://www.irs.gov/Businesses/Small-Businesses-%26-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online
It helps when requesting a Pennsylvania sales tax exemption.
For organizations that plan to be incorporated in PA, this is a key step. In Pennsylvania, you need to file your Articles of Incorporation with the Department of State's office. For more information or copies of the basic forms contact:
The Department of StateCorporation Bureau308 North Office BuildingHarrisburg, PANNN-NN-NNNN(717)(NNN) NNN-NNNN/p>
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You did not address my quesytion relating to federal filing requirements.
I was waiting to see if you had any further questions. questions
You did not address my question relating to federla filing requirements.
Are you going to register as a nonprofit?
That question is relevant to any answer I can give you.
We do not understand the registration requirement. If we must register, we shall do so. We need a bank account and undersatnd that a tax ID number is XXXXX to do so. Having been issued a tax ID number, is there a filing requirement o be satisfied?
No, if you register you would file your N 990 form each year (if your gross receipts are under $50,000).
I asked if there is an annual filing requirement to be satisfied because a tax ID number has been issued. You answered "No" but went on to say that a Form 990N must be filed annually. Your answer contradicts itself. Please be clear.
If you register as a nonprofit under the 501c7 status, you would have to file the 990. If you just get the EIN to open the bank account, no, you do not have to file a tax return.
As long as the only money you take in is from the dues of the members then that is not income.
If funds are received as donations and those funds are used to further the service aspects of the club's objectives, are such funds regarded as income which give rise to the requirement of annual filing?
Yes then your club would need to file if it is not registered because those are not member dues. This is where your club would want to go ahead and request to be nonprofit as a social club. The money then would not be taxable. You would have to file the 990 form of course because you would not want to lose your status as a nonprofit, but you would not have to pay tax on the extra donations as long as the money is not used for purposes other than the club purposes and not for the benefit of any one person in the club.
You would not want to receive too much from other sources though. A section 501(c)(7) organization may receive up to 35 percent of its gross receipts, including investment income, from sources outside of its membership without losing its tax-exempt status. No more than 15 percent of the amount may be derived from use of the club’s facilities or services by the general public or from other activities not furthering social or recreational purposes for members. If an organization has nonmember income exceeding these limits, all the facts and circumstances will be considered in determining whether the club continues to be exempt.
You always want to make sure that most of the funding comes from dues.