501[c](4) Group Exemption

As you may already be aware, RI has a 501[c](4) group exemption, which entitles all Rotary clubs in the U.S. and U.S. territories to this tax-exempt status when they charter. The IRS requires all 501[c](4) organizations to file an annual return (see attached RCs and the IRS FAQs). Each club has its own EIN (employer identification number) and must file with this number.

Section 6033(j) of the Internal Revenue Code “automatically revokes the exemption of any organization that fails to satisfy its filing requirement for three consecutive years” (http://www.irs.gov/Charities-&-Non-Profits/Automatic-Revocation-of-Exemption).

 

According to IRS records, there are a few clubs that have actually lost their exemption – these clubs have been separately notified through their AGs.

 

The IRS communicates with clubs whose tax-exempt status has been revoked, but experience has shown that some clubs have been unresponsive. Once reinstatement has been accomplished, these clubs’ tax-exempt status will be independent of RI (see FAQ). Therefore, Rotary does not track the progress of a club’s reinstatement, and it is not required that clubs communicate their progress to RI.

 

Clubs can find more information about the revocation of their tax-exempt status by using the IRS’ Exempt Organizations Select Check tool: http://apps.irs.gov/app/eos/.

 

Clubs whose tax-exempt status has been revoked must file an application for exemption with the IRS to obtain reinstatement of their tax-exempt status. While RI is unable to resolve this matter on a club’s behalf, we are happy to direct clubs to IRS resources that might be helpful for reinstating tax-exempt status (see last question of the FAQ).