U.S. Federal tax-exempt status was granted to the national organization of EQUAL! . Keep in mind that our tax-exempt status has nothing to do with our tax ID number; any organization can get a federal tax ID.
Our federal tax-exempt status does not automatically convey a similar benefit at the state or local level.
Chapters sometimes ask if the 501 (c)(3) status pertains to them as well as the national organization. The answer is no. One of the requirements for being a tax-exempt organization is to keep membership records which could be made public. Given the privacy concerns of some of our closeted members, and the fact that we do not have clear criteria for membership at the chapter level (there are no membership cards, dues are optional, and being on the mailing list often suffices for voting privileges), this was considered unacceptable. At the national level, our membership consists of the chapter representatives to the assembly.
There are stipulations attached to our status, including keeping records of how funds are spent. When EQUAL! distributes funds to other organizations, we must show whether or not they are also tax exempt. If they are not exempt, we must have evidence that the funds will remain dedicated to the purposes (educational, in our case) listed in the IRS code.
If EQUAL! distributes funds to individuals, we must keep records showing the recipient names and addresses, the purposes for the funds, the manner in which the individuals were selected to receive the funds, and any relationship of the recipients to members, officers and contributors.
Our status enables contributors to EQUAL! to deduct their donations for tax purposes. Since only the national organization is exempt, this poses a logistical and accounting challenge. It is possible for local chapters to have donations funneled through the national treasury. However, the local chapter must:
- Notify the national treasurer to expect the funds, specifically the amount and the donor. In no instance should a local chapter use the national organization’s tax ID number without first notifying the treasurer.
- Funds must be sent to the treasurer for deposit in the national account. The national treasurer will deposit the check, then write and mail a check to the local chapter for that amount. The national treasurer will also keep records of the transaction.
- The local chapter sends a written report detailing the information required by the IRS. We do not want to lose our tax-exempt status because of incomplete record-keeping.