Gene Klodzen
10-10-2001, 05:25 AM
The following was received from NAWCC President Doug Cowan, and is posted for your information. To reply to Mr. Cowan use the link below.
Subj: NAWCC-NEWS --NAWCC Sales and Income Tax Statement
Date: 10/10/2001 10:02:25 AM Eastern Daylight Time
Dear Members. During the July Annual Convention a simple statement of the
meaning of NAWCC's "tax free" status and its relevance to conventions was
requested. There has been occasional confusion for example concerning the
possibility of denying State and or local sales-taxing authorities access
to regional marts on the basis that we are "a tax free organization" The
following letter from out Legal Committee chairman , Myron Mintz, lays
out the facts. We will
publish this letter or a version of it on the NAWCC News and the paper
Mart once per year.
" NAWCC Inc. has been determined by the Internal Revenue Service to be an
educational organization, tax exempt under Section 501(c)(3) of the
Code. This means that the Corporation, NAWCC, is not required to pay
income tax on the dues received from its membership, passive income
(interest, etc.) or any other income directly related to its exempt
functions.
NAWCC is required, however, to report and pay income taxes on any other
income not related to its exempt purpose-- this tax is often referred to
as the "unrelated business income tax". (Ed.'s note-- unrelated income
might mean rental property income or affinity card profits , for
example).
" NAWCC's tax exempt status does not result in members dues being tax
deductible (to the member) as a contribution even if NAWCC, from its dues
revenues, were to make donations or grants to other tax exempt
organizations. Contributions, however, of either cash, securities or
other property to NAWCC for which the donor does not receive any
consideration may constitute charitable contributions." (Ed.'s note--for
example endowment gifts or memorial gifts.)
" Federal tax exempt staus does not preempt state and local tax
authorities from requiring compliance with their sales and use tax laws.
This means that when there is a Regional or National in a state that
imposes a sales tax on sales or exchanges within its jurisdiction, the
Regional or National will have to comply with the rules and regulations
of the state and local taxing authority"
That concludes the legal position statement. Now a few non legal comments
from yours truly based upon discussions and experience, to help with
perspective.
We as an organization and as individuals obey all tax laws.
State sales tax authority usually does not exempt out of state attendees
at conventions.
Sometimes, local tax authorities do not uniformly enforce their legal
right to tax transactions. It is always good to get the local business or
tourist board acting on your side to emphasize the overall tax loss to
the community if an NAWCC
regional leaves the area because of local taxation.
So, as a quick summary. The NAWCC is income and sales tax exempt.
Chapters who've obtained tax exempt status
are also exempt. Individuals are not tax exempt. Sincerely, Doug
Cowan, President dcclock@juno.com
__________________________________________________ ______________
-----------------------
[This message has been edited by Gene Klodzen (edited 10-10-2001).]
[This message has been edited by Gene Klodzen (edited 10-10-2001).]
Subj: NAWCC-NEWS --NAWCC Sales and Income Tax Statement
Date: 10/10/2001 10:02:25 AM Eastern Daylight Time
Dear Members. During the July Annual Convention a simple statement of the
meaning of NAWCC's "tax free" status and its relevance to conventions was
requested. There has been occasional confusion for example concerning the
possibility of denying State and or local sales-taxing authorities access
to regional marts on the basis that we are "a tax free organization" The
following letter from out Legal Committee chairman , Myron Mintz, lays
out the facts. We will
publish this letter or a version of it on the NAWCC News and the paper
Mart once per year.
" NAWCC Inc. has been determined by the Internal Revenue Service to be an
educational organization, tax exempt under Section 501(c)(3) of the
Code. This means that the Corporation, NAWCC, is not required to pay
income tax on the dues received from its membership, passive income
(interest, etc.) or any other income directly related to its exempt
functions.
NAWCC is required, however, to report and pay income taxes on any other
income not related to its exempt purpose-- this tax is often referred to
as the "unrelated business income tax". (Ed.'s note-- unrelated income
might mean rental property income or affinity card profits , for
example).
" NAWCC's tax exempt status does not result in members dues being tax
deductible (to the member) as a contribution even if NAWCC, from its dues
revenues, were to make donations or grants to other tax exempt
organizations. Contributions, however, of either cash, securities or
other property to NAWCC for which the donor does not receive any
consideration may constitute charitable contributions." (Ed.'s note--for
example endowment gifts or memorial gifts.)
" Federal tax exempt staus does not preempt state and local tax
authorities from requiring compliance with their sales and use tax laws.
This means that when there is a Regional or National in a state that
imposes a sales tax on sales or exchanges within its jurisdiction, the
Regional or National will have to comply with the rules and regulations
of the state and local taxing authority"
That concludes the legal position statement. Now a few non legal comments
from yours truly based upon discussions and experience, to help with
perspective.
We as an organization and as individuals obey all tax laws.
State sales tax authority usually does not exempt out of state attendees
at conventions.
Sometimes, local tax authorities do not uniformly enforce their legal
right to tax transactions. It is always good to get the local business or
tourist board acting on your side to emphasize the overall tax loss to
the community if an NAWCC
regional leaves the area because of local taxation.
So, as a quick summary. The NAWCC is income and sales tax exempt.
Chapters who've obtained tax exempt status
are also exempt. Individuals are not tax exempt. Sincerely, Doug
Cowan, President dcclock@juno.com
__________________________________________________ ______________
-----------------------
[This message has been edited by Gene Klodzen (edited 10-10-2001).]
[This message has been edited by Gene Klodzen (edited 10-10-2001).]