Tax-Exemption filing beyond 27 month cutoff

[MHPB]

What is the name of your state? Connecticut

Hello,

I am part of an organization (a band) that formed September 1969. We however, have never applied for tax exempt status under 501( c ) 3. We don’t have any employees; everything is strictly on a volunteer basis. No person in the band gets compensated. All of the money the band has generated over the past 38 years has been from performances. Nobody donates money to us; neither do we have membership dues. We have decided to file for tax exemption as a public charity because there has been a recent change in leadership. The new leader wants to get us straight with the IRS while the old leader had no interest in doing so. I am tasked with filling out the application for tax exemption. While doing so, I found we obviously missed the 27-month cutoff date. So, how do we go about filing correctly? What do we say? Is it possible we could consider ourselves dissolved under old leadership and reformed under the new? If so, how do we explain where our money came from? Are there some serious jail time ramifications for not filing?

Thank you for all your help.

[LdiJ]

Originally Posted by MHPB

What is the name of your state? Connecticut

Hello,

I am part of an organization (a band) that formed September 1969. We however, have never applied for tax exempt status under 501( c ) 3. We don’t have any employees; everything is strictly on a volunteer basis. No person in the band gets compensated. All of the money the band has generated over the past 38 years has been from performances. Nobody donates money to us; neither do we have membership dues. We have decided to file for tax exemption as a public charity because there has been a recent change in leadership. The new leader wants to get us straight with the IRS while the old leader had no interest in doing so. I am tasked with filling out the application for tax exemption. While doing so, I found we obviously missed the 27-month cutoff date. So, how do we go about filing correctly? What do we say? Is it possible we could consider ourselves dissolved under old leadership and reformed under the new? If so, how do we explain where our money came from? Are there some serious jail time ramifications for not filing?

Thank you for all your help.

I am a little confused. If no one gets compensated and no one makes donations to the band, then where does the money come from, and where does it go? We have to be sure that you qualify as a not for profit organization before we give you any advice.

[MHPB]

I meant to say that no one just hands us a check without us at least playing a song or two. We get paid for performances like parades and concerts. The money is used for uniforms and travel expenses like renting a bus to get us from one gig to another. Sorry if I wasn't clear. I'm completely burnt out on all this tax stuff.

Thank you.

[LdiJ]

Originally Posted by MHPB

I meant to say that no one just hands us a check without us at least playing a song or two. We get paid for performances like parades and concerts. The money is used for uniforms and travel expenses like renting a bus to get us from one gig to another. Sorry if I wasn't clear. I'm completely burnt out on all this tax stuff.

Thank you.

A not for profit organization is a charitable organization. You are not a charitable organization.

You are one of two things....if no profits are ever made (not even a small amount) then this might be considered to be a hobby. If so, you should be equally dividing the income between the members of the band, and reporting that as "other income" on your 1040, and also dividing the expenses and reporting them on schedule A, as hobby expenses.

However, if any profits at all are made, even small ones, then you should organize yourselves as a partnership, S-corp or LLC and should report the income and expenses on an 1120S or 1065, then issues K1s to each of the band members for reporting any income or loss on their personal return.

I suspect that the second option is the way that you want to go with this. You seem to have considerable expenses and I think that it would be better handled that way. I also suspect that you do have some profits as well, or you wouldn't have been doing it for this long.

Get your business entity organized and start doing things properly.

[MHPB]

If you would like I could send you several websites to bands that do the same exact thing we do. Then maybe, you'd understand what I'm talking about. We are trying to become non-profit under IRC 501 c 3 as an unincorporated association. All of the other bands I know like us are considered public charities. No one gets paid and the money isn't divided up. They are supported wholly by the public.

Thank you for your answer.

[tranquility]

I don't see the tax-exempt status either. What category are you going to claim for exemption?