FAQ's - Tier Level 1 Membership
This question and answer section is for use by Amateur Athletic Union of the U.S. Inc., its Districts, and its Affiliated Organizations. It is designed to answer questions on matters relating to:
The tax exempt status of Amateur Athletic Union of the US, Inc. and qualified Affiliated Organizations, and,
The types of contributions to Amateur Athletic Union of the US, Inc. that a taxpayer or donor can claim as a deduction on a Federal income tax return.
Other general topics
This question and answer section is an attempt to provide an educational package for those requesting information. The AAU has final determination on organizations seeking to qualify as an Affiliated Organization. All tax questions should be directed to the Internal Revenue Service toll free number 1-877-829-5500 or your local IRS office.
The Internal Revenue Service (IRS) issued a ruling letter in January 1966, that recognizes the Amateur Athletic Union of the US Inc., and its Affiliated Organizations as tax-exempt under section 501(c)3 of the IRS code.
DISCLAIMER
The AAU is attempting to comply only with its understanding of IRS regulations and applicable laws.
The information contained herein is for informational purposes only. It is not intended as nor shall it be considered to be legal advice. This information is not and shall not be considered as a directive from the National AAU (Amateur Athletic Union of the United States, Inc.). It should not be relied upon other than for educational purposes.
The answers to "Frequently Asked Questions" that appear here are opinions of the Amateur Athletic Union of the US Inc., based on the best information available to it. You should, however, not rely on these opinions without conducting your own inquires. The IRS, and not the AAU, is the final interpreter of laws and regulations about tax-exempt organizations and charitable deductions.
Section I - Getting Started
1. What is an Affiliated Organization?
An Affiliated Organization is any organization which functions for the purpose of furthering amateur sports and formally affiliates itself with the Amateur Athletic Union of the US Inc.
Affiliated Organizations must have articles of organization, must be under the Amateur Athletic Union of the US Inc.'s general supervision and control, and must submit a Request and Consent form to be included on the group ruling.
2. How does a club become an Affiliated Organization?
Clubs can only apply online to become an Affiliated Organization. Clubs must follow all of the steps on the web site for the Affiliated Club Membership Program. This is an annual membership program.
3. Can I use the "AAU" or "Amateur Athletic Union" as the name of my Affiliated Organization?
No. You may not use AAU or Amateur Athletic Union in the name of your organization or your organization’s email address. When you complete your articles of organization, you can not use AAU or Amateur Athletic Union on line 1: The Name of this Organization is __________________.
4. Can I use "AAU" or "Amateur Athletic Union" in the title of an event our Affiliated Organization is hosting?
Yes, if the event has been properly licensed by the AAU. Complete the AAU event license application to receive an AAU event license number for the event
5. Are Affiliated Organizations exempt from the payment of federal income taxes?
Yes.
The group ruling issued to the Amateur Athletic Union of the United States, Inc. by the Internal Revenue Service in January 1966,- recognized the national Amateur Athletic Union of the US, Inc. and its Affiliates as exempt from Federal income tax under section 501(c)(3) of the IRS Code. This means the Amateur Athletic Union of the US Inc. and its Affiliates are tax-exempt organizations.
IRS publication 557 is an excellent source of information for Tax Exempt Organizations. This publication is available on the IRS web site. www.irs.gov
6. Are Affiliated Organizations automatically exempt from State Sales Tax?
Click here for more information.
7. Can Affiliated Organizations be private foundations?
No.
8. Is the Amateur Athletic Union of the US Inc., a private foundation?
No.
The group ruling issued to the Amateur Athletic Union of the US Inc. by the Internal Revenue Service in January of 1966, stated that both the Amateur Athletic Union of the US, Inc. (National Office) and Affiliated Organizations are not private foundations within the meaning of section 509(a) of the IRS 1986 Code, because they are organizations described in section 170(b)(1)(A)(vi) of the Code.
9. What is the difference between Nonprofit status and Tax Exempt Status?
"Nonprofit" is the purpose of the organization as stated in the Articles of Organization. "Tax-exempt" is a status recognized by the IRS.
10. Where does the nonprofit status come from?
Nonprofit status refers to incorporation status under state law. The laws of the various states define which organizations or associations are "profit making" and which are "nonprofit". Nonprofit organizations exist only for charitable or educational purposes that are clearly stated in their articles of organization. They do not produce economic benefits for their organizers, directors and officers.
11. Where does Tax-exempt Status come from?
The tax-exempt designation is a status recognized by the IRS.
All tax-exempt organizations under Section 501(c)3 of the Internal Revenue Code are also nonprofit organizations under state law but the reverse is not true. All nonprofit organizations are NOT automatically tax-exempt under Federal Law. They must obtain Federal tax-exempt status by: (1)applying separately with all of the costs of doing so, or (2) qualifying as a member of a tax-exempt group, such as the Amateur Athletic Union of the US Inc.
The Internal Revenue Service issued a group ruling 501(C)3 determination letter to the Amateur Athletic Union of the US Inc. in January 1966. This letter from the IRS gives the Amateur Athletic Union of the US Inc. tax-exempt status. Each year the Amateur Athletic Union of the US, Inc. provides a list of subordinates to be included in this group ruling to the IRS. All Affiliated Organizations are listed as a subordinate. This means affiliate organization are recognized as tax-exempt organizations.
12. What are the responsibilities of the Affiliated Organization?
The Affiliated Organization must maintain a record of its activities, maintain a record of contributions received, prepare, keep, and file a record of its financial transactions (including, but not limited to: IRS Form 990, IRS Form 1099, IRS rules and regulations, and all applicable state requirements). It must also renew annually with the AAU as an Affiliated Organization, in order to maintain the limited trademark license and tax-exempt status.
In addition, the Affiliated Organization must check with state and local agencies for required filings and reports. The IRS link below contains some state filing and information.
IRS Link to State Charities Offices
https://www.irs.gov/charities-non-profits/charitable-organizations/state-charity-offices
13. Can a preexisting 501(c)3 organization be included as an Affiliated Organization on the AAU's group ruling?
No.
If your organization has received a letter from the IRS granting your organization tax-exempt status, then your organization is not eligible to become an Affiliated Organization (Tier Level 1 Club).
14. Are incorporated organizations eligible for inclusion under the group ruling?
Yes, the club must be registered as a non-profit corporation.
15. What is an organizing document?
IRS regulations require an organizing document. The organizing document defines the purpose of the organization, identifies the principals, and defines the dissolution process.
16. What is an EIN?
People have social security numbers; Organization and Companies have employer identification numbers (EIN).
An Employer I.D. Number [EIN], a Federal ID (FID), a Federal Employer ID Number (FEIN), and a Taxpayer ID number [TIN] are all different names for the same number.
17. Does an affiliated organization need an EIN?
Yes.
All Affiliated Organizations must have their own EIN (Employer Identification Number).
Affiliated Organizations need to apply only one time for the Employer Identification Number (EIN). Once obtained, like a personal SSN, the EIN is good forever.
Note: The Employer Identification Number (EIN) is not the same as the Amateur Athletic Union of the US, Inc. Group Exemption Number explained in question 19. Both numbers, however, must be included on Form 990, in the appropriate places, by Affiliated Organizations. Affiliated Organizations should NOT use the employer identification number (EIN) belonging to the Amateur Athletic Union of the US Inc. for any reason, or on any forms.
18. How does an Affiliated Organization get an EIN?
Affiliated Organizations can obtain an EIN by submitting an SS-4 Form to the IRS, by calling the IRS's new toll-free number, 1-800-829-4933, or via the IRS's online application process. (visit the IRS website; type in "SS-4" in the top search box, click on "apply online"). PLEASE RETAIN A COPY OF THE CONFIRMATION OF FEIN RECEIVED (LETTER SS-4) FROM THE IRS. YOU WILL NEED THIS DOCUMENTATION EACH YEAR WHEN RENEWING YOUR CLUB.
Section II- Filing and Reporting Requirements
19. Determine the Affiliated Organizations fiscal year.
To be included in the Amateur Athletic Union's membership program and be eligible to be included in its group exemption letter, all Affiliated Organizations (Tier Level 1 Clubs) must have the same fiscal year as the Amateur Athletic Union of the US Inc. This is September 1st to August 31st, which matches the AAU's membership year.
20. Are Affiliated Organizations required to file reports with the Internal Revenue Service?
YES.
The applicable Form 990 is required to be filed each year. Failure to file the applicable Form 990, for three consecutive years, will result in the tax exempt status of the entity being revoked. The 990 Form that you should file depends on the gross receipts, which can also be called revenue, income, or all monies received.
If the organization’s gross receipts are typically $50,000 or less the Form 990-N may be filed electronically. The organization only needs 8 pieces of information to file the 990—N electronic postcard. Information needed is: Employer Identification Number (FEIN), Tax Year, Legal name and mailing address, any other names the organization uses, name and address of principal officer, website address or organization (if there is one), confirmation that the organization’s gross receipts are $50,000 or less and if applicable a statement that the organization has terminated or is terminating (going out of business).
If the organization had gross revenue of more than $50,000 but less than $200,000 the Form 990-EZ should be filed. If the organization has gross revenue in excess of $200,000 or assets of $500,000 or more the full Form 990 is required.
21. When should Form 990 be filed?
Internal Revenue Service requires Form 990 to be filed by the 15th day of the fifth month following the close of the accounting period. For example, AAU Affiliated Organization's operate on a fiscal year of September 1 - August 31, then the Form 990 or an extension is due on January 15th. In order to file an extension, IRS Form 8868 is required to be completed and submitted to the IRS. The extension will move the deadline for filing the applicable Form 990 by 6 months, making the deadline July 15.
22. What is the Amateur Athletic Union of the US, Inc. group exemption number (GEN) to be used on Form990?
> The Internal Revenue Service has assigned a Group Exemption Number to Amateur Athletic Union of the US, Inc., which must be used by all Affiliated Organizations when filing Form 990. This number is 1155. On the Form 990EZ this number goes in box "F". On the Form 990 this number goes in box "I" [ i ] and box "H(d)" should be marked yes.
The Group Exemption Number (GEN) is NOT the same as the employer identification number (EIN)
23. Where can copies of Form 990 (or Form 990EZ) and Instructions be obtained?
Contact the local Internal Revenue Service office, or go to the IRS web site at www.irs.gov
> IRS Form 990 >
> IRS Form 990ez >
> IRS Form 990 (990ez) Schedule A >
> IRS Form 990 (990ez) Schedule B >>
> IRS Form 990 Instructions >
Requires Acrobat Reader. Click here to download the FREE Acrobat Reader. >
24. Where should completed Form 990 (or Form 990EZ) be mailed?
Form 990 should be sent to: Internal Revenue Service Center Ogden, UT. 84201-0027 -
25. What is a Form 1099?
IRS Form 1099 is used to report all non-employee compensations. This includes individuals providing services to the Affiliated Organization. For Example: Referee and tournament director fees are subject to Form 1099 reporting. Amounts reported are based on payments made during the calendar year. Form 1099s are usually a three part form. Part one of Form 1099 must be mailed to the recipient (Referee, Tournament Director, etc.) by January 31st of the following year. Part two must be mailed to the Social Security Administration. Part Three is for your files. Typically, Form 1099 are available at your local office supply store beginning January 1st. Instructions for Form 1099 and 1096 can be found on the IRS web site, www.irs.gov . Reimbursement of out-of-pocket travel and other expenses, where orginal receipts are provided, does not trigger a Form 1099. This form is used for personal compensation (wages, fees, and non-accountable expense plans).
26. What is a Form 1096?
Form 1096 is the summary page for Form 1099. All of the Form 1099's are added together and this total is reported on a Form 1096.
27. Are Affiliated Organizations required to file Form 1099 and Form 1096?
Yes, if you pay an individual $600 or more for providing services. >
Section III - Contributions and Donations
28. Are donations made to Affiliated Organizations deductible by donors for Federal income tax purposes?
Yes, and this is a great beneift for each of our Affiliated Organizations.
The Internal Revenue Service, in its ruling dated January 1966, stated that donors may deduct contributions to Amateur Athletic Union of the US Inc., and its Affiliated Organizations as provided in section 170 of the 1986 IRS Code (providing the taxpayer itemizes deductions).
IRS publication 1771 is an excellent source of information on donation. This publication is available on the IRS web site. www.irs.gov
29. Are donations of cars, stocks, property, ect. treated as a deductible contribution on a donor's tax return?
Yes.
But there are specific IRS rules and regulations to follow. For more information, please refer to IRS Publication 557, page 11. For Example: For non-cash donations over $5,000, the donor must attach Form 8283 to his/her tax return. The Amateur Athletic Union of the US, Inc. recommends Affiliated Organizations contact the Amateur Athletic Union of the US Inc. (407-934-7200) if they plan to receive a non-cash donation with a value greater than $5,000.
30. Can dues or fees paid to an Affiliated Organization be treated as a deductible contribution on a donor's tax return?
No. The general rule is that if value is received for money paid the payment is not tax deductible.
31. Can a donation to an Affiliated Organization be deductible if the donor stipulates that the proceeds are to be used to send his or her child to a specific function or event?
No. Value was received by the child attending an event; therefore, donation isn’t tax deductible.
Contributions earmarked by the donor, for his/her child, are treated, as a gift to the individual and is not deductible.
32. What must an Affiliated Organization do if it receives a donation of $250 or more?
The Affiliated Organization must provide a written acknowledgment for donations of $250 or more - sample wording is listed below. The letter must contain the name, address and FEIN number of the entity that received the donation.
Example of Written Acknowledgment
"Thank you for your cash (or check) contribution of $300 that (organization's name) received on December 12, 2020. No goods or services were provided in exchange for your contribution."
33. What must an Affiliated Organization do if it hosts a banquet or similar fundraiser?
The organization must provide a written acknowledgment for "quid pro quo" contributions over $75. A "quid pro quo" ("this for that") contribution is a payment that is partly a donation and partly payment for goods or services. For Example: if a donor gives a charity $100 and receives a banquet ticket valued at $40. The donor has made a partial "quid pro quo" contribution - he has received something of value in return for at least part of his total. The charitable contribution is $60 and the value of the goods or service (the banquet ticket) is $40. A written acknowledgment must be sent because the donor's payment ($100) was greater than $75. The written statement must inform the donor that the amount of the contribution is deductible for Federal income tax purposes, and must provide the value of the goods or service received, it also must contain the name, address and FEIN of the entity that received the quid pro quo contribution - sample wording is listed below
Example of Written Acknowledgment
"Thank you for your cash (or check) contribution of $100 that (organization's name) received on May 6, 2001. In exchange for your contribution, we gave you a banquet ticket with an estimated fair market value of $40.00"
Section IV - Other Items
34. Is it necessary that each affiliated organization have a separate bank account?
Yes.
Each affiliated organization must have its own bank account. The funds of an Affiliated Organization cannot be commingled with those of any other organization or with any individual.
35. What needs to be done when a change in principals occurs?
The name of the Organization, the EIN, and all assets belong to the Affiliated Organization, not the principals. When a change in principal(s) occurs the minutes of the meeting must reflect these changes. A letter stating the changes should be sent to the bank. During the annual online renewal process the Affiliated Organization should key in the information for the new principals.
36. What should an Affiliated Organization do when it terminates?
The Affiliated Organization must follow the Internal Revenue Service guidelines regarding termination of an Exempt Organization. Information on termination and appropriate treatment of assets can be found at IRS.gov (type termination of an exempt organization in the search bar.
When an Affiliated Organization terminates, notify the Amateur Athletic Union of the US Inc., (National Office). You must also file a final return with the IRS and check final return in the header section of the applicable form 990. The state where the entity is organized may have its own procedures that apply when a nonprofit organization ceases its activities. Please notify the state attorney general or other appropriate state office of the intent to dissolve, liquidate or terminate.
37. Must FICA contributions be made for employees affiliated organizations?
Yes.
Affiliated Organizations are liable for taxes under the Federal Insurance Contributions Act. The Affiliated Organization must make matching OASDI (Social Security) and Medicare contributions for each employee who is paid $100 or more in a calendar year. The Affiliated Organization paying the salaries of these individuals is liable for the payment of matching OASDI (Social Security) and Medicare taxes.
Affiliated organizations are not liable for the tax imposed under the Federal Unemployment Tax Act (FUTA).
38. Where can additional information on tax exempt organizations be obtained?
The IRS has a toll free number for technical question on tax exempt organizations. 1-877-829-5500.
39. How can I print IRS forms, instructions and publication from the IRS Web site?
Go to www.irs.gov. From the home page, look for: "Forms and Publications"
40. Do affiliated organizations need to file any documents with their state?
The AAU advises you to call the Secretary of State and the Division of Consumer Services or visit their websites. Organizations may be required to register to do business and register to solicit donations.
Example: The State of Florida requires charitable organizations or sponsors intending to solicit contributions from the public to annually register with the Division of Consumer Services. Failure to comply with this act is a third degree felony.
41. Other Information
Click here to download case studies and valuable information for Affiliated Organizations.
Then on the page that appears: choose Forms and Instruction or Publications and Notices. Scroll down to the bottom of this page. A box containing the list of forms, instruction or publications is at the bottom of this page. Choose the appropriate document. Click on "Review selected files".