Subject:
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Re: Organizational business for ldraw.org as pertains to future activities
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Newsgroups:
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lugnet.cad.dev.org.ldraw
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Date:
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Tue, 13 Jun 2000 18:44:00 GMT
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In lugnet.announce, Tim Courtney writes:
> Hello!
>
> I believe there are some group issues to attend to before ldraw.org
> starts selling CDs. I got to talk to a lot of people this weekend and
> received valuable input towards the direction of this now nebulous
> group and what needs to take place in the future.
>
> First off, I believe 'we' need to pursue becoming a legal non-profit
> entity because of the CD sales and US tax law issues.
<snip>
OK, Tim and I talked during + after the fest and I offered to help research
the issue a bit.
A quick look through the types of exempt organizations [1] narrows the search
down to Charitable Organizations. I looked into "Social Clubs" for a while,
but the requirements there don't fit ldraw.org at all.
Reading through the types of charity that the document is referring to, it
seems that ldraw.org could be considered either as a private org, or a
charitable org. Certainly not any of the others, AFAIK. It seems viable to say
that ldraw is not a private org, so I looked a bit more into "charitable".
From the requirements for charitable orgs [2]:
"The term charitable is used in its generally accepted legal sense and
includes [...] advancement of education or science"
"In addition, assets of an organization must be permanently dedicated to an
exempt purpose."
So the things to consider would be: can ldraw be considered as educational?
Does it even *have* an exempt purpose?
Another thing that was mentioned was that in order to file a request for tax-
exemption, a copy of the Articles of Organization must be included. So... you
want to have that figured out as well.
Also note:
"The articles of organization must limit the organization's purposes to one or
more of the exempt purposes set forth in § 501(c)(3) and must not expressly
empower it to engage, other than as an insubstantial part of its activities,
in activities that are not in furtherance of one or more of those purposes."
About the exempt purposes... these are mentioned here.
From section 501 in the USC:
(a) Exemption from taxation
An organization described in subsection (c) or (d) or section
401(a) shall be exempt from taxation under this subtitle unless
such exemption is denied under section 502 or 503.
This is § 501(c)(3): (summary below)
(c) List of exempt organizations
[...]
(3) Corporations, and any community chest, fund, or foundation,
organized and operated exclusively for religious, charitable,
scientific, testing for public safety, literary, or educational
purposes, or to foster national or international amateur sports
competition (but only if no part of its activities involve the
provision of athletic facilities or equipment), or for the
prevention of cruelty to children or animals, no part of the net
earnings of which inures to the benefit of any private
shareholder or individual, no substantial part of the activities
of which is carrying on propaganda, or otherwise attempting, to
influence legislation (except as otherwise provided in subsection
(h)), and which does not participate in, or intervene in
(including the publishing or distributing of statements), any
political campaign on behalf of (or in opposition to) any
candidate for public office.
To make a long story short, if ldraw.org has nothing to do with politics, and
it is operating for one of these purposes {religious, charitable, scientific,
testing for public safety, literary, or educational purposes, or to foster
amateur sports competition, or for the prevention of cruelty to children or
animals}, it can be exempt from tax.
Some of these purposes obviously have nothing to do with ldraw.org. Others
might. Mostly I'm talking about educational purposes.
To reiterate, the things to consider now would be:
=Can ldraw.org be considered as educational?
=Does it have a (different) exempt purpose?
=Writing a rough draft of the Articles of Organization
Phew! That was tiring.
-Shiri
Resources:
[1] http://www.irs.ustreas.gov/prod/bus_info/eo/eo-types.html
[2] http://www.irs.ustreas.gov/prod/bus_info/eo/exempt-req.html
Plus:
http://www.irs.ustreas.gov/prod/bus_info/eo/index.html
http://www.irs.ustreas.gov/prod/bus_info/eo/char-orgs.html
As well as in USC, section 501(c)(3).
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