4-H Tax Exemption Update – October 2008

In fall of 2007, in response to new filing procedures for small taxexempt organizations earning $25,000 or less, National 4-H Headquarters sent instructions to the State 4-H Office toupdate eligible and qualified 4-H clubs andaffiliated 4-H organizations listed under a group exemption for 4-H (GEN2704).

The IRS is dealingwith the volume of data as well as the frequency of error in thedata – such as EINs that belonged to other organizations and EINs thatdidnot match the IRS' records for organizations listed.

As a result, the IRS put a hold on updating GEN 2704 records and began aseries of discussions and negotiations with National 4-H Headquarters. National 4-H continues to work to identify more efficient and effective proceduresfor managing tax exemption for qualified 4-H entities that fit withcurrent tax codes. National 4-H Headquarters does not have plans to collect additional EINrecords in December as originally planned. The State 4-H Office will follow up wheninformation about how 4-H clubs and duly authorized affiliated 4-Horganizations can update existing IRS records, including tax years.

As indicated in the current (July 2008) tax exemption update posted on the National 4-H Headquarters website, the IRSencountered delays in processing the GEN 2704 list. Some highlights in review:

* 4-H organizations that are eligible for federal income taxexemption under GEN 2704 are chartered 4-H clubs and duly authorizedaffiliated 4-H organizations-under the control of Cooperative Extension.

* This does not include affiliated groups that function under theauthority of their own board of directors or other authorities, norfamilies-as the IRS does not recognize a single family group as aqualified subsidiary of GEN 2704.

* Affiliated groups not under the control of Cooperative Extensionneed their own 501(c)3 status.

* State 4-H Program Leaders submitted EIN records for 4-Horganizations deemed eligible for inclusion under GEN 2704, andExtension Directors signed letters certifying that allorganizationslisted were duly authorized and under the control of CooperativeExtension-unless marked for removal.

* Following data cleaning efforts, such as removing records wheremultiple organizations were using the same EIN, we submitted a nationaldata set to the IRS in March for them to update the GEN 2704 list. Entities being added to GEN 2704 will become tax exempt when the IRSupdates each record.

TAX EXEMPTION LETTERS:

National 4-H Headquarters, USDA will generate "emergency letters" uponrequest to chartered 4-H clubs and duly authorized affiliated 4-Horganizations under the control of CooperativeExtension up through June1, 2009. "Emergency letters" are for clubs that cannot accept funds orgrants without some evidence of tax exempt status to share with afunder. To request such a letter, contact JimAdams at the State 4-H Youth Development Office (785) 532-5800. Please allow approximately two weeks for National 4-H Headquarters to respond to special requests. Letters are mailed to the 4-H organization contact and copied to State 4-H Program Leader and Extension Director.

Note: CountyExtension Councils are part of the land grantuniversity, and usually operate under the tax status of the universityand are not eligible for inclusion under the existing GEN 2704.

ADDITIONAL REMINDERS:

* All 4-H tax exemption questions by county level colleagues and4-H organization leaders must be routed through the State 4-H ProgramOffice. Do not go directly to the IRS.

* Remove from your files and websites outdated tax exemptioninformation-such as the tax booklet from the early 1990s, and the Kirbyletter-as these are no longer supported by the IRS or USDA.

HOW TO FILE A 990-N (E-POSTCARD)

If you are asked to file a 990-N (e-postcard) for one of your groups, follow these steps:

  1. Go to
  2. Click on Form 990-N (e-postcard)
  3. Click on the “Here” spot to file 990-N
  4. Click to leave IRS site (Government contracted with a company to process forms)
  5. Follow directions to Register as a New User
  6. Request Login ID by inserting EIN for the group
  7. Create a password
  8. Receive e-mail
  9. Follow directions

If you have any questions, contact JimAdams () or 785-532-5800.