State Filing Requirements

Chapter/ Council Incorporation

 Incorporation is a complicated subject. The IRS does not require subordinates (chapters) under a group exemption (which TU holds) to become incorporated within the states in which they operate. However, each state may have different registration requirements, and chapter and council leaders should  become familiar with local regulations and comply with state or local laws.

In general, there is no advantage for a chapter or council to separately incorporate. For tax exemption purposes, chapters and councils are covered by TU’s 501(c)(3) exemption and do not need to seek separate nonprofit status. Chapters, councils and their officers and directors are also covered by TU’s GCL policy and its directors and officers coverage. The primary reason for incorporating (protecting individual members and directors from liability) is largely dealt with through TU insurance. A chapter or council that is separately incorporated has the same coverage under TU’s insurance policies as a chapter or council that is not separately incorporated. An additional barrier to separate incorporation is the administrative burden (different in each state) of technical rules and requirements to create and maintain corporations. Most states have an annual filing requirement and filing fees.

State Sales Tax Exemption

In order to avoid paying sales tax on goods and services purchased by the chapter or council, the  chapter or council must have a sales tax exemption issued by the state. Like incorporation, the rules and applications for this vary by state. Generally a form is required describing the organization and its activities. In some states a much shorter form may be used by entities that already have 501(c)(3)  status. Contact your state tax authorities for the forms and information.

A Responsible Raffle Reminder

Raffles are important fundraising tools for chapters and councils, but it’s important to remember that they also raise important legal issues. Councils and chapters need to be aware of those issues to avoid legal problems. Always check with your state’s secretary of state and attorney general to make sure the raffle that your chapter or council is planning complies with your state’s laws and with any applicable local laws. Moreover, do not sell raffle tickets to someone outside of your state either through the mail or over the Internet. Doing so may violate federal law and the laws of some states. It is better to take the time to check your state’s law before conducting a raffle than to run into problems later.