Form 990 Tax Filing Requirements for Employee Associations
Learn about obtaining tax-exempt status, 990 filing requirements, and your deadline.
What Should Employee Associations Know About
Form 990 Filing??
- Updated March 28, 2024 - 2.00 PM - Admin, Tax990
Any organization that operates toward the furtherance of a charitable cause can obtain an exemption from paying federal income taxes under the corresponding IRC sections.
This article explains how Employee Associations can qualify for federal tax exemption under section 501(c)(4) and what their annual filing requirements are.
Table of Contents:
How Does the IRS Define Employee Associations?
- The IRC section 501(c)(4) defines an Employee Association as a local association of employees that provides membership only to employees of a designated person or persons in a particular municipality.
- The net earnings of these Employee Associations must be devoted exclusively to charitable, educational, or recreational purposes and must not benefit any private shareholder or individual.
- The IRC section 501(c)(4) also states that Employee Associations can include individuals who work for different employers.
Note:
An employee association will not be considered a local organization if its activities are limited only to the borders of a state.
How can Employee Associations Obtain 501(c)(4)
Tax-Exempt Status?
- Employee Associations that are willing to operate as Section 501(c)(4) organizations are required to file Form 8976, Notice of Intent to Operate Under Section 501(c)(4) electronically.
- If the employee association is intended to operate under section 501(c)(4), it must notify the IRS within 60 days from the date when the organization was formed.
- Along with Form 8976, these organizations can also file Form 1024-A, Application for Recognition of Exemption Under Section 501(c)(4) of the Internal Revenue Code, to apply for recognition of tax-exempt status and obtain a determination letter. This form must also be filed electronically.
- These organizations are required to file Form 8976 even if they file Form 1024-A.
Steps to File Form 1024-A
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Step 1:
Register for an account on Pay.gov
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Step 2:
Search for "1024-A" in the search box and select it
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Step 3:
Complete the form.
Note:
Employee associations that carry out activities such as providing a bus for the members’ convenience, paying retirement and death benefits, and providing purchase discounts to members are not qualified for tax exemption under section 501(c)(4).
What are the Tax Filing Requirements for 501(c)(4)
Employee Associations?
Though 501(c)(4) Employee Associations are exempt from paying federal taxes, they are still required to file Form 990 series annually to stay tax-compliant. The details required on Form 990 include financial information, activities, program services, etc.
The Form 990 series consists of different variants. Employee Associations are required to choose the applicable form based on their gross receipts and assets.
- Form 990-N - Applicable to Employee Associations with gross receipts ≤ $50,000
- Form 990-EZ - Applicable to Employee Associations with gross receipts < $200,000 and assets < $500,000
- Form 990 - Applicable to Employee Associations with gross receipts ≥ $200,000 (or) assets ≥ $500,000
Additional Filing Requirements for Hospitals
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Along with a 990 form, 501(c)(4) Employee Associations may need to include certain Schedules for reporting additional information based on their activities, contributions received, and various
other aspects. -
Also, 501(c)(4) Employee Associations that e-file Form 990 or 990-EZ may also be required to file Form 990-T if they have an unrelated business income of $1000 or more during the corresponding
tax year.
When is the Deadline for 501(c)(4) Employee Associations to file Form 990?
For Employee Associations that have obtained tax-exempt status under section 501(c)(4), the deadline for filing Form 990 is the 15th day of the 5th month after their accounting period ends, i.e., May 15th for organizations following a calendar tax year.
Operating on a Fiscal Tax Year? Use our due date calculator to find your due date.
The IRS may impose penalties for Employee Associations that fail to file 990 forms on or before the deadline. These organizations may even lose their tax-exempt status if they fail to file 990 forms for 3 consecutive years.
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