990: IRS Form 990 is an informational tax form that most tax-exempt organizations must file annually. In a nutshell, the form gives the IRS an overview of the organization’s activities, governance and detailed financial information. Tax-exempt organizations with less than $200,000 of gross receipts and less than $500,000 in assets can file Form 990-EZ, which is the “short form” version of Form 990. The shortest version of Form 990, the Form 990-N, can only be filed by organizations with gross receipts of $50,000 or less. Any organization that fails to file the appropriate Form 990 for three consecutive years risks having its tax-exempt status revoked by the IRS.
501(c)(7): The IRS designates some organizations as tax-exempt based upon the organization’s purpose. Most fraternal organizations are considered “social clubs” with the 501(c)(7) designation from the IRS. Social clubs are exempt from federal income tax under IRC 501(a) as organizations described in IRC 501(c)(7) if they are “organized for pleasure, recreation, and other nonprofitable purposes.” Generally, social clubs are membership organizations primarily supported by dues, fees, charges or other funds paid by their members.
Tax ID Number: Also known as an employer identification number, this number is a nine-digit number used as a tracking number by the IRS for tax purposes. Whereas Social Security Numbers are assigned to people and in the format of XXX-XX-XXXX, Tax ID Numbers are assigned to non-people entities and are read as XX-XXXXXXX. This number is required information on all tax returns filed with the IRS.
Tax-Exempt: Tax-exempt organizations like fraternities typically do not pay federal income tax on revenue from the income they generate.
Tax-Deductible: Charitable contributions by an individual may be deductible for income tax purposes. However, gifts to 501(c)(7) organizations are NOT tax deductible.
Fiscal Year: A fiscal year (or financial year or sometimes budget year) is a period used for calculating annual financial statements in businesses and other organizations. You must file Form 990 with the IRS at the end of every fiscal year.