Most local and national offices have an organized structure that files with the IRS, but very few groups or individuals do this. HGOL was created in part to separate the treasurer from the money they manage and to help groups understand their responsibility to their treasurer and to the IRS.
It’s almost certain that most groups are not doing what the taxing authority allows and may be in violation of the law. After speaking to hundreds of groups, we believe the following takes place, in most of them:
- The majority of groups do not have an EIN or articles of organization; therefore, they are not a legal entity and cannot be considered for non-reporting nor tax-exempt status.
- Receiving money, with an expectation of what it is to be used for, is considered taxable income by the IRS, regardless of where it’s going, whether it’s to a legal organization or an individual taxpayer.
- By managing this money, the treasurer, an individual taxpayer, is the responsible receiving entity, and should a bank account, PayPal, Venmo, etc. be used, they must disclose their social security number.
- An individual taxpayer who receives taxable income without any withholding is required to report any earnings more than $600 annually.