501(c)

[oceanlovin'ea]

Client is president of foster parents association. They want to apply for 501(c) status so that stores and other companies are able to give them clothing, etc for these foster children. With this status, the stores can give charitable dontations to them.

What category would foster parents association come under? Certainly is not for profit, but there are so many categories.

Also do they have to form a corporation in the state?

Anyone that has any knowledge of this type of situation, PLEASE help.

Thanks. Linda F


PS: This is the family I wrote about earlier that has adopted about 8 foster children in the last 2 years.

[Uncle Sam]

501(c)

In order for a party to obtain a tax deduction for donations to an exempt organization, the exempt organization must be a 501(c)(3) organization. That is granted when the IRS APPROVES the 501(c)(3) status. An application must be made on Form 1023, along with a $ 300 application fee, with detailed answers to questions, along with some financial data (even if estimates for future periods).

To receive any other form of tax exempt status, an application must be made on Form 1024, also along with an application fee, and apply under any 501(c)(___) applicable to the exempt purpose being requested. Form 1024 instructions would list the proper subsection.

Anyway, in all probability, your individual state would require some registration process, as well as submitting a copy of the annual Form 990 to the State Attorney General, with any applicable fee(s).

[Bees Knees]

In addition to the application process, this “foster parents association” is going to have to be a public charity. That means it can’t be set up merely to take care of the 8 kids they are currently taking care of. When one kid grows up and leaves home, another is going to have to be allowed to move in. Public charities benefit the public, not a specific individual. For example, you can’t set up a public charity for a specific individual that came upon hard times, like getting cancer or having his house burn down. Your client’s public charity would have to be for the care of foster children. That means an ongoing care of foster children in the community that meet the qualifications whenever space is available in the organization to take on new children.

Does your client wish to continue this process? Or are they just looking for a way to turn their current 8 kids into a tax exempt organization with no intention of taking on new kids?

[taxmandan]

Bees Knees is right on point. Also, there are strict rules on the disposal of assets when the tax exempt charity shuts down, they can't convert assets to personal use or sell them. If they are thinking about transferring the home or other properties to the charity for whatever reason, they need to know the rules. Check state laws, our state has a charity information return required and an annual fee to be paid based on how much money is collected by the organization.

[oceanlovin'ea]

All foster children

No the association is for all foster parents in the area, maybe in the county. She is president because she is a good organizer and good at getting things done. She was president of our private school set up for home schoolers after I retired from that.

There are a group of foster parents that have formed an association for support and to help each other. Many of these kids come to the foster homes with nothing. If they were set up correctly, large corporations and stores would be able to donate clothing, furniture, etc to help the foster parents be able to take care of these children better. The companies want to be able to write off their donations.

Since they have adopted most of the foster children that were placed with them, their share of donations would be small.

Linda F

[Uncle Sam]

501(c)(3)

If the donors want tax donations for their contributions, and the organization is going to help anyone in the public seeking their assistance for support, then it's 501(c)(3) status you're looking for.
Form 1023 must be filled out, and sent along with an application fee.
Therefore, I strongly suggest that an attorney be consulted to form the organization - with articles of incorporation et al, application be made and filed with the State in which it's incorporated, when name is approved, then apply for an EI # on Form SS-4, then complete Form 1023.
Let me tell you, from my past experience this year - you cannot just put down in response to each question "See Incorporation Papers attached". IRS wants specific answers to each question detailing and specifying the organization's planned policies, process in which they'll be obtaining funds and resources, and selection process for those seeking assistance.
As part of the application documents, you MUST have a stamped copy of the articles of incorporation on file with your state. A mere filing receipt, showing that the filing fee has been paid, IS NOT ACCEPTABLE.
If IRS wants more information relative to a response, you'll get a letter requesting that with only a short window period to respond, otherwise the application will be rejected and you must start all over again.

[taxmandan]

I had a client who wanted to get the 501c3 status for a child care center she was opening. She couldn't afford to pay me or anyone else to do the paperwork, so she did it herself. Long story short: She incorporated, filed the 1023, didn't do a very good job on it, BUT, the nice lady from the IRS called her and walked her through the correct answers and she received her 501c3 status two weeks later! Boy was I surprised. She's a nice lady but not the sharpest crayon in the box, so I hadn't given her much hope of success and I really was blown away by the 'nice lady from the IRS' being so helpful.

Daniel

[ecb34691]

Boy I wish I'd had the "sweet lady" from IRS. It took 10 months for the last one I did for a Police Athletic League (PAL). Linda, the IRS made the PAL file amended Articles of Incorporation with Florida to state in effect that upon dissolution, that all assets would go to an other 501c(3) organization. In Florida, there are "boiler plate" articles of incorporation on the states web site - Division of Corporations at sunbiz.org.