Tax Exemption
"What are the Benefits?"

TAX EXEMPTION

NSNA is a 501(c)(6) tax-exempt organization as defined by the Internal Revenue Code. However, the NSNA exemption does not extend to constituent associations. They in turn should file the proper forms with the Internal Revenue Service.

ADVANTAGES OF BEING TAX-EXEMPT AND NON PROFIT

NSNA and its constituents are pre-professional membership organizations supported by a nationwide membership. The purpose and functions are stated in both national and state bylaws of the association. Budgets, financial reports, and books of account should substantiate your association's support of the purposes stated in the bylaws. These items will indicate that income from membership dues is allocated to support the programs and activities of your association. The voting body, the executive board, and the committees have the responsibility for devising the programs and activities by which the purposes and functions are carried out.

By obtaining the non-profit status you are entitled to, your association will be exempt from the payment of federal income tax for those activities which are related to the exempt purpose of Section 501(c)(6). You will still be required to pay sales and hotel taxes as a 501(c)(6) non-profit organization.

FORMAL RECOGNITION OF EXEMPTION FROM FEDERAL INCOME TAX

To obtain formal recognition from the U.S. Treasury Department, Internal Revenue Service (IRS), it is necessary to:

1. Obtain three copies of Form 1024, Exemption Application, from the District Director of IRS in your area or by dialing toll-free 1 (800) 829-1040.
   
   
2. Apply for exemption under Sec 501(c)(6) of the Internal Revenue Code of 1954.
   
   
3. Instruction F on Form 1024 refers to Employer Identification Number (EIN), see section below. This form is available at your nearest IRS office, or by dialing the above toll-free telephone number. Various documents from the bank now require an EIN. If you have already obtained one, use the same one on your tax forms.
   
   
4. Form 1024 must be filed in duplicate. Be sure to make a third copy for future reference. When you receive the reply from the District Director of Internal Revenue Service attach it to the file copy and keep it in permanent safekeeping. It may be desirable to have copies of these documents in the files of various other offices and in the possession of your regular accountant. Another safeguard is to indicate on the copies where the original is kept.
   
   
5. According to the instruction on Form 1024, "every attachment should show the name and address of the organization, the date, and identifiable heading, and that it is an attachment to Form 1024." Spell out the name of your association. Initials and abbreviations are not enough. Be sure that all material is dated.
   
   
6. Form 1024 requires the following attachments in duplicate copies:
   
   The current bylaws of the student nurses association will give the required "document setting forth your aims and purposes." Be sure the bylaws are clearly identified with the name of your association, the date of most recent amendment and the date when the association was first established by adoption of bylaws.
   
   
   • A financial report prepared, if at all possible, by a certified public accountant is needed. This will include income from dues and any other sources. Few states, if any, need be concerned about the matter of loans or a lease.
     
     
   • In addition to the formal purpose stated in the bylaws, you will have to make a brief statement paraphrasing the bylaws, for example: As a constituent of the National Student Nurses' Association, the state student nurses' association is dedicated to aiding in the development of the individual student and to urge students of nursing, as future health professionals, to be aware of and to contribute to improving the health care of all people.
     
     
   • Unless you have employed a fund-raising firm, you need not be concerned about "agreements with other parties for conduct of fundraising activity or business enterprise." Simply indicate if, as an association, you have raised money for a scholarship, expenses of delegates to attend conventions, or for some other activity related to the purposes of the association.
     
     
   • Paraphrase the functions spelled out in your bylaws. Presumably the programs and activities are designed to contribute to the personal and professional growth of the member and to serve the interest of students preparing to become registered nurses.
     
     
   • List major programs and activities of your association.
     
     
   • Itemize costs of meetings, publications, travel for officers to attend meetings, workshops, conventions, or to carry out other responsibilities in furtherance of the purposes of the organization.
     
     
   • Indicate "NOT APPLICABLE" where appropriate. Quote the qualifications for membership as provided under your bylaws (similar to Article IV in NSNA bylaws).
     
     
   • Fill out Form 1024 in duplicate, retaining a third copy in your own file. Attach duplicate copies of the items indicated. Be sure everything is identified with the full name of the organization, permanent address (if possible), and date. For further IRS information, dial toll-free, 1 (800) 829-1040.
     
     

EXEMPTION NOTICE

In due course, you should receive a letter or notice from the District Director of Internal Revenue Service, indicating that your association is exempt from certain federal income tax. This does not mean that you are automatically exempt from state and local tax. You will also be notified that it will be necessary to file an annual Return of Organization Exempt from Income Tax on Form 990, or before the fifth month following the close of your annual accounting period (fiscal year).

It would be advisable to obtain the services of a certified public accountant, familiar with professional membership organizations, to assist you with the preparation of Form 990. The accountant can examine your books and records to ensure that you have full and accurate information.

Tax Exemption: "What are the Benefits?" [PDF]