ESCAPEES SOCIAL NETWORK
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1 ESCAPEES SOCIAL NETWORK Escapees Social Network, Inc. Information for Chapters Hello Chapters! We have received numerous requests from Chapters to assist them with their annual IRS filings and with insurance coverage. We are happy to share with you that we spent the past year working with attorneys and the IRS to get a process in place. We are glad to announce that we have the new nonprofit corporation in place Escapees Social Network -- and have hired both an attorney and CPA to assist with this service. We feel this will be a big relief for many of the officers and will also reduce the liabilities for all concerned. Chapters will pay $100 to be included in the group tax-exemption this will cover 2015 costs (fee is waived for 2015), fees for insurance, and for the IRS annual filings. If we find that we can reduce those dues in 2016, we will. We will also look at possible sliding scales based on chapter member numbers/and/or financial assets so that the smaller chapters with less income may receive some kind of financial break. There will be a learning curve for all of us, but we hope you, your officers, and the members of your chapter will now be able to relax a bit and get back to enjoying the fun, social aspects of your organizations once again. This packet provides answers to common questions relating to Escapees Social Network. It also includes an application to join. We are here for you! 1. What is a Nonprofit? What is Tax-Exempt Status? A nonprofit organization is one that is created for a specific charitable purpose and governed by a group of individuals who do not benefit financially from association 1
2 with the organization. These individuals make up an independent board of directors for the organization and become responsible for running the nonprofit organization. Nonprofit designation does not forbid the organization from making a profit; however, any profit earned must be invested back into the operations of the organization and cannot inure to any person or board member. Tax-exempt status refers to income tax exemption under the Internal Revenue Code or a particular state. Tax-exempt status means an organization does not pay corporate federal income tax on income generated from charitable activities. There are many 501(c) categories. 2. What type of entity is Escapees Social Network, Inc.? Escapees Social Network, Inc. is a Texas nonprofit corporation that has taxexempt status under IRC section 501(c)(7). This 501(c)(7) designation is for organizations that are involved in recreation and social activities. Escapees Social Network, Inc. is a club that is organized and operated exclusively to encourage and cultivate social interaction among members, and in doing so generally advance the interests and promote the welfare of these individuals. Your local club offers unique programs to your park community, including supporting each other, enjoying recreational and social activities, and performing community service. Like other tax-exempt nonprofit organizations, Escapees Social Network is managed by a board of directors. Moreover, each local chapter has its own governing board. And while it is tax-exempt, donations to 501(c)(7) organizations like Escapees Social Network are not tax-deductible to donors. 3. What do the chapters do? Your local chapters can provide social and recreational activities that you decide. We want your chapter to advance the interests of and promote the welfare of the residents of your park. Your chapter can provide opportunities for members to be together through social and/or charitable activities. Activities may be different at each park. Activities may include luncheons, planned chapter outings and visits to area attractions and sporting events, and/or holiday get-togethers with other members. Your chapter may opt to create 2
3 opportunities for club members to interact with each other, which may include birds of a feather groups for members who share special interests in addition to RV ing (such as computers on the road, biking and hiking, amateur radio, pets, quilters, and more). You may come together to volunteer to help a local charity or to help your local RV community. 4. How does our chapter fit in with the National Escapees Social Network, Inc.? Your chapter can be an affiliate member of Escapees Social Network Inc. Through a group exemption with Escapees Social Network Inc., your chapter can have 501(c)(7) tax-exempt designation. The national office will help your chapter by filing annual IRS reports and more. 5. Why did Escapees Social Network, Inc. apply for group exemption? Over the past year, the Escapees National Office recognized that many local chapters, including SKPs, Birds of a Feather groups, and other local volunteer groups, were not aware of the various federal filing obligations and were out of compliance with government agencies, including the IRS. * Several were automatically revoked by the IRS for failure to file the annual reports. To remedy the situation, Escapees National Office worked to help each chapter. Fortunately, the IRS allows organizations that are affiliated with a central organization to obtain tax-exempt status as a group. This not only saves time for the organizations applying, but it also relieves the IRS of reviewing each chapter organization s application for tax-exempt status. Escapees Social Network, Inc. falls into this category of group exemptions. As such, the National organization Escapees Social Network, Inc., along with various local chapters, applied for and received tax-exemption as a group. The National office serves as the parent organization; the various chapters serve as affiliates, * Generally, nonprofit organizations apply for tax-exempt designation with the IRS, based on their type of organization and type of activities. Moreover, individual organizations are responsible for annually filing an IRS report, which may include the IRS Form 990, IRS Form 990-EZ, or IRS Form 990-N. There are penalties for not filing such reports. A volunteer s ignorance of this annual filing requirement is not a valid excuse with the IRS. 3
4 subordinates, or chapters. The national Escapees Social Network, Inc. is happy to share its 501(c)(7) status with chapters as a part of a group exemption. The national organization filed the application on behalf of the chapters and paid the regular and group filing fees of $3,400. Now, the national organization will prepare and file the annual IRS 990 reports. 6. How does a new chapter join the Escapees Social Network, Inc. group exemption? a) Request to Join. The chapter submits a request to join and provides certain documents to national. See the application, attached. b) Have an EIN. Your chapter will have its own Employer Identification Number ( EIN ). This is a 9-digit number that the IRS assigns to your group; it is similar to a social security number. You will need an EIN to open a bank account. Send us a copy of your EIN. If your club does not have one, you can visit and search for EIN. The EIN will tie your club to our national group exemption filing. Please note that many chapters EINs have been revoked by the IRS. You may need to get a new one, see page 9. c) Be organized as a chapter with bylaws. Your chapter will have its own organizing documents. We will provide sample bylaws for your use. If you decide, your local chapter may opt to incorporate on a state level. This is a local decision; it is not required in order to use the group taxexemption. You may have certain state filings that are required of you. 4
5 d) Annual Updates. Since we are a part of the same group, and since national will file reports on your behalf, your chapter will provide certain information to the national office, including: Submitting an annual financial report to the national office. Submitting any contact or address changes. 7. How does our chapter explain our tax-exempt status? If your chapter is a part of the group exemption, the proper way to articulate this relationship or to communicate this to your members or local community is: Our chapter is an affiliate member of Escapees Social Network, Inc. Through a group exemption with Escapees Social Network, Inc., EIN , Group Exemption Number 6080, we are a 501(c)(7) tax-exempt organization. National will provide you with a certification letter explaining your inclusion in a group exemption. 8. Will national file our annual reports? Yes. So long as your chapter is in compliance and provides national with the needed documentation, the national office will prepare your IRS report. The national organization will prepare all of the following: An annual IRS Form 990 Report. Annual Group 990 Report. Information about all changes in the purposes, character, or method of operation of the chapters included in the group exemption letter. A separate list (that includes the names, mailing addresses, actual addresses if different, and EINs of the affected subordinates) for each of the three following categories. o Chapters that have changed their names or addresses during the year. o Chapters no longer to be included in the group exemption letter because they no longer exist or have disaffiliated from or withdrawn their authorization to the central organization. o Chapters to be added to the group exemption letter because they are 5
6 newly organized or affiliated or because they have recently authorized the central organization to include them. Ready to Join? Please review complete the attached documents: (a) (b) (c) (d) (e) (f) Checklist how to join Application and Authorization EIN information how to obtain one Sample bylaws for your chapter Sample financial report How to request insurance coverage for event 6
7 ESCAPEES SOCIAL NETWORK (a) CHECKLIST HOW TO JOIN Our chapter would like to be included in Escapee s Social Network Inc. IRC Section 501(c)(7) tax-exempt group ruling. We understand that each year our chapter will submit the following information to the national organization. Chapter Name: Mailing Address: President s Name: Phone: Names of Officers and Directors: EIN Number: Accounting Period From January 1 December 31 Items included in this packet we are sending to the national organization: Application and Authorization to Join Copy of EIN letter from IRS Bylaws Financial Information from last year $100 application fee (includes insurance, annual tax filing help, and more) SEND TO: Escapees Social Network, Inc. 100 Rainbow Drive Livingston, Texas Fax:
8 ESCAPEES SOCIAL NETWORK (b) APPLICATION & AUTHORIZATION To establish Exemption from Section 501(c)(7) of the Internal Revenue Code The annual filing for our group tax exemption determination with the Internal Revenue Service (IRS) will be made by Escapees Social Network, Inc. for its clubs and affiliated organizations. A chapter is eligible for inclusion in the group exemption ruling provided it has: (1) authorized Escapees Social Network, Inc. to include it; and (2) provided the necessary federal employer identification number (EIN). The EIN is the nine-digit number assigned to you by the IRS. It usually consists of two digits followed by a dash and seven more digits, e.g., If you wish to be included under Escapees Social Network, Inc. s group exemption determination, please complete the form below, and return it to: Escapees Social Network, Inc. 100 Rainbow Drive Livingston, Texas Fax: Club/Chapter Name Preferred Mailing Address City State Zip Telephone: Federal Employer Identification Number: - Person Completing Form: (Please Print) Position The organization identified above is affiliated with and, for IRS purposes, subject to the general supervision or control of Escapees Social Network and authorizes Escapees Social Network to request that the organization be included under the IRS group exemption status whereby the organization will be determined to be exempt from federal income taxation pursuant to 501(c)(7) of the Internal Revenue Code. Date: Signature: 8
9 ESCAPEES SOCIAL NETWORK (c) EIN: Validating Your Current EIN (Tax ID Number) or Obtaining a New One VALIDATING YOUR CURRENT EIN If your club already has an EIN, it is important that you call the IRS at to verify that your number is still active or valid. If it is not an active number, then you will need the information below to request a new EIN. OBTAINING A NEW EIN 1. APPLY ONLINE This Internet EIN (I-EIN) application is another avenue for customers to apply for and obtain an employer identification number. Once all the necessary fields are completed on the online form, preliminary validation is performed and the taxpayer will be alerted to information IRS needs that may not have been included. An EIN will be issued IMMEDIATELY after the successful submission of the completed Form SS-4 online. 2. APPLY Toll-Free Taxpayers can obtain an EIN IMMEDIATELY by calling the Business & Specialty Tax Line ( ). The hours of operation are 7:00 a.m. - 10:00 p.m. local time, Monday through Friday. An assistor takes the information, assigns the EIN, and provides the number to an authorized individual over the telephone. *You will go through an automated system before reaching a real agent. The IRS will assign you an EIN at the time of the call. Please complete the form before calling. HINT: If you call between 8:00 and 8:15 or 9:00 and 9:15 am in any time zone, especially on Wednesdays & Thursdays, there should be less wait time to speak to someone. They will ask you all of the questions on the form, which usually takes less than 10 minutes. *Write the EIN# the IRS Rep. gives you in the upper right hand corner of the Form SS APPLY BY FAX Taxpayers can FAX the completed Form SS-4 application to their state FAX number, , after ensuring that the Form SS-4 contains all of the required information. If it is determined that the entity needs a new EIN, one will be assigned using the appropriate procedures for the entity type. If the taxpayer's fax number is provided, a fax will be sent back with the EIN. 9
10 3. APPLY BY MAIL The processing timeframe for an EIN application received by mail is four weeks. Ensure that the Form SS-4 contains all of the required information. 10
11 (d) Sample Bylaws for Chapter of Escapees Social Network, Inc. 1.1 Name Bylaws for (Chapter Name and Number) of Escapees Social Network, Inc. Adopted 2014 ARTICLE 1 NAME, PURPOSES, POWERS, AND OFFICES The name of this Chapter is (Chapter Name and Number) of Escapees Social Network, Inc. 1.2 Purposes and Powers This Chapter is organized and operated for the following general purposes: Within these purposes, the Chapter shall perform social and recreational activities for individual chapters associated with Escapees RV Club. The assets and property of the Chapter are hereby pledged for use in performing its exempt purpose. Moreover, No part of the net earnings of the organization shall inure to the benefit of, or be distributable to its members, trustees, officers, or other private persons, except that the organization shall be authorized to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of the purposes of the organization No substantial part of the activities of the organization shall be the carrying on of propaganda, or otherwise attempting to influence legislation, and the organization shall not participate in, or intervene in (including the publishing or distribution of statements) any political campaign on behalf of or in opposition to any candidate for public office. Upon the dissolution of the organization, assets shall be distributed for one or more exempt purposes within the meaning of section 501(c) of the Internal Revenue Code, or the corresponding section of any future federal tax code. ARTICLE 2 MEMBERSHIP 2.1 Membership in the Chapter is open to all current members of Escapees RV Club 2.2 Number and Qualifications The Board of Officers shall consist of at least three (3) officers but may contain more. Officers will include a President and a Secretary. Additional officers 11
12 can include a Vice President and/or Treasurer. Any two or more officers may not be held by the same person. 2.3 Term of Office Officers shall serve until such officer s successor is elected and qualified, or until such officers earlier death, resignation, retirement, disqualification or removal from office. Elections will be held according to each chapter s Standing Rules. 2.4 Nomination of Officers A Nominating Committee will nominate candidates for successor officers. At any meeting at which the election of an officer occurs any member may nominate a person with the second of any other member. In addition to nominations made at meetings, a nominating committee may consider nominees. 2.5 Election of Officers A person who meets any qualification requirements to be an officer and who has been nominated may be elected as an officer. Officers shall be elected by a majority vote of those members at a meeting at which a quorum is present. 2.6 Duties of Officers Officers will perform their duties in good faith, with ordinary care, and in a manner they reasonably believe to be in the best interest of the Chapter. Ordinary care is care that prudent persons in similar positions would exercise under similar circumstances. In the performance of any duty imposed or power conferred on directors, they may in good faith rely on information, opinions, reports, or statements, including financial statements and other financial data, concerning the Chapter or another person that were prepared or presented by a variety of persons, including officers and employees of the Chapter, professional advisors, or experts such as accountants or attorneys. An officer is not relying in good faith if the officer has knowledge concerning a matter in question that renders reliance unwarranted. 2.7 Filling of Vacancies Any vacancy occurring in the Board of Officers resulting from the death, resignation, retirement, disqualification or removal from office of any director will be filled by the affirmative vote of a majority of the members present at any meeting of the chapter at which a quorum is present. Any officer elected or appointed to fill a vacancy will hold office for the remainder of the vacated term and until such officer s successor is elected and qualified, or until such officer s earlier death, resignation, retirement, disqualification or removal from office. 2.8 Removal Any officer can be removed, either for or without cause, by the affirmative vote of a majority of the members present at any meeting of the chapter at which a quorum is present, if notice of the intention to act upon such matter shall have been given in the notice of such meeting and if such notice is provided to the officer proposed to be removed. 12
13 2.9 Resignation Any officer may resign at any time by delivering written notice to the Secretary or President of the Board of Officers. Such resignation shall take effect upon receipt or, if later, at the time specified in the notice Officers Compensation Officers will not receive any salaries or other compensation for their services, but, by resolution of the Board of Officers, may be reimbursed for any actual expenses incurred in the performance of their duties for the Chapter, as long as a majority of disinterested officers approve the reimbursement. The Chapter will not loan money or property to, or guarantee the obligation of, any officer. 3.1 General Powers; Delegation ARTICLE 3 BOARD OF OFFICERS The Chapter is a Board of Officers-managed organization. The activities, property, and affairs of the Chapter shall be managed by its Board of Officers. The Board of Officers may exercise all such powers of the Chapter and do all such lawful acts and things as are permitted by law, by the Certificate of Formation, or by these Bylaws, unless otherwise expressly provided herein. 4.1 Notice ARTICLE 4 NOTICES At least five (5) days' written notice must be given to all Officers and members of any meeting of the Board of Officers and general meetings. Notice of meetings may be given by electronic transmission (i.e., ) if all directors individually and collectively consent. ARTICLE 5 MEETINGS (Clarification chapter officers may have board meetings separate from the main meeting, but it is the membership that vote on decisions) 5.1 Meetings The Board of Officers will hold at least one meeting a year. General meetings may be held at each rally and or luncheon per chapter decision. 5.2 Quorum and Manner of Acting A majority of the number of members present will constitute a quorum for the transaction of business at any meeting of the members. 5.3 Proxy Voting Prohibited Proxy voting is not permitted. 13
14 6.1 Contracts ARTICLE 6 OPERATIONS The Board of Officers may authorize any officer or officers, or agent or agents, of the Chapter to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Chapter, and such authority may be general or confined to specific instances. 6.2 Disbursement of Funds Management may dispense with the funds of the Chapter in accordance with the annual budget approved by the Board of Officers and the purposes of the Chapter as set out in the Certificate of Formation and these bylaws. Financial transactions with the value of $1, or more that are not in the annual budget require majority approval of the members. Notwithstanding the above, all checks of more than $1, disbursing funds from any of the Chapter s accounts require the signatures of at least two of the following: President, Vice President, Secretary, Treasurer, or key management personnel. 6.3 Records The Chapter will keep correct and complete records of account and will also keep minutes of the proceedings of the Board and general meetings. The Chapter will keep at its principal place of business the original or a copy of its bylaws, including amendments to date certified by the Secretary of the Chapter. 6.4 Dividends Prohibited No part of the net income of the Chapter shall inure to the benefit of any private individual and no dividend shall be paid and no part of the income of the Chapter shall be distributed to its directors or office. 6.5 Loans to Officers and Directors Prohibited The Chapter will not make loans to its officers and members. 6.6 Fiscal Year The fiscal year of the Chapter will be January 1 to December Invalid Provisions If any part of these Bylaws shall be held invalid or inoperative for any reason, the remaining parts, so far as is possible and reasonable, shall remain valid and operative. 6.8 Powers to Amend These Bylaws may be amended or repealed, or new bylaws may be adopted at any annual or special meeting of the Board of Officers at a quorum is present by the 14
15 affirmative vote of a majority of the members present at the meeting, provided notice of the proposed amendment, repeal or adoption be contained in the notice of such meeting; and provided further, that the foregoing notice requirement shall not prohibit the directors from adopting the proposed amendment, effecting the proposed repeal or adopting the proposed new bylaws, as the case may be, in a modified form which is not identical to that described or set forth in the notice of such meeting. CERTIFICATION The undersigned, being the duly elected and qualified Secretary of the Chapter, hereby certifies that the foregoing Bylaws of the Chapter were duly adopted by the Board of Officers and members of the Chapter. Secretary, Date 15
16 ESCAPEES SOCIAL NETWORK (e) SAMPLE ANNUAL FINANCIAL REPORT Name, Treasurer INCOME (List all sources of income*) BUDGET ACTUAL Dues $ $ Fundraisers Donations $50.00 $ Activities November Box Lunch $ Holiday Party $ TOTAL INCOME $ $ EXPENSES Meeting Expenses Programs $ $ Room Rental Fees $ $ Printing/Postage Newsletter $50.00 $25.00 Activities/Fundraisers Fundraiser - Plant Sale $50.00 $75.00 November Box Lunch $ Holiday Party $ Donations Kids Camp $ TOTAL EXPENSES $ $
17 ESCAPEES SOCIAL NETWORK (f) HOW TO REQUEST INSURANCE COVERAGE FOR EVENT INSURANCE CERTIFICATES FOR CHAPTER/C-BOF RALLIES If the rally facility/park where you are holding your rally requires proof of liability insurance, you may request a certificate from the Chapter Directors. Do not contact the insurance company directly, as they will not issue the certificate until the Chapter Directors have contacted them. Please send the following information for the insurance request: Insurance request for rally Chapter/C-BOF Name: Group Contact Name: Address: Phone: SKP #: 17
18 Campground requesting info: Name: Park Address: (do not use P O Box address) Name Attn: Superintendent: Phone: Fax: Rally dates: (Beginning Ending) Please include any special language the facility requires to be listed on the certificate. This information is found in your contract. IMPORTANT: All rallies taking place in California will require language similar to the following: "That the State of California, the 40th District Agricultural Association, County Fair, Citrus Fair, or California Exposition and State Fair, their agents, officers, servants, and employees are made additional insured, but only insofar as the operations under this contract are concerned." The insurance certificate will not be issued unless this information is provided. 18
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