Guidelines for an IRS Field Audit 2013
By T. Robert Carolan, Department Judge Advocate
The American Legion, through the National Office, is tax exempt under IRS Code Section 501 (c) (19). Not only are we tax exempt but any contributions made to our organization are tax deductible. But we have to maintain the conditions required to keep our tax exempt and tax deductible status. The Internal Revenue Service is directed by Congress to periodically check our status by usually a Field Audit or sometimes by a Correspondence Audit. We will address a Field Audit.
The IRS auditor, who comes to our Post, will first be looking at 3 major tests: 1. Proof of a military veteran. 2. Proof of a member of the American Legion. 3. The “Coverage Test”
Here are some Guidelines to assist Posts in the event of an IRS Field Audit:
Proof of a military veteran
a. Discharge papers b. Department of Veterans Affairs Photo ID card c. DD-214 d. American Legion Membership Card
e. American Legion Membership Register (from National) f. Active Duty Card g. Military Retirement Card
h. Military Record from www.archives .gov I. All others showing proof of military service.
Proof of a member of the American Legion
a. American Legion Membership Card b. American Legion Membership Register
c. American Legion Membership Application as approved d. Post minutes showing membership approval
e. Any other means of proof.
There are 2 parts to the Coverage Test; the first is the Exemption Test and the second is he Membership Test. BOTH must qualify for the tax exemption.
1. Exemption Test: at least 75% of the members must be past or present members of the US Armed Forces. Substantially all other members must be cadets, spouses, widows, widowers, ancestors or lineal descendants of past or present members of the US Armed Forces (basically Auxiliary members)
2. Membership Test: at least 75% of the members must be past or present members of the US Armed Forces and 97.5% must be cadets, spouses, widows, widowers, ancestors or lineal descendants of past or present members of the US Armed Forces (basically leaving only 2.5% that can be non-members).
There are still other areas that you will need to show the composition of membership. You will need the following: 1. Articles of Incorporation (all Posts should be incorporated) 2. Charter 3. Bylaws 4. Minutes of the General Meetings
All of the above discussion was primarily for the definition and substantiation of membership. This was to dispel the current rumors of DD-214’s and massive dollar penalties levied against Posts as well as the “attack on veterans’ organizations”. However, you must have close access to substantiating your members. Copies of the DD-214 can help. Copies of the approved Membership Application can help. If you have not done so already, start keeping copies of these documents. But if I were the IRS auditor, I would rely heavily on the MEMBERSHIP REGISTER which we receive through Department from National. It has 16 columns and ALL of the information necessary. A good auditor would certainly use it.
Under audit - you will also need financial advice, especially concerning Unrelated Business Income, taxes associated with gaming and all of the other taxes that a Post has to pay.
Keep in mind that the auditor has peripheral questions especially from employees, especially bartenders. Advise your bartenders to “button it”.
I have covered the IRS audit procedures very briefly here. Get a copy of the TAX GUIDE FOR VETERANS’ ORGANIZATIONS from the IRS website at www.irs.gov and study it carefully. It is the best source that I have seen. I hope this helps all of our Posts. Remember to consult your financial advisor if you are audited. But DO NOT PANIC! It is not that bad.
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YEC 2014 Conference May 16-19, 2014
by Barbara Ross, Program Coordinator email@example.com or (916) 798-3317
Hopefully every Post in the Department has received information from their Districf Ag Chairman about this unique program sponsored by The American Legion Dept. of California and conducted by the U.S. Forest Service – Eldorado National Forest.
If your Post hasn’t received the information, you can either find the forms on the Dept’s website, or contact the Coordinator to receive the forms for making reservations, and for the student, school and family to complete.
Although it’s been an ongoing annual program for nearly 40 years, it seems to be a well kept secret among the Legion members. When considering sponsoring a student, don’t only look at your Post’s ability to fund the program, talk to your Auxiliary, Squadron, 40/8, Riders and if you aren’t fortunate enough to have these supporting Legion family groups, ask a local civic club if they would consider helping out. Many local clubs are looking for youth-oriented programs to support. Basic fee is $350, and transportation ranges from $50 to $65 depending on where your student travels from.
Or, another possible source of support would be another Legion Post to partner with and then alternate which Post selects the school to sponsor.
This is a co-ed program for high school sophomores or juniors who are interested in environmental sciences – any discipline – any school. The students who do go into this field in college are eligible for a small scholarship from the program when they enter their second year.
Although it does take the students out of school for two instructional days, we have never had a school charge the student for absences against perfect attendance records. So, if you haven’t already presented the program to the counseling center or science department, now is the time to start. If necessary, the students can take assignments with them and they will be given time to complete them in a quiet location.
If you would like to get in contact with Posts who sponsor students to learn what their impressions of the program are, please contact me and I can put you in touch with them.
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Way and Means Commission - Calendar Program
by Janet Wilson, Area 2 Vice Commander
Hello California Legionnaires!
We are trying something new this year. Now is a perfect opportunity to add pictures of our own liking to the Annual California Legion Calendar. We will be using the top five membership award District Commanders pictures. The calendar will feature the past years winners, as we publish the calendar one year ahead.
We also need more photos to fill out the balance of the calendar. If you have a great photo, that you would like to see in the calendar, please send me via email the jpeg picture file. I am not sure what we can use, but will try to see if we can use older pictures of events in our California Legion History as well.
Please be sure to tell what the picture is: naming who is the photo of, when taken, name of Post, etc…
If you have any questions, you can call or email me.
Thanks… Janet Wilson, Area 2 Vice Commander 925-754-9070 firstname.lastname@example.org
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California’s Department Vice Commander December Reports
As submitted for publication in the “California Legionnaire”
Ercie "Paul" Ball - Area 1 Janet Wilson - Area 2 Walt Butler - Area 3
Marilyn E. Rideaux - Area 4 Lee A Quarcelino - Area 5 Scott Sinclair - Area 6
Your Department Vice Commanders Representing the six areas have graciously given up their usual column space in the December issue of the paper so that the various commissions and other news items could be included in this issue. Each of the Vice Commanders articles for this month can be found by clicking on the appropriate Area link above (a new page will open for the PDF file). Thanks to everyone for their help and contributions to the paper.