CGCI Group Exemption FAQs

Frequently Asked Questions ....

about the CGCI Group Exemption program

1. If our club is a member of CGCI, are we automatically included in the Group Exemption as a non-profit 501(c)(3) club?

NO. The IRS has specific requirements that make a club eligible to be deemed a 501(c)(3) non-profit organization. Not all clubs qualify. To see the requirements, click here.

2. Does our club have to be in the Group Exemption to belong to CGCI?

NO. Participation in the program is strictly optional.

3. Our club has a fundraiser coming up. How long does it take to be approved?

That depends. If your club meets all the requirements, your club can be approved and added to the list within a very short time. (Don't forget! We are all volunteers and sometimes "life happens" outside of garden club.) But the important thing to know is that no matter what actual date your club is approved, your exemption will be in effect for the entire calendar year. So, even if your club was not approved until Dec. 15, 20xx, all deductions made to your club anytime in 20xx will be tax deductible.

4. Why do you want a list of our club activities?

Not all "non-profits" qualify for 501(c)(3) status . The IRS has only a few, specific categories it will allow. The IRS granted CGCI its 501(c)(3) status as an educational non-profit organization. To be included under the CGCI exemption, it only follows that the club must also be an " educational" non-profit organization. Therefore, a club must demonstrate that its activities are mainly educational. Tours, speakers, programs, flower shows, scholarships and all like activities are considered "educational" and should be prominent in you list of activities for your IRS file.

5. What kind of financial statement is required?

The IRS wants a general idea of where your club gets its income and how it spends its money. Please do not send a list of checks and deposits. This does not help! A simple list of categories is much more appropriate. For income the list could include categories such as dues, fundraiser, donations, etc. The expenses could include rental, postage, programs, office supplies, etc. Appropriate reimbursements for services and travel are allowed. Even salaries are allowed. It must just be evident that funds to not accrue to one or a few select people who are skimming funds for their self-aggrandizement.

6. If we are a non-profit, do we still have to pay sales tax?

Absolutely! 501(c)(3) status is granted by the US Federal government Internal Revenue Service. It applies to Federal income tax. It also applies to state income tax in that state income tax returns are based on federal returns. It has nothing to do with state sales tax as these rules differ from state to state.

7. Once accepted, what do we have to do?

Once accepted, the IRS will contact your club to make sure you do not make more than $25,000 per year. It does this by sending a Form 990. If club revenue is less than $25,000, just indicate that this so and return the form. If your club earns over $25,000, refer the form to your tax accountant.

The IRS requires that CGCI check with each club each year to verify that each club wants to remain in the Group Exemption. Each club in the program will receive a renewal form at the beginning of the year. It asks that you indicate that your club wishes to continue; for an updated financial report and for an updated list of club activities. These papers will be filed in case the IRS audits CGCI's records. A $15 fee is charged to defray administrative and professional expenses. That is all.

8. If we havaE questions, can we talk to a real person?

Yes!
Contact Maryanne Lucas or George Perko. Their contact information is in the CGCI Yearbook given to every CGCI member club.

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