Group Tax Exemption Program (GTEP)
- It is the opportunity for a member Garden Club or District to obtain Tax-Exempt Status under the CGCI exemption umbrella.
- Please note: If you already have tax-exempt status from the IRS and California you DO NOT need to apply through CGCI.
- You do need to “renew” each year through the IRS and state of California. If you lose your exemption, you cannot apply for reinstatement through the CGCI program.
Benefit & Cost for members of CGCI’s Group Exemption:
- subordinates do not have to file an application for exemption.
- members do not have to pay the federal or state fees to obtain an exemption letter.
- CGCI fees: Application – $35; Annual Renewal – $15
- members can accept donations that are tax-deductible under the law.
- bequests, legacies, devises, transfers, or gifts are deductible for federal estate and gift tax purposes if they meet the applicable provisions of section 2055, 2106 and 2522 of the Code.
Why is this allowed?
- California Garden Clubs, Inc. is a not-for-profit educational organization under Section 501(c)(3) of the Internal Revenue Code. This section affords CGCI tax-exempt status.
- CGCI applied for and received a group exemption letter recognizing subordinate clubs and districts of the type described in Section 501 (c)(3) of the Internal Revenue Code on November 15, 2006, Revenue and Tax Code Section 23701d of the California Franchise Tax Board on November 9, 2010, retroactive to November 15, 2006.
- By obtaining these Group Exemptions, CGCI is able to pass along to its subordinates its tax exemption status under both Federal and California codes.
- Thus, qualifying member clubs and districts are eligible to be considered tax-exempt organizations under the same status as CGCI, as long as they follow the guidelines set by CGCI on the basis of IRS and California FTB requirements.
- In order to continue in the CGCI Group Tax Exemption Program, the member clubs and districts also need to meet all Federal and California tax forms and filing requirements. If your GTEP exemption is revoked, you must apply directly to the IRS for reinstatement.
Participation in GTEP is optional, not included with membership.
A district or club must apply to be included in the program. To qualify for inclusion in GTEP, clubs and districts must agree to follow the guidelines required by the IRS and the California FTB and successfully complete the application process administered under the supervision of the CGCI GTEP Chairman and the Financial Consultant. Group tax-exemption status is renewable each year thereafter.
To qualify a club or district, which may or may not be incorporated, must:
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- Be affiliated with and carry out the mission of CGCI. If the club is a member of CGCI, this is already true.
- To have been ratified as a member of CGCI, a club must have one or more objectives in common. This is also true for districts.
- Be subject to CGCI’s general supervision and control. As a member of CGCI, this is already true. CGCI is an affiliation of clubs governed by representatives of member clubs who vote at an annual Convention to elect the directors of CGCI and to decide issues.
- Be exempt under the same paragraph of IRS 50l(c)(3) as CGCI. In other words, a club or district must qualify for tax exemption as an educational and charitable organization, having objectives and activities that are the same as those of CGCI.
- The MAJORITY of activities must be educational. (Flower shows, speakers, tours, etc. are all “educational” activities.) As part of the application process clubs and districts are required to submit a financial report and an activities report which verify the majority of their activities are educational.
- Have club or district bylaws which include the required and very specific language required by the IRS.
- Have bylaws that mirror those of CGCI.
- Have an accounting period the same as that of CGCI, July 1-June 30
- Are in good standing with the IRS and California FTB and have not been revoked for failure to file the required annual informational returns in a timely manner, or any other reason.
- California law requires registration with the Attorney General’s Registry of Charitable Trusts. Whether a GTEP member or not, each club or district must separately report to the Registry of Charitable Trusts annually. Contact the GTEP Chairman for complete information.
Annual renewal as a member of GTEP is required each year. Once a club or district has been ratified as a member of the CGCI GTEP, it is necessary that they submit the Annual GTEP Renewal Form and the required support documentation. The annual renewal form must be submitted along with other required paperwork as noted below by January 15 of each year. Make checks payable to CGCI and mail to the GTEP Chairman. Note: If post-marked after January 15 an additional $15 late processing fee is in effect.
To complete the annual renewal process, member clubs and districts must:
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- Have an authorized officer, president, director or treasurer, of the club or district give permission on the appropriate form IN WRITING annually, that states they wish to continue to be included in the GTEP program for the next fiscal year.
- Provide activities report for the most recently completed fiscal year showing that the majority of that year’s activities were educational.
- Provide an annual financial report for the most recently completed fiscal year in the form of a profit and loss statement, which shows actual gross receipts (income) and expenditures (expenses) classified by budget categories or other descriptive classifications.
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The form with a detailed description of the requirements is emailed to clubs and districts annually in September or October. The information is also available on the CGCI website.
California law requires registration with the California FTB and the Attorney General’s Registry of Charitable Trusts. Completing the GTEP process allows CGCI to register the district or club with the California FTB. However, each group must separately report to the Registry of Charitable Trusts annually.
CA Attorney General website: – California Attorney General website for forms and instructions
- It can be downloaded and saved to your computer or printed for handy reference
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