Financial Responsibilities of Sections
1. As an affiliate of the Society, the Section does not need an employer ID number, corporate status, or
a separate tax exemption.
2. Any Section that collects, holds, or disburses funds on behalf of the Society must submit an annual
accounting of such funds.
3. Section funds will be accounted for in the Society’s IRS return unless the Section specifically desires
to file a separate return with the IRS. If a Section chooses to file its own return, it must provide a copy
of the return to the ACerS Director of Finance and Operations.
4. Failure to submit financial reports is grounds for revocation of the Section charter as provided in the
ACerS Constitution and Bylaws.
5. Disbursements of funds for expenditures necessary for the normal operation of the Section do not
require approval. Any Section desiring to disburse funds beyond those necessary for normal
operations must obtain advance approval of the ACerS Director or Finance and Operations.
6. In the event of dissolution of a Section, for whatever reason, all assets of the Section will be turned
over to the Society.
Section’s Relationship to the IRS
501 (c) (3) Status
ACerS is exempt from federal income taxes under Section 501 (c) (3) of the Internal Revenue Code of 1954 since the Association is organized and operates exclusively for scientific and educational purposes. ACerS has a Group Exemption Number which recognizes that ACerS Section share this 501 (c) (3) exemption status. To maintain this group exemption, ACerS is required to send an annual update to the IRS with information regarding changes in Section addresses and chairpersons, and a list of newly chartered or un-chartered Sections.
Group Form 990: The Statement of Cash Receipts and Disbursements
Although ACerS is not required to file income tax returns, the Society must complete the annual informational return, Form 990, and the Group Form 990 for its Sections. Every Section must submit a Statement of Cash Receipts and Disbursements, an account of the financial activity of the Section for the fiscal year, to headquarters. A Section’s treasurer and chairperson provide the authorization for ACerS to include its Section in the group filing. An organization which fails to file a Form 990 Return with the IRS by the due date can be charged with a penalty. It is essential, therefore, that Sections submit the Statement to headquarters by March 1 so that ACerS can file the Group 990 Return in a timely manner.
Sales Tax Exemption
ACerS has been granted an exemption from the state of Ohio and local sales tax. ACerS Sections have the same right to be exempt from state and local sales taxes in those states and localities which grant such exemptions; each Section must apply to the authorities in the state in which they operate for the exemption. Sections should contact their state department of revenue for the necessary forms, and should contact the Director of Finance and Operations at ACerS with any questions.
Reporting of Income Paid To Third Parties
The following disbursements must be reported to the IRS if they amount to more than $600 per calendar year: awards, prizes, all types of grants, honoraria, fees for professional services, temporary employment, and if the recipient is a permanent resident of the United States. Reimbursements of actual expenses, such as travel reimbursements, need not be reported.
The IRS may send your Section blank tax returns each year. Since most Sections choose to be included in the ACerS Group 990 Return, these forms should not be prepared. The IRS may also send Sections reminder notices, and in some cases, delinquent notices. If your Section receives such a notice, send it to the ACerS Director of Finance and Operations, who will respond to the IRS. Sections should not respond directly to any IRS request, either in writing or by telephone, but instead should direct the request to the ACerS Director of Finance and Operations.
Basic Section Accounting and Maintenance of Section Financial Records
ACerS operates on a fiscal year which begins January 1 and ends December 31. All financial books and records are maintained, and all IRS returns reported, on this fiscal calendar. To facilitate the Section’s preparation of the annual Statement of Cash Receipts and Disbursements, and the preparation of the Group Form 990 Return by ACerS, all ACerS Sections are to use the January 1 through December 31 fiscal year schedule.
Chart of Accounts
To establish a proper accounting system, Sections should organize a chart of accounts. The chart is a listing of the various categories of assets, liabilities, income, and expenses of an organization. Asset accounts are used for checking and savings accounts, other investments, inventory, and accounts receivable. Liability accounts include bills and invoices to be paid or any other payables due from the Section.
Income accounts include any major item of cash receipts received by the Section, like registration fees for seminars, regular meeting fees, interest from savings accounts and other investments, and other classes of income.
The expense section of the chart of accounts should include categories that conform to the cash disbursements section of the annual Statement of Cash Receipts and Disbursements. These expenses include meeting, conference and seminar expenses, publication expenses, postage and supplies, and any other miscellaneous types of Section expenses.
Required Documentation and Retention
All books and records, original documentation, and any other pertinent financial information, should be maintained by the Section for a minimum of 7 years in order to adhere to ACerS Record Retention and Document Destruction Policy and Procedures. Any IRS, state, or local sales tax exemption documents should be maintained permanently in accordance with ACerS Retention Policy. Each Section should contact the state authorities in which it operates in order to comply with state requirements. ACerS maintains all records in accordance with its Retention Policy.
Financial Support from ACerS
Membership and the payment of dues to ACerS constitutes membership in the Section. No additional dues are to be collected for membership in the Section. Funds for Section activities will be provided by ACerS.
Every year, the Section will receive financial support from ACerS for the Section activities outlined above, based on its number of members:
• 10 to 50 members – $ 500
• 51 to 100 members – $1,000
• more than 100 members – $1,500
Each Section’s annual allocated funding, to be distributed in January or February of each year, will be specified by the Board of Directors for each regular Section member as of August 31 of the previous year. The maximum Section Fund balance from Society-allocated funding shall be no more than twice the allocation calculated on August 31 of the previous year for that Section. The Section Funds provided by ACerS are designed to strengthen the Section’s plans for programming, membership and needs of their membership. Funds raised by Sections from other sources (e.g., dinner meeting fees, donations, award funds, etc.) are to be accounted for separately by the Section and will not be subject to the above maximum.
When opening a checking or savings account, signature cards must be prepared indicating the individuals who have authority to sign checks, deposit, or withdraw funds. This is usually limited to the Section chairperson and treasurer. Signature authority, however, should be granted to the Outreach Manager of ACerS, as a safety precaution in the event of dissolution of a Section. The Section may send a signature card to the Outreach Manager at ACerS, 550 Polaris Parkway, Suite 510, Westerville, OH 43082, who will obtain sign and return the card to the Section treasurer.
Sections may wish to consider investing Section funds in excess of $3,000 in low risk investments, like savings accounts, certificates of deposit, or U.S. Treasury Securities. Before making any such investment, the Section should read the ACerS policy regarding investment of ACerS funds, and consult with the ACerS Director of Finance and Operations. Any interest received by a Section from any investment is considered income and should be recorded on the Section’s regular financial statements and the annual Statement of Cash Receipts and Disbursements.
If a Section has accumulated funds of more than $5,000 that is not designated for current (next two years of) Section activities, it is recommended that the Section establish a “Section Fund” directly with the Society. Upon transfer of those funds to ACerS, ACerS will establish a Board Restricted Fund for the Section that the Section may use for special projects, scholarships, and other activities defined by the Section when the Fund is established. For amounts greater than $25,000 that the Section wishes to use to establish scholarships and/or endowments, it is recommended that the Section use the Ceramic and Glass Industry Foundation to manage such programs.