Financial Responsibilities of Sections
- All ACerS Sections collect and disburse their own funds.
- Any Section that collects, holds or disburses funds on behalf of the Society must submit an annual accounting of such funds.
- 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 Operations and Finance.
- Failure to submit financial reports is grounds for revocation of the Section charter as provided in the ACerS Constitution and Bylaws.
- Any Section desiring to solicit donations of more than $5,000 cash or equivalent goods or services from a single source must obtain advance approval from the ACerS Executive Director. Solicitations of donations of small magnitude for a specific goal of a specified time do not require approval.
- 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 Executive Director.
- Upon dissolution of a Section or revocation of a Section’s charter, all assets of the Section become the property of 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
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 April 30 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 Operations and Finance at ACerS with any questions.
Federal Employer Identification Number
Apply for an Employer Identification Number (EIN) that is assigned and registered by the Internal Revenue Service (IRS). The EIN is comparable to an individual’s social security number and is used on all returns, statements, or documents filed with the IRS, including the group tax return filed by ACerS for all Sections. The EIN also is used as the identifying number of your Section’s bank accounts. An EIN number can be obtained by visiting https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online
Once obtained, send the EIN number to the ACerS Outreach Manager at firstname.lastname@example.org.
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.
Responding to IRS Requests
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 Operations and Finance, 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 Operations and Finance.
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 ACerS’ preparation of the Group Form 990 Return, it is helpful for all ACerS Sections 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, loans, 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, Section dues, interest from savings accounts and other investments, and other classes of income such as from sponsorship of the Section newsletter. The income classifications in the chart of accounts should conform to the categories of cash receipts shown on the annual Statement of Cash Receipts and Disbursements and accompanying instructions from headquarters to each Section.
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 4 years in order to meet federal record retention requirements. Each Section should contact the state authorities in which it operates in order to comply with state requirements. ACerS maintains all records for 4 years in order to meet federal and state requirements.
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 Executive Director 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, 600 North Cleveland Avenue, Suite 210, Westerville, OH 43082, who will obtain the Executive Director’s signature and return the card to the Section treasurer.
Sections may wish to consider investing Section funds, in excess of normal checking account and operational requirements, 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 Operations and Finance.
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.