Tax Filing & FAQ
Tau Kappa Epsilon Fraternity has partnered with www.File990.org to assist and support chapters through the tax filing process. You can learn more information about the partnership by reading below. The following frequently asked questions will help you as an officer and/or advisor better understand the requirements as it relates to tax filing for groups of Tau Kappa Epsilon.
Throughout the FAQ, the word “group” will refer to all subsidiaries of Tau Kappa Epsilon Fraternity including colonies, chapters and chartered alumni associations. When a colony transitions to a chartered chapter, their EIN will not change. The following information was adopted from Sigma Phi Epsilon.
Does our chapter have to file a tax return with the IRS?
Every group of Tau Kappa Epsilon must file an annual return with the Internal Revenue Service (IRS). You will need to a short list of information to correctly file your annual return. A list of this information can be found here. The IRS enforces an automatic “three strikes and you’re out” policy with respect to annual filing. Failing to file a return three times results in automatic forfeiture of your group’s non-profit status. Once a group has lost their tax exemption, they must reapply – a sometimes costly and cumbersome process.
When’s the filing deadline with the IRS?
Tax returns are due on the 15th day of the 5th month after the group’s tax year-end. If a group’s tax year ends May 31st, the tax form would be due October 15th (the 15th of the fifth month after May 31st). If you aren’t sure of your year end, you can refer to the previous year’s filing paperwork. Additionally, you may visit GuideStar, a search engine providing the most up-to-date nonprofit data available, and search by your groups EIN. It is strongly encouraged that you select the same fiscal year dates as the International Fraternity, June 1 to May 31. Additionally, certain chapter officers will receive an email from our partners at File990.org when you are eligible to file. Click “get started” from that message, an if your chapter is able to file a 990N or 990EZ, you can do so online for a reduced price.
What happens if my Form 990 is filed late?
If an organization whose gross receipts are less than $1,000,000 for its tax year files its Form 990 after the due date (including any extensions), and the organization doesn’t provide reasonable cause for filing late, the Internal Revenue Service will impose a penalty of $20 per day for each day the return is late. The maximum penalty is $10,000 or 5 percent of the organization’s gross receipts, whichever is less. The penalty increases to $100 per day, up to a maximum of $50,000, for an organization whose gross receipts exceed $1,000,000.
What tax return does a chapter need to file?
Every group files a version of the IRS Form 990 (Return of Organization Exempt From Income Tax). The specific version is determined based on the total gross receipts and assets of a chapter. Gross receipts are all income that a group receives during the year. The chart below identifies the version of the Form 990 your group must file.
Gross Receipts and Assets
Form 990 Version
$50,000 or less
An e-post card notification to IRS
Greater than $50,000 but less than $200,000 and assets < $500,000
Gross receipts > $200,000 and/or Assets > $500,000
Search 990 on www.irs.gov to find the form and instructions
Note: Be sure to include 4275 on the Form 990 as the group exemption code when filing.
Additionally, the chapter must file a Form 990T if “unrelated trade or business income” is greater than $1,000. This can include earnings from or payments received from non-members. This form is available through the IRS website found here.
Aren’t all TKE groups tax exempt?
Most of a group’s revenue would be tax exempt (dues and member fees). However, groups are liable for federal income tax on Unrelated Business income (UBI). Income from investments such as revenue from vending machines and renting rooms to non-members are examples of UBI.
Must the undergraduate colony/chapter and the Alumni Association file separately?
Yes. The colony and/or chapter is an “unincorporated association” that derives its non-profit status from a group exemption granted the national Fraternity, a 501(c)7 corporation. The Fraternity’s Headquarters is required to update its roster of colonies, chapters, and alumni associations annually with the IRS. TKE’s group exemption code is 4275 and should be included on all subordinate group returns. The Alumni Association is a separate corporation and must apply for its own non-profit status.
Are funds from fundraisers taxable income?
No. It must be included in your revenue total for the year, but is not considered UBI and will not be taxed.
Are donations to colonies, chapters, and alumni associations tax deductible for the donor?
No. “Tax deductible” refers to a donor being able to deduct the amount of the donation from his/her income, thus reducing his/her taxes. Donations are only tax deductible when given to a charitable or educational 501(c)(3) corporation. A chapter, colony and/or alumni association does not qualify for this status. The TKE Educational Foundation (TEF) exists as 501(c)3 corporation for this express purpose—to receive and manage contributions for educational scholarships and programs.
The chapter has no employees, so why would it have an EIN?
The IRS uses EINs to track organizations just as it uses social security numbers to track individuals. The IRS requires all banks to relate either a personal social security number or EIN to any account opened. All chapters, colonies and alumni associations are strongly encouraged to use their groups EIN to open an organizational bank account.
Will we owe income tax?
It depends. Anything over $1,000 in Unrelated Business Income (UBI) is taxable. If the group has over $1,000 in UBI then they must ALSO file a 990T.
How much will the income tax be?
The tax rate for organizations with less than $50,000 in unrelated business income (UBI) is 15%. It is highly unlikely that any group would have more than $50,000 UBI.
Is there any way to avoid owing income tax?
Chapters can avoid the tax on investment income only by following IRS procedures called “set-aside.” This IRS provision (originally written in a case for Sigma Phi Epsilon Fraternity in 1969 which still stands as IRS ruling for all fraternal organizations) allows organizations to “set aside” net investment income for charitable, religious, scientific, or literary or educational purposes. More information about “set-asides” can be found here.
What do I do if my group has lost its tax status?
If your group has lost its tax status, you will need to file IRS 1024 to be reinstated as a 501(c)7. You can find form 1024 on the IRS website. There is a onetime fee of $850.00 due to the IRS in order to process your paperwork. More information about the revocation and reinstatement can be found here.
Where can I go with additional questions?
Tau Kappa Epsilon Fraternity has partnered with File990.org for IRS 990 & 1024 support. Through this support, File990.org will provide the following services to TKE groups:
- Form 990 (Annual Filing)
- Reminders to all TKE groups when they need to file their 990 tax form.
- Phone and email support to any TKE group with their annual 990 tax filing
- If you are interested in filing IRS Form 990 using the file990.org system, the cost will be at a discounted price $29.95. For all 990 questions, please contact JB Goll, Director of National Accounts, at email@example.com.
- Form 1024 (Reinstatement Filing)
- Support and assistant through the reinstatement filing process
- Through this support, File990.org will provide a certified public accountant (CPA) to assist you with your reinstatement filing using Form 1024. The fee for this service will be at a discounted rate of $1,000.00 in addition to the IRS refilling fee of $850.00. If you are interested in using this service, please contact Cindy Bell, File990.org CPA, at firstname.lastname@example.org.
For more information about File990.org, you may visit their website – www.file990.org, or give them a call at 859.309.3640.