Student Organization Checking Account Management Guidelines
- The Student Organization Business Office (SOBO) will receive regular correspondence from the Center for Student Engagement regarding student officers of recognized student organizations on campus.
- The Student Organization Business Office will ensure that the student organization advisors receive the checkbook register information on request.
Questions? Please contact Donna Mount at 974-3168 or come by 174W Student Union.
- Register with Center for Student Engagement, 174 Student Union
- Come to the Student Organization Business Office in 174W Student Union
- SOBO office will open an account and assign an account number and a disbursement book
- Need to sign a signature card at SOBO office – President, Treasurer, and Advisor signatures are needed
- Fill out a disbursement in the amount of the balance in the account minus the yearly bookkeeping charges
- The disbursement needs to be made out to the organization (No disbursement will be processed if made out to an individual)
- Advisor of the organization must send a memo and sign the disbursement with their authorization to close the account
- A check will be processed and can be picked up in 5 business days
- Fill out blue disbursement form completely
- Attach a receipt or invoice to every disbursement. This proof of documentation for disbursement protects your organization and this office if any questions are ever asked about your records. Checks without proper documentation for each disbursement will not be issued until the appropriate receipt or invoice is provided.
- A current signature card must be filled out completely and on file in the office before checks can be disbursed
- The advisor and the authorized organization officer must sign disbursements requests that exceed $100.00
- An Advance disbursement can be obtained also before an event. To do this, bring disbursement with the amount that the organization needs to be processed with proper signatures. Receipts or invoices will need to be turned in to the SOBO office within three business days of the event.
- Deposit should be dropped off at 174W Student Union between 8 am and 3 pm. Endorse checks with organization name on the back of the check. A written numbered receipt for each deposit will be issued, but the deposit will not be verified at that time. Upon verification, if any discrepancies are detected, the individual who made the deposit will be immediately contacted to determine the source of the error. A new receipt will be issued for the correct deposit amount.
- When receiving checks from individuals or companies please have them make checks out to the organization. DO NOT make them out to the University of Tennessee. If a company or individual makes a donation to the organization and needs a receipt for tax purposed, the process will need to be handled differently.
- If the check needs to be processed for tax purposes, it will need to be made out to the University of Tennessee and that deposit will need to be made with Mark Alexander at 515 Andy Holt Tower. He will need to deposit the check into a restricted account set up for student organizations, he will need to know how the donor wants the money spent and then the invoice will need to be sent to him also to process payment out of the account for the expenditure the donor wants it spent for.
- SOBO – Disbursement Voucher
- Box Office Report
- Tax ID Instructions: A Tax ID Number or EIN (Employer ID Number) is like a social security number for your organization. Student organizations are often in situations that require a Federal Tax ID Number (opening an off campus organizational bank account, conducting fundraisers with a business, etc.). Registered student organizations are not permitted to use the UT’s tax identification number; therefore they are required to obtain their own EIN. The purpose of the EIN is so the IRS will not make any organization members personally responsible for taxes on revenue that the organization has earned. To get a Tax ID number, you may contact the IRS and request a Form SS-4 (Application for Employer Identification Number) or visit their Web site in order to request an EIN.
- Go to the following website to obtain the Form SS-4 and instructions:
- Online Application: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online
- Is my student organization Tax Exempt? Registering your organization with the Center for Student Engagement/ Dean of Students does not cover you under the University of Tennessee tax-exempt number. A student organization is NOT authorized to use UT’s tax-exempt identification number for purchases. Your organization is not “Tax-Exempt” unless you have applied for and been granted that status from the Internal Revenue Service (IRS). http://www.irs.gov/pub/irs-pdf/p4220.pdf
Non-Profit & Tax-Exempt Status
All student organizations are required to operate as non-profit organizations that do not generate income for individuals and/or the organization itself. Student organizations, however, are not automatically registered as 501(c)3 organizations, and do not, therefore, automatically receive tax-exempt status.
If it becomes necessary for the organization to incorporate, this action is to be undertaken after consultation with the Center for Student Engagement. Any undergraduate organization that incorporates must do so strictly on a nonprofit basis and in a manner that perpetuates its undergraduate status. Organizations that seek tax-exempt status are required to apply for such status through the United State Internal Revenue Service.
All undergraduate organizations are expected to comply with the Undergraduate Regulations and must also comply with applicable federal and state tax laws. The University of Tennessee’s tax-exempt status does not extend to its undergraduate organizations. Nonetheless, the University of Tennessee requires all undergraduate organizations to operate exclusively on a not-for-profit basis. Filing federal and state returns for an organization and complying with related federal and state tax laws is the responsibility of each undergraduate organization.
If you have any questions about the information outlined herein, or if you wish to seek assistance with any of your organization’s financial or tax matters, please contact Ashleigh Moyer, director in the Center for Student Engagement.
Note: This information is intended only at the University of Tennessee undergraduate student organizations. Although the information contained in this website is designed to offer general tax information, it is not a substitute for advice obtained from the Internal Revenue Service, Tennessee Department of Revenue or a qualified tax professional. The information on this website is subject to change or further interpretation by the Internal Revenue Service or other tax authorities.
Federal Tax-Exempt Status
In order to qualify as a tax-exempt organization (i.e., exempt from Federal taxation under Internal Revenue Code (IRC) Section 501(a)), a student organization must generally be a type of organization described in IRC Section 501(c). Organizations that meet the requirements of IRC Section 501(a) are generally exempt from federal income taxation. In addition, charitable contributions made to some section 501(a) organizations by individuals and corporations are deductible as charitable contributions under IRC Section 170.
Although IRC Section 501(c) includes organizations operating as title holding companies (501(c)(2)), membership organizations (501(c)(4)), trade associations (501(c)(6)), and fraternal beneficiary societies (501(c)(8)), the majority of undergraduate student organizations will qualify for tax exemption under IRC Section 501(c)(3).
An organization exempt under IRC Section 501(c)(3) is an organization organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes. Please refer to IRS publication 557, Tax-Exempt Status for your Organization, for a description of the types of organizations included under IRC Section 501(c).
In order to support its entitlement to this exemption, every organization should have a written Constitution, Bylaws, and/or Article of Association which would typically include the following basic information:
- The name and purpose of the organization;
- A description of its activities in terms that indicate the organization’s tax‐exempt character;
- A description of its membership (e.g., how does someone become a member? Is the group composed predominately of the University of Tennessee students? Is there membership by audition? Is the group exclusive in any other way?);
- A list of officers and a description of how officers are chosen;
- An indication of how and for what purpose the organization disburses its funds;
- A dissolution provision stating that if the group dissolves, its assets will be distributed to the University of Tennessee or to some other designated tax‐exempt organization.
501(c)(3) Restrictions: Private Benefit and Lobbying
An absolute requirement for federal tax exemption under IRC Section 501(c)(3) and certain other organizations described under IRC Section 501(c) is that none of the organization’s net income or profits can inure to the benefit of private interests, such as the creator or the creator’s family, shareholders or other designated individuals or persons controlled directly or indirectly by such private interests. Further, an organization exempt from taxation under IRC Section 501(c)(3) is limited in its ability to attempt to influence legislation and is prohibited from intervening in a political campaign for or against any candidate for public office.
For additional information regarding federal tax-exempt status, please refer to the IRS public charities and non-profits site and IRS Publication 557, Tax-Exempt Status for Your Organization.
Obtaining Federal Tax-Exempt Status
The benefits of 501(c)(3) status include exemption from federal income tax and eligibility to receive tax-deductible charitable contributions. To qualify for these benefits most organizations must file an application with and be recognized as exempt under IRC Section 501(c)(3) by the IRS.
Organizations with Gross Receipts of Not More than $5,000 per Year
An organization that normally has gross receipts of not more than $5,000 per year (see gross receipts test below) and which is organized and operated exclusively for tax‐exempt purposes will generally be recognized as tax‐exempt under Internal Revenue Service Code (IRC) Section 501(a) without applying to the IRS for approval of IRC Section 501(c)(3) status.
Organizations with Gross Receipts in Excess of $5,000 per Year
An organization that normally has gross receipts in excess of $5,000 per year (see gross receipts test below) and which is organized and operated exclusively for tax‐exempt must formally request recognition of exemption in order to be recognized as an entity exempt from federal income taxes. The request is generally made on IRS Form 1023, Application for Recognition of Exemption under IRC Section 501(c)(3) of the Internal Revenue Code.* Where the form is timely filed, the organization will generally be treated as tax‐exempt until the IRS acts on the application. In order to ensure that the Form 1023 is complete and accurate, it is strongly recommended that an organization seek professional tax assistance in completing this application.
Note: Organizations which are not described in IRC Section 501(c)(3) may be required to file IRS Form 1024, Application for Recognition of Exemption under Section 501(a) or for Determination under Section 120, rather than Form 1023, in order to formally request recognition of exempt status.
Gross Receipts Test
The gross receipts of an organization are not more than $5,000 if: i) during the first taxable year of the organization, the organization received gross receipts of less than $7,500; ii) during its first two taxable years, the aggregate gross receipts received by the organization are $12,000 or less; and iii) in the case of an organization which has been in existence for at least three taxable years, the aggregate gross receipts received by the organization during the immediately preceding two taxable years plus the current year are $15,000 or less.
Annual Filing Requirements
Organizations recognized as tax-exempt under IRC Section 501(c)(3) are generally required to file an annual information return. The type of annual filing is determined by the organization’s annual gross receipts and assets.
Important: The Pension Protection Act of 2006 mandates that most tax-exempt organizations must file an annual return or submit an electronic notice with the IRS. The Act also requires that any tax-exempt organization that fails to file for three consecutive years automatically loses its federal tax-exempt status.
Organizations with Gross Receipts of Not More than $50,000 per Year
Organizations with gross receipts that are not normally more than $50,000 per year (see gross income test below) must electronically submit IRS Form 990-N, also known as the e-Postcard, annually (unless the organization chooses to file a complete Form 990 or 990-EZ). The e-Postcard is due by the 15th day of the 5th month after the close of the organization’s tax year.
Note: Organizations that were not formally granted federal tax-exempt status through the filing of either Forms 1023 or 1024, but that are recognized as tax-exempt (because their annual gross receipts are not more than $5,000 and they are organized and operated exclusively for tax-exempt purposes) should contact the IRS Account Services Unit prior to the initial e-Postcard filing at (877)-829-5500 to request the IRS to set up the organization’s account to allow filing of the e-Postcard. Organizations that received formal IRS approval of exempt status do not need to contact the IRS prior to filing the e-Postcard.
Organizations with Gross Receipts in Excess of $50,000 per Year
Whether it has received recognition of its tax‐exempt status or is awaiting notification of exempt status, an organization that normally has gross receipts in excess of $50,000 per year (see gross income test below) must file IRS Form 990, Return or Organization Exempt from Income Tax, or IRS Form 990-EZ, Short Form, Return of Organization Exempt from Income Tax, annually, with the IRS. Forms 990 and 990-EZ are due by the 15th day of the 5th month after the close of the organization’s tax year.
An organization that has gross receipts during the year of less than $200,000 and total assets at the end of the year of less than $500,000, however, may file Form 990‐EZ rather than Form 990.
A Form 990 or Form 990‐EZ must be filed even if the organization has little or no net income (e.g., because its expenses equal its income) or has income only from carrying on its exempt activities. If your organization is required to file an annual information return, it is strongly recommended that you consult with a tax professional to ensure that it is filed in a complete, accurate and timely manner.
Gross Receipts Test
An organization’s gross receipts are considered normally to be in excess of $50,000 if the organization is: i) up to a year old and has received, or donors have pledged to give, more than $75,000 during its first tax year; ii) between one and three years old and averaged more than $60,000 in gross receipts during each of its first two tax years; or, iii) three years old or more and averaged more than $50,000 in gross receipts for the immediately preceding three tax years (including the year for which the return would be filed)
Federal Filing Information
Federal Employer Identification Number (EIN)
Undergraduate organizations are not permitted to utilize the University’s EIN for any purposes. Any organization that has at least one employee, files tax or information returns and/or opens a bank account will be required to obtain an EIN. An organization can apply for an EIN by completing IRS Form SS-4 online, by telephone, by fax or by mail (Please refer to SS-4 instructions for further information). To avoid the issuance of multiple EINs, it is advised that an organization check its records before applying, in order to verify that the organization was not already issued an EIN.
Note: An individual’s social security number should not be utilized on a student organization’s bank account as the funds in the account may be treated by the IRS as part of that individual’s assets and any earnings on the account will be deemed earnings of the individual for income tax purposes.
Typically, undergraduate organizations are not permitted to employ students directly. Organizations wishing to pay wages to students must receive advance written approval to do so from the Dean of Student Affairs. An undergraduate organization that employs anyone directly is responsible for all related federal and state employment tax and compliance issues (i.e., payment of all taxes and the filing of all related federal and state tax returns and information returns) associated with the wages paid. In general, employers are required to withhold and remit federal income and FICA taxes (including the employer’s share of FICA taxes paid on a matching basis) and state income taxes to the appropriate taxing authorities. Tax-exempt employers may also be responsible for the payment of federal and state unemployment taxes. In addition to the tax returns required for taxes above, federal and state information returns (Forms W-3, W-2, etc.) must be provided to direct workers and/or filed with the appropriate taxing authorities.
Federal Income Taxes
If an organization qualifies for tax-exempt status under IRC Section 501(a), it may still be subject to federal income tax on income from an unrelated trade or business. Unrelated trade or business income is the gross income derived from any trade or business that is regularly carried on and that is not substantially related to the organization’s exempt purpose. There are several exceptions to the definition of unrelated trade or business income. An exempt organization that has gross income from an unrelated trade or business of $1,000 or more in any year must file Form 990-T, Exempt Organization Business Income Tax Return, and pay the related federal income tax. Gross income is defined as gross receipts minus the cost of goods sold.
If you believe that your organization will generate unrelated business income, you should contact a tax professional for a complete analysis and assistance in the completion of Form 990-T, if required. Please refer to IRS Publication 598, Tax on Unrelated Business Income of Exempt Organization, for additional information regarding unrelated business income is available at www.irs.gov.
State Filing Requirements
An organization that is required to file a Form 990 or Form 990‐EZ is not required to file a copy of the federal information return or an equivalent state information return with the State of Connecticut. If your organization is required to file a Federal income tax return (e.g., Form 990-T), however, it will generally be required to file a state income tax return. Please consult a tax advisor or state tax authority sites for filing requirements with respect to states, other than Connecticut, if the organization is organized or has activities in states other than Connecticut.
Recordkeeping & Public Disclosure Requirements
All organizations must maintain accurate and complete financial records and must keep them for at least six years. Failure to maintain proper records may make it difficult to substantiate to tax authorities that the organization does not owe taxes, interest, and penalties for prior years.
An organization must, during the three‐year period beginning with the due date (including extensions, if any) of Form 990 (or Form 990‐EZ), make its return available for public inspection upon request. The entire information return, with the exception of the schedule of contributors, must be made available. In addition, certain other information, including the Form 1023, must be made available for public inspection. Inspection must be permitted during regular business hours at the organization’s principal office.