I applied for and received an EIN in order to open a bank account for a youth baseball team. This will be used to collect due from families and to pay for a few tournaments that we will enter. It will be a few thousand dollars each year. We did not apply to be a 501c entity.
Now that I have the EIN, does this mean I have to file a tax return for the sports team every year? And do I need to file with the state as some sort of business entity?
You have your answer :
Nearly all organizations claiming tax-exempt status must file a Form 990-series
annual information return (Form 990, 990-EZ, or 990-PF) or notice (Form 990-N)
beginning with the year they legally form, even if they have not yet applied for or
received recognition of tax-exempt status."
When you got the EIN you had to indicate which type of entity you were going to be ... what did you put on the SS-4 ? And what tax form did the IRS tell you to file on the EIN verification letter ?
I applied under Additional Types, Sports Team (community). That was the best description for us.
On the verification letter, it defaulted us to a non-profit organization and pointed us to a Publication with information about applying for tax exempt status. We weren't planning on doing that for this limited scope because I had heard that there were additional steps and it didn't seem worth it to us.
"When you submitted your application for an EIN, you checked the box indicating
you are a non-profit organization. Assigning an EIN does not grant tax-exempt status
to non-profit organizations. Publication 557, Tax-Exempt Status for Your
Organization, has details on the application process, as well as information on
returns you may need to file. To apply for recognition of tax-exempt status under
Internal Revenue Code Section 501(c)(3), organizations must complete a Form
1023-series application for recognition. All other entities should file Form 1024 if
they want to request recognition under Section 501(a).
Nearly all organizations claiming tax-exempt status must file a Form 990-series
annual information return (Form 990, 990-EZ, or 990-PF) or notice (Form 990-N)
beginning with the year they legally form, even if they have not yet applied for or
received recognition of tax-exempt status."
You have your answer :
Nearly all organizations claiming tax-exempt status must file a Form 990-series
annual information return (Form 990, 990-EZ, or 990-PF) or notice (Form 990-N)
beginning with the year they legally form, even if they have not yet applied for or
received recognition of tax-exempt status."
I have included a few links that should be helpful. I also recommend that you have a short meeting with an attorney that provides NFP advice.
You may or may not have to file for NFP status according to the form 1023-EZ instructions:
https://www.irs.gov/pub/irs-pdf/i1023ez.pdf
If you don't file for NFP status, you will be a taxable entity, which will depend on how you completed your SS-4.
Get some upfront legal and tax advice. Even though the $$ are not significant, penalties for not filing correctly will easily exceed any tax liability, if applicable.
https://nilanjohnson.com/you-run-a-youth-sports-organization-should-you-set-up-a-501c3-or-an-llc/
Since this is most likely a very small group, any filing requirements should not be overly taxing, but you need to understand which forms are applicable.