NAMI North Carolina Affiliate Tool Kit | Your Affiliate & the IRS

Form SS-4

Once your affiliate is incorporated, apply to the IRS for an employer identification number (EIN) using Form SS-4. You will need an EIN to apply for non-profit tax status.

To order an SS-4 form from the IRS, call 800 829-3676.  It will take 7 to 15 working days for you to receive the forms in the mail. You may download forms from the IRS World Wide Web site at [link to forms page].

Changing Your Affiliate’s Name or Address

Once your affiliate is incorporated, you are responsible for keeping the appropriate state office informed of any changes of name or address for the affiliate. After you have formally registered the new affiliate name with the state, you must then file a name change form with the IRS. Notify the state office, your bank and the post office of the name change, too.

Filing for Tax-Exempt Status Form 8718

Titled “User Fee for Exempt Organization Determination Letter Request,” this one-page form must accompany your Form 1023 when you file for tax-exempt status with the IRS. The form’s purpose is to determine the user fee amount to enclose with your application for tax-exempt status, based on your affiliate’s gross receipts.

If your affiliate’s annual gross receipts average less than $10,000 during the past four years, the fee is $150. If your gross annual receipts during the past four years average more than $10,000, the fee is $500. Attach a check or money order for the appropriate amount to the form.

Form 1023

Use the “Application for Recognition of Exemption Under Section 501 (c) (3) of the Internal Revenue Code” form to apply for official non-profit status. Although the form is nine pages long, you can complete the applicable portions for a newly-organized affiliate fairly quickly. If your affiliate has been in operation for a number of years, you will have to provide income and expense records for the past three years, so allow extra time to secure the appropriate financial reports from your treasurer.

Step-by-step instructions for completing Form 1023 follow. The recommended responses are appropriate for most affiliates, but we strongly encourage you to review IRS instructions, too, to make sure our suggestions apply to your affiliate. Your responses to Part IV of Form 1023 will depend on how long your affiliate has been incorporated, so be sure to read Part IV carefully to determine the right responses for your affiliate.

The IRS will contact you if you have not filled out the forms completely. They will make sure you have applied properly.

Step-by-Step Guidelines for Completing Form 1023

Page 1 of Form 1023 asks for basic information, including the affiliate’s Employer Identification Number (EIN), assigned by the IRS when you submit Form SS-4.

Part I Guidelines

• In 1b, which asks for “c/o Name,” list either the affiliate president or treasurer.
• For line 5, the date incorporated or formed, list the date when the Secretary of State approved your articles of incorporation.
• Leave the boxes in line six unchecked.
• Indicate your affiliate is a corporation in line 10, and attach a copy of your Articles of Incorporation approved by the State.
• Attach a copy of your affiliate’s bylaws.
• Have the officer you listed in 1b sign the form.

Part II Guidelines

• For line 2, if yours is a typical affiliate, most of your financial support is from members’ dues, with some additional support for projects from the state office and/or local organizations. If you anticipate a grant that would substantially increase your funds, attach a statement and description of that grant.
• If your affiliate conducts or plans to conduct fund raising activities, such as organizing special events or seeking donations or grants, describe them in line 3. If not, mark “N/A.”
• Leave line 4b blank.
• Check “No” boxes for lines 4c, 4d, 5, 6, 7, 9 and10a and b.
• Unless your affiliate owns a computer or other significant assets, indicate “N/A” for line 8.
• For line 11, check the “Yes” box and complete sections a, b and c.
• Check the “N/A” boxes for 12a and b.
• If your affiliate responds to Legislative Alerts from the state office by writing letters and/or calling legislators, check “Yes” on line 13. Estimate the percentage of time members are involved in this activity, and be sure to state your affiliate uses no funds for this purpose.
• Check “No” in line 14. We are not allowed to promote or campaign against candidates for political office.

Part III Guidelines

If your affiliate was incorporated within the last 15 months:

• Check “Yes” in line 1.
• Leave lines 2 through 7 blank.
• Check “No” in line 8.
• Leave lines 9 through 14 blank.
• Check all “No” boxes in line 15.

If your affiliate has been incorporated for more than 15 months and has not had receipts of more than $5,000 per year during that time:

• Check “No” in line 1.
• Check box b in line 2.
• Leave lines 3 through 7 blank.
• Check “No” in line 8.
• Leave lines 9 through 14 blank.
• Check all “No” boxes in line 15.

If your affiliate has been incorporated for more than 15 months and you have received more than $5,000 in any year, we suggest you consult with a lawyer.

Part IV Guidelines

Part IV asks for a statement of your affiliate’s revenues and expenses and for a balance sheet.

• If you have operated your affiliate as a corporation for at least one year, fill in the financial information for the current year.
• If you have operated your affiliate as a corporation for more than one year, fill in the financial information for the current year and for up to  three previous years of operation as a corporation.
• If you have operated your affiliate as a corporation for less than one year, provide figures for the current year and proposed budgets for the next two years.
• Your entries in the assets portion of the balance sheet will most likely consist of your affiliate’s checking account balance.
• Most affiliates have no liabilities to list.

Form 990 or 990EZ

Once you have filed Form 1023, your affiliate will be on probation for three years. File yearly tax returns for your incorporated affiliate during those three years, no matter what your income, using Form 990 or 990-EZ.

Determination Letter

During the probation period, your affiliate remains a tax-exempt organization, but your tax status is not official until you receive official notification from the IRS. After the three-year probation period, provided you have successfully satisfied IRS requirements for non-profit status, the IRS will issue an Exempt Organization Determination Letter. Once you have received the determination letter, you will be required to file income tax returns for the affiliate only for years in which your gross receipts total more than $5,000.

Please review the “Organizing for Success” section of the Affiliate Tool Kit for a summary of restrictions applying to 501 (c) (3) corporations.

Need Help?

Contact the state office if you have questions about applying for tax-exempt status.

Need Forms?

To order IRS application forms, call 800 829-3676 and ask for Forms1023, 8718 and SS-4.  It will take 7 to 15 working days for you to receive the forms in the mail. You may download forms from the IRS World Wide Web site at [link to download page].

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Insert a Sample Activities Description Here

Sample Text from NAMI North Carolina’s Wake County Affiliate:

1. Support group to help families and mental health consumers handle the difficulties of living with severe and persistent mental illness in the family and to learn how to get better services for individuals who have mental illness. Started May 1997, three hours per month, 20 percent of group’s activities. Conducted by volunteer members on the second and fourth Monday nights of each month at Highland Methodist Church, 1901 Ridge Road, Raleigh, NC 27612.

2. Educational meetings to inform members of services in the community, updates in treatments and medications for persons with mental illness. Started May 1997, three hours per month, 20 percent of activities. Conducted by the president on the fourth Monday night of each month at Highland Methodist Church.

3. Monthly luncheon and pot luck dinners twice a year to provide fellowship for members and social activities for persons with mental illnesses. Started May 1997, three hours per month,  20 percent of activities for the group. Organized by various members, with events held at restaurants, parks and members’ homes.

4. Board meetings to plan educational meetings and other activities. Started May1997, three hours per month, 20 percent of group’s activities. Conducted by the president on the second Thursday of each month at officers’ homes. 5. Distribution of brochures, public speaking presentations to service organizations and displays at health fairs, etc., to inform the public of the

need for better services and treatments for the mentally ill. Started May 1997, 1.5 hours per month, ten percent of group’s activities. Conducted by members throughout the community. 

6. Letter writing to legislators and mental health professionals to encourage better services and treatments for those who have mental illness. Started May 1997, occurs periodically, as issues emerge, five percent of group’s activities. Carried out by members as needed. 7. Representation on Area Mental Health and Clients Rights Committee to speak for mental health clients’ treatment in the mental health system. Started June 1997, one hour per month, five percent of activities. Conducted by members.