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Proving Your Tax-Exempt Status & Common Issues

 

The Group Ruling Packet

Your organization will receive three documents in the tax packet received after completing the group ruling application. This collection of documents should be sufficient proof of your organization's tax-exempt status as a group-ruling subordinate organization: 
  1. Certificate of Inclusion letter with your organization's legal name, current address, and EIN. It is good practice to keep a letter on file that is dated less than 6 months. 
  2. GCFA's 1974 IRS Letter from the IRS granting GCFA the group exemption, and 
  3. IRS Publication 4573 which gives general information on group exemptions and states that verification from the central organization (GCFA) of inclusion is sufficient for verification of the exemption. 


Electronic Verification Issues

If your organization establishes or documents its exempt status by inclusion as a “subordinate organization” in the UMC Group Tax Exemption Ruling, it is likely that your organization does not appear on the IRS Tax Exempt Organization Select Check database (“Select Check”).

Only organizations that apply directly to the IRS for exemption appear on Select Check, so as a group ruling subordinate, your organization will not appear on this list. Luckily, per IRS Publication 4573, group ruling subordinate organizations are not required to be listed on a database if the parent organization (in this case, GCFA) is listed. Thus, a subordinate organization’s failure to show up in Select Check does not mean the subordinate organization isn’t tax-exempt. However, we have found that over the past couple of years, many businesses and grant-giving groups have turned to an electronic verification process as a means of verifying an organization’s exempt status, such as searching the Select Check database for your organization’s EIN. If they do not have an existing understanding of the IRS requirements for group exemptions and their subordinates, they may deny your grant request when their search comes up empty. Below are possible solutions for handling this issue: 
  1. As stated above, your organization’s Group Ruling Packet meets the IRS’s requirements for proof of your tax-exempt status. This collection of documents can be requested at any time at www.UMgroupruling.org.
  2. Having a profile on GuideStar will be helpful in proving your exempt status. GuideStar is an online directory of US charities and nonprofit organizations. GCFA has partnered with GuideStar so that our UM Group Ruling website provides an option for us to send your organization’s information for GuideStar to create a profile. Your organization’s listing on GuideStar can help verify your organization’s 501(c)(3) status with entities like Amazon Smile, the Walmart Foundation, and Network for Good. Don’t forget to Claim Your Profile!
  3. There is a second IRS database, the Exempt Organization Business Master File ("EO BMF"), that allows group ruling subordinates to be listed if a group ruling parent organization (GCFA) sends an individual request to the IRS. Our application form at www.UMgroupruling.org offers an option for GCFA to send a request to the IRS to get your organization listed on this database. Please note that we have found that it takes a minimum of 45 days to get an organization listed from the time the request is sent to the IRS.


​Facebook's Fundraising Tools

We have been made aware of the issues that our subordinates have experienced when applying to utilize Facebook's Fundraising Tools. Here is what we've learned about the requirements and application process: 
  1. Your organization must have an active Facebook page. 
  2. Only the Admin for your organization's Facebook page can complete and submit the application for fundraising tools. Incomplete applications can't be saved. 
  3. Including your organization's banking information is optional. If banking information is not provided, payments will be made via the Network for Good platform. See the links at the bottom for more information. 
  4. Your organization must be in good standing with the IRS (cannot be listed on the IRS Automatic Revocation List - see more information about this list in the FAQ Menu) or the Parent Organization of a group exemption (GCFA). 
  5. You'll need to provide official documentation verifying your organization's business name and address, such as your EIN issuance letter from the IRS, a utility bill, current business license, most recent tax filing, and/or certificate of formation document. 
    • Note: You will likely be asked to provide one or more of the documents listed above along with your organization's group ruling Certificate of Inclusion letter from GCFA. Also, it seems to be a requirement that all documents reflect the same business name and address.
  6. Group ruling subordinates are not able to provide 501(c)(3) documentation from the IRS, as mentioned above. To prove your organization's 501(c)(3) status, you will need to provide all three documents received in your Group Ruling Packet as mentioned above. 
  7. We have also found that Facebook has denied applications due to inconsistency in GCFA's name between the Certificate of Inclusion letters we supply our subordinates and GCFA's 1974 IRS Letter and listing on the IRS database. This is simply due to the IRS only allowing a certain number of characters to be shown in its systems. If you are denied for this reason, we've found that other subordinates have had the most success if they include with their application a letter from GCFA explaining the inconsistency. You can click this link to download the letter -  Letter+to+Facebook+-+GCFA+Name.pdf 
For more information on Facebook's requirements, see the links below.   

 
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The General Council on Finance and Administration of The United Methodist Church.