Unincorporated Associations And Tex Exempt Status

[jjmackow]

My question involves business law in the state of: NH

A friend of mine and I are interested in creating an association and we are interested in charging membership fees for the express purpose of covering operating costs explicitly limited to:

1. Internet domain registration
2. web site hosting fees
3. fees charged by the secretary of state for registering the title.
4. any fees charged by the IRS or state in regards to filings

We are not paying ourselves or any other officers, nor are we paying any staff. I am aware of IRS form 1023 and intend to file it.

Are we entitled to collect membership fees for these expressed purposes, holding them in a bank account, without any state or federal tax consequences?

At the end of the year, if we carry a surplus (oh boy!) , will that be susceptible to a BET tax? I'm seeing operating revenue of far less than $1,000 per year, and expenses to match.

Thanks for your insight.

[aardvarc]

You can't generally be granted tax exempt status without incorporating (since individuals and for-profit enterprises are taxable). What type of organization you'll want to create will depend on the nature of the association, as this has direct bearing on the exact IRS section you'll be incorporating under. There are a lot of differences between, for example, a trade or professional association (such as a (c)(6)), or an association formed for charitable purposes (such as a (c)(3)), versus a homeowners association, or a membership-based organization that is supported by membership fees. It doesn't matter so much the types of expenses, as it does the mission and reason for the existance of the organization in the first place.