January, 2014
ASHI Community
Inspection News and Views from the American Society of Home Inspectors



Is Your Chapter in Compliance with the IRS?

MICHAEL STEPHENS

Chapter in Compliance

Is Your Chapter in Compliance with the IRS?

Is your chapter properly insured?

BY MICHAEL J. STEPHENS, ACI - ASHI TREASURER

hen you were elected as a chapter leader, your member-ship entrusted you with the responsibility for the wellbeing of the organization. Many of our chapter leaders are not well versed in accounting or business administration. Also, with the changeover of officers and their addresses, some important mail may get lost or sent to the wrong person. So I have compiled a checklist of those items that require your attention.

The Answers to Five Questions that Every Chapter Leader Must Know

1. Has your chapter filed the proper tax return for the past year?
Since 2007, tax-exempt organizations like ours are required to file an IRS Form 990. Even if your chapter revenues were less than $50,000, you must file a Form 990-N. It is an electronic postcard that asks you eight simple questions. Your first return was due in 2008 for the tax year 2007. The IRS will send you a notice if you do not file on time and failure to file for three consecutive years automatically results in loss of the tax-exempt status of your chapter. One of our chapters has suffered this problem, and we are working to restore their exempt status.

2. Is your treasurer bonded?
Last year at Leadership Training Conference, at a roundtable discussion group, I learned of two chapters that lost monies when their treasurers absconded with chapter funds. These were some very serious amounts to both chapters who trusted in their fellow members to be honest. I strongly recommend getting your treasurer bonded and having two signatures be required on checks over $10, and the requirement printed on the signature line of your chapter’s checks. Also, require an annual review for the checkbook by a committee or a CPA firm.

3. Is all your insurance up to date?
Strongly consider if you don’t have them, General Liability, D&O (Directors and Officers) insurance, and Fidelity Bond. These policies are not very expensive and can potentially save your chapter thousands of dollars. If you do have these policies in force, verify that the premiums have been paid. With the change of treasurers every few years, this is something that may fall between the cracks.

4. Does your chapter have a budget?
I have seen firsthand the results of not having a budget and not sticking to it. It is important because at the beginning of the year there are a lot of monies in the bank, and the tendency is to think you have more than what you need. Remember, it has to last all year. Keep in mind any good budget must provide for a contingency reserve for future shortfalls.

5. Does your chapter have a historian or records keeper?
This is a person who serves for multiple years and maintains for safekeeping all your records and files, minutes of board meetings, etc. This person may also serve as your chapter contact person. So much older information sometimes is lost with the changeover of recording secretary or treasurer.

If you have any questions or need some help, please don’t hesitate to give me a call.

Michael J. Stephens
Phone: 703-250-5388
Email: Stephensmj@cox.net