Difference between ‘Tax Exempt’ and ‘Tax Deductible’
Some members may unknowingly misrepresent NPMA when soliciting or accepting local support for chapter events. Please be advised that there could be adverse legal and tax implications from these actions.
The IRS has ruled that NPMA, like most other non-profit professional associations, is an organization that is exempt from Federal income tax under Section 501(c) (6) of the Internal Revenue Code. Being ‘tax exempt’ in this regard does NOT mean NPMA qualifies as a charitable organization under Section 501(c)(3). Therefore,a company or any other supporter that provides funds or donates items of value in support of NPMA activities such as a chapter event, should not be told or led to believe that such support is ‘tax deductible’ like a charitable donation.
It’s important that when your members approach potential local supporters, they refrain from using phrases like ‘make a contribution’ or ‘donate to NPMA,’which might mislead the supporters into thinking that NPMA is a qualified charity, and that their support would be tax deductible. Should a company give money to NPMA and record that transaction as a charitable deduction when filing their tax return, they would be in error and could be in trouble if that return was audited. Needless to say, they wouldn’t be happy with NPMA for the misrepresentation.
It is certainly OK to ask the local company to ‘support’ your event(s) or educational efforts, but if they ask for NPMA’s tax ID number, it’s important to make clear to them that NPMA is not a tax deductible charitable organization.
Please discuss this issue with any of your members who are responsible for chapter event fundraising. If you or your members have questions about this, please have them contact the NPMA National Office.