Welcome to the DSA Chapter Incorporation Help page. Below you will find resources for your Chapter to assist you with getting incorporated and becoming a 501(c)4.
Please review all of the following resources before beginning the process.
Other related links:
- Chapter Incorporation Manual *
- Incorporation and Tax Status Flowchart *
- State Incorporation Guide
- Model Articles of Incorporation
- Model Organizational Resolutions
ATTENTION: The IRS has indefinitely suspended acceptance of group exemption applications until a new revenue procedure regarding the process is issued. The pause went into effect June 17, 2020 and no date has been given for when the revenue procedure will be updated. As such, there are no plans to submit a DSA group exemption application for the foreseeable future. If it is determined that your chapter is required to obtain an IRS Determination Letter of Tax Exempt Status, then you should proceed with submitting IRS Forms 1024-A & 8718.
Incorporation State Resources & Agency Links
- Incorporation State Resources – Compilation resource
- IRS Resources Helpful links where you can obtain an EIN, file your 990-N or Form 8976, or address other IRS issues
- 50 State Nonprofit Corporation Laws – Your state’s official citation to use in drafting Articles of Incorporation
- 50 State Articles of Incorporation Filing – File Articles of Incorporation in your state
- State Income/Franchise Tax Exemption – Apply for corporate tax exemptions in your state
- State Corporate Reports/Renewals – File your annual/periodic corporate report
- 50 State Charitable Solicitation Registration – Register for charitable solicitation or apply for an exemption to registration
- Is there a group exemption for chapters?
- What’s the difference between a 501(c)4 and a 501(c)3?
- What do you mean by “social welfare” as used by the IRS?
- What are examples of “political activity” as defined by the IRS, specifically?
- What specifically makes DSA considered a social welfare organization i.e. a 501(c)4?
- Our chapter does not have a permanent address. What address should we list when filing our Articles of Incorporation with the state?
- If we file Articles of Incorporation with our state, are we considered a 501(c)4?
- Does our chapter need an IRS Tax Determination Letter?
- Why is obtaining an EIN not the same as incorporating?
- Can we skip incorporation and instead just obtain an EIN so we can get a chapter bank account quicker?
- We didn’t file IRS Form 8976 within 60 days of incorporating and we received a notice from the IRS with penalties. What do we do?
- We sent a letter requesting a waiver from the IRS for a penalty related to filing the IRS Form 8976 late, but we never received a response. Now we’ve received a letter that they’ve issued a levy—what do we do?
- We didn’t file form 1024-A within 27 months of incorporation. What can we do to get our exemption backdated?
- We can’t find our incorporation documents. Where do we go to obtain new documents for our records?
- I am a new chapter officer and found out we haven’t filed our taxes for almost 3 years. What happens to our incorporation status?
Questions Related to Incorporation
- Do we need to dissolve our incorporation status to be a part of the DSA Chapter Agreements?
- Is our chapter covered under DSA National’s insurance, e.g. liability insurance?
- Can we still receive Dues Share via a PEX Card if our chapter is incorporated?
- Does National offer any group discounts on accounting software like Quickbooks Online?
There is not a group exemption for chapters at this time, though it had been the goal we were working towards for several years. There are several current barriers complicating the option of a group exemption, foremost being that the IRS as of June 17, 2020 indefinitely halted processing any new group exemption applications.
Chapters should proceed with filing the IRS form 1024-A, form 8718, and pay the application fee ($600) to obtain an IRS Tax Determination Letter.
Both statuses are considered nonprofit organizations. 501(c)4 organizations are created for “social welfare” purposes, whereas 501(c)3s are strictly non-political charitable organizations.
The most important differences are that a 501(c)4 can engage in political activity, which means chapters can endorse or campaign against candidates, and contributions to 501(c)4 organizations are not tax deductible.
There is a limitation in how much electoral activity your chapter can engage in at a 501(c)4. The sole purpose of a 501(c)4 is to promote social welfare, thus the primary activity the chapter engages in should be social welfare. Electoral activity should be kept to a minimum (less than 40% of chapter activities) to avoid penalties and fines.
Social welfare activity is activity that furthers the common good and general welfare of the people of the community (such as by bringing about civic betterment and social improvements). It is not an activity that benefits a private or limited group of people. Examples of social welfare activities include political education, organizing an issue campaign, and grassroots lobbying.
Political activities according to the IRS are activities influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any federal, state, local public office or office in a political organization, or the election of the Presidential or Vice Presidential electors, whether or not such individual or electors are selected, nominated, elected, or appointed.
This broad IRS definition encompasses any electoral campaign work related to a candidate and also work related to electioneering communications and most communications mentioning candidates for public office.
In DSA’s Model Articles of Incorporation, a chapter’s “primary purpose” is described as, “seeking to facilitate the transition to a democratic and socialist society, one in which the means as well as the resources of production are democratically and socially controlled.” DSA works to facilitate this transition in a number of ways—political education, organizing, grassroots lobbying, mutual aid, and in some instances, electoral politics.
There are various types of federally recognized tax exempt organizations. DSA has been organized as a category 501(c)4 tax exempt organization because the primary activities that DSA engages in to fulfill our purpose would be described as social welfare activity by the IRS. The same activity might otherwise qualify DSA as an organization under the 501(c)3 category except that those charitable organizations are prohibited from engaging in electoral politics. DSA Fund is in fact organized as a 501(c)3 organization.
By organizing as a 501(c)4 organization, DSA is allowed to engage in a limited amount of electoral activity in addition to our primary purpose activities, and still retain our tax exempt status. DSA is not organized as a political organization, such as a 527 organization, because engaging in electoral politics is not DSA’s primary purpose. Political organizations, unlike 501(c)3 and 501(c)4 require donor disclosure. Due to the historic targeting of self-identified socialists in America we do not publicly disclose our donors who do not contribute specifically toward electoral activity or as otherwise required by law.
Our chapter does not have a permanent address. What address should we list when filing our Articles of Incorporation with the state?
All states require nonprofit corporations to have a registered agent in the state of formation. The registered agent is responsible for receiving legal and tax documents, must have a physical address (no P.O. boxes). You may list the address of a chapter officer, however we recommend that you hire a registered agent (typical cost is $50-100 a year). You can find a registered agent for your chapter by… If you hire a registered agent then you will not miss any important documents during periods of chapter leadership transition and you will also maintain chapter leaders’ privacy.
No. 501(c)4 is a federal tax classification. You must file Form 8976 (Notice of Intent to Operate Under Section 501(c)4) with the IRS within 60 days of incorporation.
Many states require nonprofit corporations to have an IRS Tax Determination Letter to be exempt from certain tax liabilities. Check your state’s requirements here.
An EIN (Employer Identification Number) is a number used by the IRS to identify your nonprofit corporation when filing your taxes annually. Obtaining an EIN does not grant your chapter any official status. Your chapter must file Articles of Incorporation with your state and submit the IRS Form 8976 to formalize yourself as a nonprofit corporation.
Can we skip incorporation and instead just obtain an EIN so we can get a chapter bank account quicker?
In order to have an official chapter bank account, your chapter should become a nonprofit corporation. While an EIN may be required to open a bank account, it does not grant your chapter an incorporation status. We do not recommend obtaining an EIN before following through with the incorporation process because incorporating affords your officers basic protection from liability that they would not get as an unincorporated association.
Additionally, the corporation name associated with an EIN must match the name on your incorporation documentation. If you file for an EIN before incorporating, there is a chance the state could deny your chapter your corporation name and you would have to file for a new EIN so that it matches.
We didn’t file IRS Form 8976 within 60 days of incorporating and we received a notice from the IRS with penalties. What do we do?
Within 10 days of receipt of the IRS letter, draft a letter using the 8976 Penalty Guidance document to make a request to rescind the penalty based on reasonable cause. Directly contact the IRS to make sure they note you are requesting the penalty be rescinded.
For further guidance, reach out to the DSA Compliance Manager at [email protected].
We sent a letter requesting a waiver from the IRS for a penalty related to filing the IRS Form 8976 late, but we never received a response. Now we’ve received a letter that they’ve issued a levy—what do we do?
Call the IRS at the number listed on the levy communication. Explain to the agent that you have submitted a request for penalty waiver due to reasonable cause and ask that they hold collection activity until your request is received and processed. The IRS will typically do this for you, but you may need to be persistent in attempting to reach an IRS representative on the phone.
We didn’t file form 1024-A within 27 months of incorporation. What can we do to get our exemption backdated?
Nothing. The IRS does not have statutory authority to backdate 1024-A applications after this time period. Your Determination Letter will list the date you submit your 1024-A application.
You can typically request copies from your state’s Secretary of State business division. You may need a unique ID number to verify and match your incorporation records. Use the business search database on your state’s Secretary of State website to find your chapter’s incorporation information and the unique ID. This process varies from state to state so contact your local Secretary of State office for details.
I am a new chapter officer and found out we haven’t filed our taxes for almost 3 years. What happens to our incorporation status?
The IRS will automatically revoke your chapter’s incorporation status if you do not file a 990 every year. If this happens, you will need to start over and follow the incorporation process entirely.
Questions Related to Incorporation
Chapters do not need to dissolve their incorporation status to be a part of the chapter agreements.
Chapters are not covered under DSA National’s insurance.
The PEX Card dues share program is for unincorporated chapters who do not have access to a bank account. If your chapter is incorporated, you are expected to obtain a chapter bank account where you can receive dues share via a direct ACH transfer.
If your chapter gets incorporated with a bank account while you are still on the PEX Card program, reach out to [email protected] to start receiving dues share via your chapter bank account.
At this time, DSA’s national headquarters does not offer any group discounts on accounting software. We do offer free templates for your chapter to use to maintain proper books for your chapter finances. Visit the Treasurer Resource Library to download the bookkeeping templates and other chapter financial resources.