Today’s Challenge – Bill Kunkel, CFO Lewis King
Much is said and written about the need for a greater emphasis on science and math in our schools today. In East Tennessee the economic and business development leaders have created a 15 county alliance known as the Knoxville Oak Ridge Innovation Valley to promote the creation, development and funding for technology. In fulfilling their mission they have raised the bar for more science and math in our classrooms. 21st century jobs will be in such science rich areas as nano technology, biofuels and super computing.
The FIRST organization (For Inspiration and Recognition in Science and Technology) www.usfirst.org has a program that we believe is part of the solution. A 501(c)(3) charity founded in 1989 their mission is to create a world where science and technology are celebrated and where young people dream of becoming science and technology heroes.
This is the organization that for high school students creates technology competition through the creation of robots that compete in a regional event and where the winning teams square off in a national championship. Teams of mentors and students design and assemble the robots over a six week period that starts prior to competition in one of 46 regions arcos the United States. Assembly is done using a kit of common parts purchased from FIRST costing $6,000. The parts kit does not include instructions on assembly that is for the mentors and students to determine. It does come with a challenge. The challenge is what the robot should be able to do at competition (ie. carry a ball 50 yards and place it on a table).
For the students the payoff is not just the learning that takes place in building the robot and securing funding for the parts kit but there is scholarship money available. For 2009 there are over 120 colleges and universities, professional associations, and corporations from the United States and Canada providing over 550 individual scholarship opportunities, valued at over $9.7 million, to FIRST high school students. This is an official recognition of the knowledge and technical and life skills these students have gained from participating in a FIRST competition. FIRST scholarships enable students to pursue majors and careers in engineering, computer science, science, math, design, aeronautics, and many other fields.
At Lewis King we are supporting this FIRST imitative. Staff volunteers served as mentors for a Knoxville high school team that competed for its first time in March of this year at the Peachtree Regional in Atlanta. We believe this program is part of the long term solution to creating more interest in science and technology. However, there is much work to be done. Last year there were only two East Tennessee teams that participated in a regional event. That is not enough for the Innovation Valley. Registration for 2008-09 has already started. We will again support a team that will compete in Atlanta and we hope to see you there.
Sam Jackson
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Does Tennessee’s new school support organization statute require that an organization become a corporate entity?
This question arose in our consulting with members of an unincorporated non-profit entity that had previously filed with and obtained 501(c)(3) status with the IRS. Their issue being that IRS would require them to re-file for exempt status if their organizational structure changed to incorporated.
We discussed this issue with a staff member of the Tennessee Secretary of State’s office who indicated the following:
§ The act requires that these school support organizations be non-profit entities
§ The Secretary of State for Tennessee only recognizes corporations and limited liability companies (LLC) as non-profit entities
§ Legislative intent of the statute was for those support organizations subject to its domain to be corporations
While this advice is non-binding it does suggest that for this organization to be in compliance with the SSOFAA statute it will need to file and become a corporate entity as recognized by the Secretary of State and to re-file for exempt status with the IRS.
Workshop August 13th On Incorporating School Support Organizations
Hands on Workshop for Incorporating Your School Support Organizations with the State Of Tennessee August 13th at 1:00 – 2:30 Eastern Time by WebEx
Chuck Cagle, Lewis King’s Education Practice Leader and Joe Ballard, Associate attorney in our Knoxville Office will conduct a 90 minute workshop that will review in depth the steps and information for filing a school support organization charter with the state of Tennessee. This workshop should be of interest to school district representatives and school support organization individuals who are responsible for aiding their organizations compliance with Tennessee’s newly enacted financial accountability statute.
Workshop material including a model charter, bylaws and state filing forms will be provided and downloadable for participants from our education blog site at lkbulletin.squarespace.com. The amended law does not require a school support organization to become a 501(c)(3) entity pursuant to IRS requirements and that filing process will not be part of this workshop. For certain organizations we believe the benefits of being a 501(c)(3) entity are important and in discussing the model charter and by-laws we will comment on provisions that should be included should that filing status be your organization’s goal. Specific items to be reviewed include:
1. Application for EIN with IRS necessary for opening organization’s bank account
2. Charter and by-laws for non-profit organization
3. Exemption of non-profit charter filing fee
4. School Support Organization Manual published by State Comptroller’s Office
5. Tennessee State Sales Tax Exemption
To receive an invitation with directions for this WebEx session, please respond with the registrant's name, e-mail address and the approximate number of participants to schoolsupport@lewisking.com by Friday August 8th. Invitations will be e-mailed Monday August 11th.
Lewis King Education Practice
Bill Kunkel Coordinator
Exemption From TN Sales Tax
Q. Pursuant to the newly enacted SSOFAA a school support organization such as a band or booster club may become a state chartered charitable entity. The amended act does not require them to seek 501(c)(3) status from IRS. If the booster club becomes a state chartered charitable organization and does not become a 501(c)(3) entity can it apply for and receive an exemption from Tennessee state and local sales tax? (Go to Item 7 Under Tools: IRS And TN State for a copy of the TN Sales Tax Exemption Form)
A. Response From John Harvey, State of Tennessee Taxpayer And Vehicle Services Division
No. The sales tax law requirements for exemption from sales tax have not changed. There are many organizations that are state chartered charitable entities that do not qualify for sales and use tax exemption. Simply being a nonprofit or charitable organization does not grant tax exempt status. An organization must still be named in the sales tax law as eligible for exemption in order to receive the tax exempt status.
John Harvey, Taxpayer and Vehicle Services Division
Any opinion from tax law or regulations given herein is believed to be a correct interpretation. However, the opinions cannot constitute a revenue or letter ruling pursuant to the provisions of Tenn. Code Ann. Sect. 67-1-109.
Upcoming Presentation On SSOFAA As Ammended June 2008
Chuck Cagle, Lewis King's Education Practice Leader announced to School Directors across Tennessee an upcoming presentation on Tennessee's new School Support Organization Financial Accountability Act including recent Amendments passed by the Governor in June 2008.
This 30 minute event which will include a 20 minute slide presentation with 10 minutes for questions will be conducted over the internet using WebEx.
Key points that will be discussed will include, among others, the following:
§ Amendments including clarification that School Support Organizations do not need to be organized as an IRS 501(c)(3) entity
§ Will need to file annual state fund raising activity reports
§ Enhanced internal record keeping
§ Effective date for full compliance July 1, 2008
This presentation will be offered at 11:00 CST (12:00 EST) on MWF July 14th,16th and 18th.
At Lewis King we are committed to our local communities and are pleased to offer what we believe will be an informative and helpful sharing of information relevant to this new act.