State Sales Tax Exemption:

Effective July 1, 2018, qualified purchases for Veterans Service Organizations are exempt from state sales tax under section 77.54(9G), WI Stats. Food and alcohol, and items purchased to prepare them, are not exempt if the food/beverage is for resale. ALA units whose tax exempt status has been revoked by the IRS for failing to file the annual IRS Form 990 do not qualify for sales tax exemption. To obtain the sales tax exemption, the unit must complete Wisconsin Department of Revenue (DOR) Form S-211: Wisconsin Sales and Use Tax Exemption Certificate and submit it to the seller.  Links to the Form S-211 and a sample of how to complete the form are available in the Resources section above.

 

Federal Tax Exemption - 501(c)(19):

Exemption from federal income taxes is granted to the American Legion Auxiliary National Organization. Units, counties and districts fall within the national organization’s Group Exemption Number and are tax exempt under Section 501(c)(19) of the Internal Revenue Service Code unless the unit, county or district has had its exempt status revoked by the IRS, or the unit, county or district has been granted its own tax exempt status as evidenced by a unique Letter of Determination from the IRS.

 

Important Tax Information for Units, Districts, County Councils:

ALA units and departments are separate entities that operate independently as affiliates of the ALA national organization. The ALA national bylaws were amended at the 2012 National Convention to establish Districts/County Councils (D/CCs) as intermediate bodies between units and departments.

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Administratively, a D/CC is part of a Department. D/CCs are federally tax exempt under the ALA national organization’s Group Exemption unless its tax exempt status has been revoked or the D/CC has obtained its own tax-exempt status with the IRS. Units and D/CCs must annually report income to the state and federal governments. Upon request, units and D/CCs are required by law to make the tax form available for public inspection during regular business hours at the organization’s principal office or at a reasonable location if there is no office.

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Units and D/CCs that have maintained their exempt status by complying with IRS requirements are in good standing and are tax exempt under the ALA national organization Group Exemption Number (GEN) 0964. Any unit or D/CC that fails to file the required IRS tax forms for three consecutive years will automatically lose its tax-exempt status as of the filing due date of the third year. Units and D/CCs that have had their tax-exempt status revoked by the Internal Revenue Service (IRS) for failure to file, or in some instances due to IRS error, are encouraged to initiate appropriate steps to regain tax exempt status.

 

Units and D/CCs must file tax reports with the IRS every year by the 15th day of the 5th month after the close of the organization’s tax year. For example, organizations whose fiscal year ends December 31st must file by May 15th; organizations whose fiscal year ends on September 30th must file by February 15th. IRS Form 990N (e-Postcard) may be used when a unit or D/CC has gross receipts of $50,000 or less. Units and D/CCs must file IRS Form 990EZ or Form 990 when their annual gross receipts are greater than $50,000. A unit or D/CC whose gross receipts are $50,000 or less, and whose tax-exempt status has not been revoked, may request the Department Secretary to file the 990N ePostcard on its behalf. Units should consult a professional tax accountant or attorney if they need further assistance or guidance.

 

Recommended Reinstatement Process of Tax Exempt Status:

If an ALA unit or D/CC has had its exempt status revoked by the IRS, it is the responsibility of the unit or D/CC to handle the matter directly with the IRS since it is separately incorporated and has its own Employer Identification Number (EIN).

 

1. Units and D/CCs should contact the IRS at (toll-free) 877-829-5500. This IRS group is specially trained in tax exempt issues and should be able to answer questions and give direction to resolve the issue.

2. Units and D/CCs may confer with a tax attorney or CPA/tax accountant.

a. If tax exempt status is desired, units and D/CCs may retain a tax attorney or CPA/tax accountant knowledgeable in        not-for-profit tax matters and exemptions to review the situation and handle reinstatement of tax-exempt status.

​b. Revoked units and D/CCs have the option of being a taxable entity. If a unit or D/CC loses its tax-exempt status and         chooses to remain a taxable entity, the unit or D/CC must file the appropriate annual income tax forms with the             IRS and notify donors that donations are not tax-deductible.

3. If a tax attorney, CPA or tax accountant’s review of the details regarding tax exempt status revocation determines that          the revocation was due to IRS error, the unit or D/CC may send documentation that supports the error to ALA National          Headquarters, Attention: Compliance Division. The ALA National Headquarters staff will forward the documentation            disputing the IRS error to the National Judge Advocate for review and appeal assistance when appropriate.

 

Not-for-Profit Corporation

Incorporation provides legal protection for an organization by limiting the liability of the individual members of the organization. The American Legion Counsel General strongly recommends incorporation. The act of incorporating as a not-for-profit corporation does not confer tax exempt status.  A not-for-profit corporation may exist and operate according to the purpose of its articles of incorporation without being tax exempt. If a not-for-profit corporation loses its tax-exempt status, it may continue its operations; however, it must pay appropriate annual federal, state and local taxes, and donations it receives are not tax-deductible to the donor.