Do Fraternities Have to File Taxes? What Chapter Officers Need to Know
Many fraternity officers are surprised to learn that it is typically required to file an annual return with the IRS. Because officer transitions usually occur every year it very common for this responsibility to fall through the cracks.
Failure to file can have SERIOUS tax implications
Failure to file can put your chapter at risk of IRS audits, revocation and paying back taxes for all revenue received during the period where your chapter's operations were not considered tax-exempt.
Both social and professional fraternities are typically required file an annual Form 990-series return to report basic financial and organizational information to the IRS.
For most fraternity chapters, that filing may be Form 990-N, also called the e-Postcard. Larger chapters may need to file Form 990-EZ or the full Form 990.
The important thing to remember is this: being tax-exempt does not mean you don't have to file. A simple, 1-page 990N filing submitted once each year could save thousands in late-filing penalties, reinstatement fees, or worse, tax penalties.
What IRS Form Does a Fraternity Need to File?
The form your fraternity files usually depends on the chapter’s gross receipts, total assets, and tax-exempt status. In order to answer this question, you just need to know how much your chapter collects during the school year in dues, donations, fundraisers, etc.
Form 990-N for Small Fraternity Chapters
Form 990-N, also called the e-Postcard, is generally used by small tax-exempt organizations with gross receipts normally $50,000 or less. Simply put, if your chapter makes less than $50,000 in dues, donations, "pass-the-hat" collections for events etc, you are only required to fill out a basic 990N e-postcard. This form does not contain any financial details and is not a "tax-return" in the traditional sense. Look at is like as more of a notice to the IRS that just lets them know that you're still in operation and wish to maintain tax exemption.
Form 990-EZ or 990 for Medium to Large Fraternity Chapters
This is where things can get complex. If your chapter typically brings in more than $50,000 in a single year is dues collections, donations, fundraisers etc.. you may require a more extensive form. Click Here to learn about the various thresholds and to learn which form you likely need to file for your chapter.
How to File Your Fraternity’s Taxes
1. Confirm Your Fraternity’s Status
Start by finding out whether your chapter has its own EIN and tax-exempt status, or whether it is covered under a national fraternity’s group exemption.
If your chapter is included in a parent organization’s group return, you may not need to file separately. If your chapter operates independently, it will likely need to file its own annual Form 990-series return. Search your chapter's EIN to determine if you're eligible to file using our Free EIN Search Tool.
2. Choose the Correct IRS Form
Your fraternity will usually file one of the following:
- Form 990-N: For small organizations with gross receipts normally $50,000 or less.
- Form 990-EZ: For organizations with gross receipts under $200,000 and total assets under $500,000.
- Form 990: For larger organizations with gross receipts of $200,000 or more, or total assets of $500,000 or more.
Choosing the right form is important because filing the wrong return can delay compliance or create issues for future officers.
3. Gather Your Financial Records
Before filing, collect your fraternity’s financial information for the year, including:
- Member dues
- Fundraising income
- Event income
- Bank statements
- Expenses
- Vendor payments
- Officer information
- Beginning and ending balances
Keeping organized records makes filing easier and helps protect your chapter if questions come up later.
4. Review Any Outside Income
Fraternities should pay close attention to income from nonmembers, public events, advertising, or other activities outside normal chapter operations.
Some outside income may be considered unrelated business income, which could create additional filing requirements.
5. File by the Deadline
For most tax-exempt organizations, the annual Form 990-series return is due by the 15th day of the 5th month after the tax year ends.
For fraternities that use a calendar year, the deadline is usually May 15.
Missing filings can create penalties, and organizations that fail to file for three consecutive years can lose their tax-exempt status. Select Create Account to start your return today!