Why is this important? Since its formal founding in January, 2000, the Kennydale Neighborhood Association has been registered and operated in Washington State as a non-profit corporation. As the association matured, the Board became aware of the possibility that our non-profit status with the state did not necessarily relieve us of income tax liability as defined in federal Internal Revenue Service (IRS) regulations.
What actions has KNA taken? About two years ago, the KNA Board started in earnest to get better educated as to which set of IRS rules were applicable to us. We also sought guidance from Norma McQuiller, the City of Renton's Neighborhood Program Coordinator, as to the City’s position, and what the other neighborhoods were doing, if anything. In response to this show of interest, Norma arranged for a seminar on IRS rules regarding tax-exempt charitable organizations. In November 2014, Misty Baker, who is a Senior Finance Analyst for the City, conducted this seminar. At that meeting, the representatives from various neighborhood association leaders received excellent information which clarified that seeking tax-exempt status per IRS Section 501(c)(4) was the best fit for the associations.
As KNA’s Treasurer, it was my job to read and understand the IRS rules and then fill out the 7 pages of IRS Form 1024 and add 18 pages of attachments in order to apply for tax-exempt status. The effort was time-consuming but manageable because KNA has always maintained excellent financial records of where our money comes from, and how it is spent. At this time, I also filed two related tax returns for year 2014, although no taxes were due. I am pleased to report that, on May 14, 2015, KNA received IRS notification that it is “exempt from Federal income tax under section 501(c)(4) of the Internal Revenue Code”.
Where do we go from here? KNA will to continue to operate its financial affairs so that all of the funds that we receive through membership dues, donations, our advertisers/sponsors, and City of Renton Neighborhood Grants are utilized for events and activities that energize and improve our neighborhood, and provide essential lines of communication...just have we always have done since 1999. We will also file an IRS Form 990N each year to maintain our tax-exempt status.
Please be aware: Per IRS rules, payments to 501(c)(4) groups like KNA are not deductible as charitable contributions for Federal Income Tax purposes.
Darius Richards, KNA Treasurer
KNA is dedicated to enhancing the quality of life in Kennydale and fostering community spirit.