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Gearing Up
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Gearing Up
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UnMeilleurReve
Dirt-Under-The-Nails Hippy


Joined: 29 Apr 2008
Posts: 542


Location: Las Vegas

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Under the 501(c)(4):

To qualify for exemption under section 501(c)(4), the organization's net earnings must be devoted only to charitable, educational, or recreational purposes. In addition, no part of the organization's net earnings may benefit any private shareholder or individual. If the organization provides an excess benefit to certain persons, an excise tax may be imposed. See Excise tax on excess benefit transactions under Excess Benefit Transactions in chapter 5 for more information about this tax.

I think we might be able to make it swing that it's not benefiting any "private shareholder or individual", but we might have to have separate residences to make it really fly.
Sun Jul 25, 2010 3:21 pm View user's profile Send private message Send e-mail Visit poster's website AIM Address Yahoo Messenger MSN Messenger
UnMeilleurReve
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Joined: 29 Apr 2008
Posts: 542


Location: Las Vegas

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As an interesting note, if we decide we wish to promote the creation of similar societies, it'd be pretty freakin' easy to get 501(c)(10) status as a domestic fraternity. We'd have to operate under the "lodge" system, but that's friggin' easy to tailor to our own needs.



*edit*
So, these are the rules for a fraternal organization.

To be exempt under Internal Revenue Code (IRC) section 501(c)(Cool, a fraternal beneficiary society, order, or association must meet the following requirements:

It must have a fraternal purpose. An organization has a fraternal purpose if membership is based on a common tie or the pursuit of a common object. The organization must also have a substantial program of fraternal activities.
It must operate under the lodge system or for the exclusive benefit of the members of a fraternal organization itself operating under the lodge system. Operating under the lodge system requires, at a minimum, two active entities: (i) a parent organization; and (ii) a subordinate (called a lodge, branch, or the like) chartered by the parent and largely self-governing.
It must provide for the payment of life, sick, accident, or other benefits to the members of such society, order, or association or their dependents.
An organization that provides benefits to some, but not all, of its members may qualify for exemption so long as most of the members are eligible for benefits, and criteria for excluding certain members are reasonable.
To be exempt under IRC 501(c)(10), a domestic fraternal society, order, or association must meet the following requirements:

It must have a fraternal purpose. An organization has a fraternal purpose if membership is based on a common tie or the pursuit of a common object.  The organization must also have a substantial program of fraternal activities.
It must operate under the lodge system. Operating under the lodge system requires, at a minimum, two active entities: (i) a parent organization; and (ii) a subordinate organization (called a lodge, branch, or the like) chartered by the parent and largely self-governing.
It must not provide for the payment of life, sick, accident, or other benefits to its members. The organization may arrange with insurance companies to provide optional insurance to its members without jeopardizing its exempt status.
It must devote its net earnings exclusively to religious, charitable, scientific, literary, educational, and fraternal purposes.
It must be a domestic organization, that is, it must be organized in the United States.


Now that I've posted that terribly long bit of information, here's my thinking.

The Urban Commune, provided it occurs, will be the Parent organization. The Rural commune will be the first chapter, and anything else we do expansion-wise will count as chapters. I think we can get temporary exemption status as a non-profit under the Fraternal codes if we declare that we need to be able to start up in the first place as an organization before we can have an expansion. We'll include in our bylaws everything that governs the creation and existence of the chapter, and we'll even create the entire organizational framework for the chapter.

As our fraternal purpose, we intend to 1)explore avenues of providing subsistence for people of various population sizes and cultural backgrounds and 2)develop and exercise means of curtailing the trauma and secondary trauma that inevitably occur worldwide.

Our lodges will be the site of our communes, the Parent being the one that we're looking to create. Class A members will be the ones who are chosen to make the executive decisions during counsel meetings as well as members who participate and contribute that voluntarily forego the right of making executive decisions. All Class A members will be required to reside on site at the lodge in order to perform agricultural and societal tasks, which is integral to the exploration of the aforementioned venues.

I think many people here will view the second part of the second sentence in the previous paragraph. I'm coming to find that there are people who tend to fit into the "dominant" and "submissive" role archetypes, and people should have the decision to behave in a way that they feel is most natural to them. I'm more than willing to discuss this in-depth with anybody here, especially since I think you guys are the most qualified to dispute such a notion of anybody I've talked with.

Anywho, thoughts?
*/edit*





Additionally:

All of the organizations listed above must submit evidence with their application that they receive 85% or more of their gross income from their members for the sole purpose of meeting losses and expenses.

Basically, if we're not selling anything, and we're buying things only to contribute to our commune and organization, and we have lots of people we help, we should be able to do this really easily. We'll have more exhibited expenses than profits, mostly because what we do to generate income will be to counteract costs of operating.


Last edited by UnMeilleurReve on Sun Jul 25, 2010 4:43 pm; edited 1 time in total
Sun Jul 25, 2010 3:38 pm View user's profile Send private message Send e-mail Visit poster's website AIM Address Yahoo Messenger MSN Messenger
UnMeilleurReve
Dirt-Under-The-Nails Hippy


Joined: 29 Apr 2008
Posts: 542


Location: Las Vegas

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Should I edit instead of add?

Anywho, an excess benefit is any benefit given to a person who has 35% control, a family member of a person who has influence or control of  the organization, or "Any person (at any time during the 5-year period ending on the date of the transaction) in a position to exercise substantial influence over the affairs of the organization."

I think that the bylaws should include a requirement  for Class A persons to hold primary residence on the site of the commune and advocacy/sanctuary. The intention for this would be to make it so that a person who has "substantial influence" isn't simply taking advantage of the organization by residing there, especially on paper. Having a body of members who aren't Class A vote in support of this would make it so that the initiative was not made as an excess benefit decision by a disqualified person. Also, showing the bylaws and the stuff that we've decided on for the commune to the IRS will tell us whether or not we'll receive approval.



Additionally, we can have Class A members contractually hired as employees, I think? They are then paid compensation for their services in whatever way.

"An applicable tax-exempt organization (or entity that it controls) is treated as clearly indicating its intent to provide an economic benefit as compensation for services only if the organization provides written substantiation that is contemporaneous with the transfer of the economic benefits under consideration. Ways to provide contemporaneous written substantiation of its intent to provide an economic benefit as compensation include:
The organization produces a signed written employment contract,

The organization reports the benefit as compensation on an original Form W-2, Form 1099, or Form 990, or on an amended form filed before starting an IRS examination, or

The disqualified person reports the benefit as income on the person's original Form 1040, or on an amended form filed before starting an IRS examination."


Then again, it might not work because of a "conflict of interests" in the members who have control over the organization. They benefit from access to and use of property in the way of housing and agriculture, and if they vote or decide to make this so, the conflict of interests arises. Possibly another way of bypassing this is arguing that there is not a conflict of interests for all members of the governing body who are not the member being voted on. Thus, if compensation or regulation dictate that housing and access to the facilities of the commune is granted to a member by the other members, with the member specified having no say in the matter, we might be able to get away with it. Also, Class B members who don't live on site (Class B2) could vote on it. Class B members could have the role of securing resources for the commune.


Additionally, non-profits that normally generate less than 25k in gross receipts don't have to file a form 990. However, if they do... well, the instruction manual for the 990 is so long it makes me want to cry, lol.
Sun Jul 25, 2010 4:19 pm View user's profile Send private message Send e-mail Visit poster's website AIM Address Yahoo Messenger MSN Messenger
glorfon
Comrade


Joined: 23 Apr 2008
Posts: 469



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Nice work.  One thing which will help us avoid having an apparent excess of profit is if we distinguish between things done privately and things done as part of the commune.  For example if I make and sell a piece of art while living and working at the commune, the profit should not be part of the corporations finances but I could spend that money on things for the commune but it would be a donation.

I'm concerned that having permanent residences funded by the group may disqualify us from many of these classifications.

I like the four classes but outside of the written law I think we should come up with less hierarchical names for them.

Also it seems we'll need to become an association [ulr]http://www.irs.gov/charities/article/0,,id=96120,00.html[/url] before we can get non-profit status.  But this requires registering in a specific sate.  So that will have to wait until we have a clearer plan and a set location.
Sun Jul 25, 2010 5:50 pm View user's profile Send private message Send e-mail
UnMeilleurReve
Dirt-Under-The-Nails Hippy


Joined: 29 Apr 2008
Posts: 542


Location: Las Vegas

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Private housing would have to be self-provided. HOWEVER!!! In part V number 1a on the form 1023, we can list the actual or proposed compensation for Officers, Directors, and Trustees.

I agree with you about the less hierarchical classifications, too. We could give them fun names. Class A, hereby referred to as Berthas, class B hereby referred to as Goatees, class C hereby referred to as Snarks, class D hereby referred to as Wicked Witches. Very Happy

And we need to become an incorporated association, corporation, LLC, or non-profit organization or charity in the state in which we register. DC and Idaho seem to have pretty lenient laws, so far as I can tell, and I think most states follow a similar pattern.

Part of what I was hoping to do with this gearing up thing is get started on the actual organizational and financial plans that we want to use. This necessitates research in things like the (goddamn sonofabitch fucking) IRS laws.
Sun Jul 25, 2010 6:07 pm View user's profile Send private message Send e-mail Visit poster's website AIM Address Yahoo Messenger MSN Messenger
UnMeilleurReve
Dirt-Under-The-Nails Hippy


Joined: 29 Apr 2008
Posts: 542


Location: Las Vegas

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Ahhhh, this is what I needed. Instructions 1023, appendix A. Conflict of Interest Policy. Check it out. Smile
Sun Jul 25, 2010 6:14 pm View user's profile Send private message Send e-mail Visit poster's website AIM Address Yahoo Messenger MSN Messenger
glorfon
Comrade


Joined: 23 Apr 2008
Posts: 469



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Say what you will about Washington, I find their websites very user friendly, even if the tax code isn't.  Regarding housing.  If the houses are part of a building owned by the group then how is that handled legally.  Would we have to rent the houses to ourselves?

Since we seem to both be coming back and forth through here I added you on skype.
Sun Jul 25, 2010 6:58 pm View user's profile Send private message Send e-mail
UnMeilleurReve
Dirt-Under-The-Nails Hippy


Joined: 29 Apr 2008
Posts: 542


Location: Las Vegas

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I think you have the general gist of things. For tax purposes, I think the fair market value of our residence is the amount of compensation allocated to ensure we're not violating excess benefit. It would be counted as "compensation" in kind for purposes of reporting it as intended compensation for executives, etc.
Sun Jul 25, 2010 8:14 pm View user's profile Send private message Send e-mail Visit poster's website AIM Address Yahoo Messenger MSN Messenger
Zeerahks
Dirty Hippy


Joined: 24 Apr 2008
Posts: 311


Location: Minnesota

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Hey, just stopping in.  (Glad to see you're back, Glor!)

I honestly have no head for legalities; it's not my forte, and it makes my brain hurt.  If you (two) would be willing to shoulder that (massive) responsibility, well, I'd be very grateful.

That said, I'm willing to help out wherever I can, no matter what's needed (I would simply fuck something up if I had to deal with laws and such).

Lastly, all of this sounds wonderful; my only concern is that I'd like to see the bylaws/rules/etc re-written every 10 years or so (some arbitrary number), rather than simply piling amendments onto them.

_________________
"The words work...sometimes."


They say one shouldn't shit where one eats, but there are more types of shit than feces, and we consume much more than food.
-- Black Iron Prison


Fuck competition.  LOVE IS COOPERATION.  And I like being loved. Very Happy
Mon Jul 26, 2010 8:04 am View user's profile Send private message Send e-mail AIM Address
UnMeilleurReve
Dirt-Under-The-Nails Hippy


Joined: 29 Apr 2008
Posts: 542


Location: Las Vegas

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Sounds like a good plan. We should also write the rules with a lot of leeway and leniency in regards to commune members and their collective powers.

It also really looks to me like doing the lodge system and getting incorporated as a fraternal domestic organization will be the easiest. Doing so would make the switch from urban to rural natural, and we could run advocacy out of the urban and sanctuary out of the rural. The reason the switch would be natural is the lodge system requires a parent lodge and a subsidiary "chapter" lodge. Each lodge is almost entirely autonomous, the parent lodge having the role of oversight and managing the creation of more lodges.

We'd be like the Masons, except radical, non-spiritual, and more like monks, what with the whole living where you grow your food and all.


Mon Jul 26, 2010 12:54 pm View user's profile Send private message Send e-mail Visit poster's website AIM Address Yahoo Messenger MSN Messenger
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