Fundraising and Tax Exemption
Council 501(c)(3) Status as Related to Tax Exemption for Michigan Sales Tax
Girl Scouts Heart of Michigan is a corporation that has 501(c) (3) non-profit status as determined by the Internal Revenue Service of the United States Government. This status exempts Girl Scouts Heart of Michigan from federal income taxes. This status also requires Girl Scouts Heart of Michigan to be audited and complete file an IRS form 990 on an annual basis.
Troops/Groups and Areas do not have 501(c) (3) non-profit corporation status.
Troops/Groups and Areas are subordinate units of the Girl Scout Council and are the property of the Girl Scout Council. All assets (both cash and physical) held by Girl Scout Troops/Groups and Units are owned by the Girl Scout Council.
There are two distinct taxing authorities in this situation. The Internal Revenue Service (IRS) is the taxing authority of the Federal government, and the Michigan Department of Treasury is the taxing authority of the State government. The IRS allows council and troop level exemption of federal income taxes. As a result, troops are allowed to use GSHOM's 501(c) (3) number when opening bank accounts for their troops. The Michigan Department of Treasury allows exemption of income taxes at Girl Scouts Heart of Michigan and troop level. Troops are once again in compliance when opening a bank account. The Sales and Use division of the Michigan Department of Treasury does not allow exemption at the troop level (see letter). Troops are subject to sales and use taxes at the state level. Some cities and counties have taxing authorities, and Girl Scouts Heart of Michigan is often subject to those taxes as well.
G.S.U.S.A. Policy from the Blue Book of Basic Documents 2006, page 19:
“Control of Funds All money raised, or earned, and other assets received in the name of and for the benefit of Girl Scouting must be authorized by a Girl Scout council or Girl Scouts of the United States of America and used for the purposes of Girl Scouting. Such monies and other assets become the property of and are administered by the Girl Scout council or Girl Scouts of the U.S.A. Such assets are not the property of individuals, geographic units, or communities within a Girl Scout council.”
Troops/Groups and Areas must use Girl Scouts Heart of Michigan Federal Tax ID number for opening all bank accounts. This allows the bank to report interest income earned by Troops/ Groups and Areas to the IRS. Troop/Group and Area Bank accounts are exempt from paying Federal income tax on interest income when they use Girl Scouts Heart of Michigan tax ID number to identify the Troop/Group or Area bank account as owned by the council.
Michigan Sales Tax
Girl Scout Troops/Groups or Areas may not use Girl Scouts Heart of Michigan Federal Tax Identification number to obtain exemption from State of Michigan Sales Tax. State of Michigan Law grants sales tax exemption only to 501(c) (3) organizations. Troops/Groups and Areas do not have 501(c) (3) non-profit corporation status.
Troop leaders and other volunteers must not ask for or use a sales tax exemption
for purchases made for the Troop/ Group or Area.
Girl Scout Troops/Groups and Areas of Girl Scouts Heart of Michigan Council will pay sales tax on all purchases including those made in any Council Shop.
Federal Tax ID or EIN Numbers
Girl Scouts Heart of Michigan Council Troop/ Groups and Areas do not need and should not apply for a tax ID or Employer Identification Number (EIN). Having an EIN or tax ID number does not grant or imply tax exempt status.
If you have an EIN send a letter requesting the closing of your account to: Internal Revenue Service, Attn: EO Entity, Mail Stop 6273, Ogden, Utah 84201 or fax it to 801620-3249. State the reason you wish to close the account. If you have a copy of the EIN assignment notice that was issued include that when you write. Include legal name of entity, the EIN and the mailing address.