PayPal tax-exempt status approval example for a Catholic-chartered unit

This may be specific to Catholic-chartered units but, after months on-and-off trying to get recognized by PayPal as tax-exempt, it seems like this might be helpful to units to chartered organizations that may have similar circumstances.

The first thing you should do, and the thing it took us the longest to figure out, is to change the name of our PayPal account to include the name of the CO. For example, our PayPal account went from something like “Cub Scout Pack 0000 Anytown” to “Your Parish Name Here Cub Scout Pack 0000 Anytown”. I’d suggest you start out that way.

The foundation for demonstrating our status as covered under Section 501(c)(3) of the IRS Code was the “Determination Letter” issued to the United States Conference of Catholic Bishops (USCCB) by the IRS. I know it sounds like overshooting by a lot up the chain of command, but you will see why it starts with them in a moment. Additionally, it is simple and easy to get a copy of this document, because the USCCB publishes it online! Tax and Group Ruling | USCCB

You will see in the Determination Letter references to “subordinate organizations”. Your parish/chartered organization is a “subordinate organization”.

The Determination Letter explains that anyone looking for proof demonstrating that an organization which claims to be a “subordinate organization” of the United States Conference of Catholic Bishops is valid, may refer to the latest edition of the Official Catholic Directory, of which just about every parish has a copy. Make a photocopy of the cover page and the page that your CO listing appears on. If you can’t find your CO in there then your CO is not covered under the “group exemption”, and you can stop there.

The Determination Letter also explains that “Subordinate organizations under a group exemption do not receive individual exemption letters.” It further states that “Subordinate organizations are not listed in Tax Exempt Organization Search (pub 78 data), and many are not listed in the Exempt Organizations Business Master File extract, or EO BMF.” This is important because, usually, this is what the PayPal staff would use to determine eligibility. You must refer them to these statements in the letter when they challenge you about not being listed by the IRS.

Finally, for the Determination Letter, it states that “Each subordinate organization covered in a group exemption should have its own EIN. Each subordinate organization must use its own EIN, not the EIN of the central organization, an all filings with IRS.” This means you must use, and give to PayPal, the COs EIN (Employer Identification Number), with their permission. The parish/CO bookkeeper will have that information.

Once you have all of this information determined, get an electronic version of your most recent BSA Charter document - the certificate with the seal, not the application form. You also will send this to PayPal as proof that you are wholly owned and part of the CO and belong to it.

Now, to be completely transparent, we work pretty closely with our CO which I know is not the case with some units. The parish created a checking account for us and gave us a checkbook, we send in receipts and deposit slips to the parish. Our Religious Emblem Program is pretty robust for members of any faith, and our Scouting for Food supports a parish food pantry. They were pretty cooperative about getting us what we needed for the PayPal non-profit status determination.

Anyway, I have no idea if other denominations or faiths have similar enough circumstances for this to be useful, but it should help Catholic-chartered units get what they need. Good luck!

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