Each chapter is a separate legal entity. The AMA Support Center recommends that AMA professional chapters in the United States incorporate a 501(c)(3) nonprofit organization.
The difference between being an incorporated nonprofit organization and a tax-exempt nonprofit can be confusing. Incorporation happens at the state level, while obtaining tax-exempt status happens at the federal level.
Chapters are responsible for adhering to state and local laws regarding incorporation and tax exemption.
Incorporating a chapter as a nonprofit has several benefits, including limiting chapter board members’ personal liability from chapter activity and forming the basis for pursuing tax-exempt status.
Each AMA professional chapter located in the U.S. incorporates in its own state. Each state’s office of the secretary of state oversees the incorporation process and has more details about individual state laws. Chapters may wish to seek local legal counsel to help with incorporation.
Once a chapter becomes incorporated in its state, the chapter must forward a copy of its articles of incorporation to the AMA Support Center at firstname.lastname@example.org.
Each AMA professional chapter located in the U.S. should have its own employer identification number (EIN) from the IRS. If a chapter cannot remember its EIN, contact the AMA Support Center at email@example.com for assistance.
The AMA Support Center includes most U.S. chapters incorporated as 501(c)(3) nonprofit under a federal group tax exemption, giving these chapters federal exemption from income tax. If a chapter loses its tax-exempt status for failure to file tax returns or is incorporated as anything other than a 501(c)(3), the chapter cannot be included under the federal group tax exemption of the AMA. Contact the AMA Support Center at firstname.lastname@example.org to determine if a specific chapter is included under the AMA’s federal group tax exemption.
Being exempt from paying federal income taxes does not mean that chapters are excused from filing a return or are exempt from other taxes, such as sales tax or property tax. Chapters are responsible for maintaining their records and complying with all applicable federal, state, and local laws and regulations, including tax laws. U.S. chapters must file a tax return with the IRS, even if they do not owe taxes. See Professional Chapter Tax Return Filing Requirements for more details.
If a chapter is unsure of its state and local tax status, contact the local and state directors of finance or taxation. It is not unusual for a state to grant an exemption for income tax but not allow a sales tax exemption. U.S. chapters can contact the state department of revenue for information on how to file for income tax exemption and/or sales tax exemption at the state level.
If a U.S. chapter loses its tax-exempt status, that chapter may need to pay federal income taxes and can no longer receive tax-deductible charitable contributions as an IRS 501(c)(3) charitable organization. That chapter will no longer qualify to be included under the AMA’s group ruling and must apply for its own nonprofit status.
Canada and Mexico have different tax requirements from the U.S.; therefore, Canadian and Mexican chapters should review their local and provincial laws for tax requirements. Canadian chapters can attempt to file for tax-exempt status at the provincial or federal level.
To request a Tax-Exempt letter, contact the AMA Support Center at email@example.com.