Incorporation and Tax Exemption – Top 5 Frequently Asked Questions
The ease and simplicity of becoming recognized as a 501(c)(3) tax exempt charitable organization under Little League Baseball®, Incorporated (Little League) Group Exemption Number (GEN) is one of the many benefits of being associated with the Little League program.
Below are the top 5 Frequently Asked Questions on incorporation and tax exemption.
1. Is our league automatically exempt from paying income taxes?
No. Leagues can apply for federal tax exemption by submitting a Letter of Intent to Little League Baseball, Incorporated, for inclusion under its group exemption number (the form and instructions are available at LittleLeague.org/Taxexempt.) or by applying for it on their own directly with the IRS. Leagues must apply for their own state sales tax exemptions.
2. What Reporting Procedures are needed to retain tax exempt status?
All non-profits, regardless of income, must file the appropriate 990 Form with the IRS annually as well as any state forms required. Failure to do so for three consecutive years will result in the IRS automatically revoking your federal tax exempt status.
Leagues under the Little League group exemption number should use a 10/1-to-9/30 fiscal year putting their filing deadline at 2/17.
The league must also submit an annual financial statement to Little League Baseball, Incorporated. A sample financial statement is available at LittleLeague.org/FinancialStatement.
3. What is incorporation?
Incorporation is a form of organizational structure recognized by law that provides local leagues with permanency, stability and protection that may otherwise be lacking. While it is not required, it is recommended.
4. What benefit does incorporation afford a local league?
- A level of recognition that business contacts, donors and future league officers will appreciate
- Added personal liability protection for league officers
- A means of holding title to property
5. How does my league become incorporated?
Leagues would first obtain consent from Little League Baseball, Incorporated, to use the words “Little League” in their name by submitting their incorporation paperwork and consent form for review. Once approved, your league would file and maintain them with their state government offices. A bulletin detailing the procedure is available at LittleLeague.org/Consent.