We would like to clarify the federal
tax status of Boy Scout packs, troops, and other units,
in response to questions we have received.
The IRS recognizes the Boy Scouts
of America National Council as tax exempt under IRC Section
501 (c)(3). This tax exempt status extends only to BSA
local councils and their trust funds. It does not extend
to or include Scout packs, troops or other units. Scout
units are not considered subordinate organizations of
the BSA, they are not included within the BSA group exemption,
and they are not entitled to use the BSA's Group Exemption
Number ("GEN"). This is an IRS rule.
Units must either: 1) obtain their
own employer identification number ("EIN")
using IRS Form SS-4, or 2) use the EIN of their chartering
organization. Sometimes, the IRS correctly explains to
a unit the process for an organization to be considered
a "subordinate" of a parent organization, and this explanation
is interpreted as permission to do so. But, again, the
BSA National Council cannot, and never could, declare
Scout units to be subordinates.
Also, receiving an EIN does not
imply tax exempt status; it is nothing more than a unit's "Social
Security" number. If a troop's chartering organization
is a church (and tax exempt), the troop could be considered
tax exempt only if the church let the troop use the church's
EIN, or the troop's EIN was included within the church's
group exemption by the church. "Unit" gifts would be tax
deductible as gifts to the church, not to Scouting.
Gifts designated for a specific
unit should not go to a local council with the expectation
that the gifts will pass through the council to the unit.
This includes gifts from corporate charitable incentive
plans and employee matching grants programs. Councils may hold
funds in a unit account for things such as camperships
at the council's camp or program-related items and awards.
However, due to the added staff burden and expense it
creates for the council, each local council is free to
choose whether it will create unit accounts.
Remember also that Article XI
of the BSA Charter and Bylaws states that "Contributions
shall be solicited in the name of the Boy Scouts of America
only through or by the authority of the Corporation and
shall be limited to the National Council or chartered
local councils...". Similarly, the BSA Rules and
Regulations gives each council the power to "control
the raising and expenditure of all funds for local Scouting
work in their jurisdiction." As such, attempting
to incorporate a Scout unit as a separate tax exempt
entity is strongly discouraged as a potential conflict
with BSA rules and bylaws.
We hope this information is helpful,
and thank you for all you do for Scouting.
Western Los Angeles County Council