Legal and Tax Issues for NCTM Affiliates
Although NCTM and its Affiliates operate with similar missions to serve teachers of mathematics, they are separate entities that operate independently. NCTM’s incorporation status, tax status, and insurance coverage do not extend to its Affiliates.
NCTM has received questions regarding some legal aspects of Affiliate management. Given that state and local laws are so diverse, these issues require legal counsel. To assist Affiliates, the following questions and answers were prepared. The answers include resources for further information. The information below is intended to serve as a resource and should not be construed as legal opinion or advice. Please refer to the appropriate resources and seek legal counsel for additional information.
Q. Is my Affiliate covered under NCTM’s incorporation status, tax status, and insurance coverage?
A. No. NCTM is a legal and separate entity from all Affiliates (i.e., local, state, and Affiliates-at-Large) and its incorporation status, tax status, and insurance coverage do not extend to any Affiliate. Therefore, any legal, incorporation, tax, insurance, or other questions or guidance must be directed to the Affiliate’s local professional services for each of these issues.
Q. What are the benefits of having my Affiliate incorporated?
A. An organization may choose to become incorporated, thereby creating a legal entity not composed of individual members but considered to have its own existence apart from its members, for the purposes of organization, operations, liability, longevity, holding property, and so forth. Incorporation is a state process, and therefore the process and specific benefits may differ according to the state of incorporation.
To learn more about the value and process of incorporating as a nonprofit organization, please seek legal counsel and additional information in the state in which you wish to incorporate.
Q. What about state tax-exempt status?
A. As not-for-profit organizations, NCTM and its Affiliates are eligible for nonprofit tax-exempt status. Nonprofit is a state law concept and as such the nonprofit status is determined under the laws of each individual state. A nonprofit status may provide certain state benefits, such as exemptions from state sales, property, and income tax. Since the state tax-exempt status is determined by each individual state, the state tax-exempt status applies only in the state or states in which your Affiliate has applied for and received tax-exempt status. For more information on state tax exemption, contact your state directly.
Q. What about federal tax-exempt status?
A. Organizing as a nonprofit organization at the state level does not automatically grant the organization exemption from federal income tax. Only the Internal Revenue Service can grant not-for-profit organizations an exemption from federal income tax. Incorporation is not required for an organization to be considered tax-exempt by the IRS. For more information on the topic of federal tax exemption, visit http://www.irs.gov/charities/topic/index.html or seek legal counsel.
Q. What insurance coverages are available for my Affiliate?
A. The following are types of insurance coverage an Affiliate might consider.
General Property and Liability Coverage
Property insurance protects the organization’s physical assets, such as a building and its contents. Liability insurance protects from losses resulting from a real or alleged wrongful action on the part of the insured whether it be the directors, officers, staff, volunteers, or the organization itself. Property and liability coverage also may be extended to include “off premises” activities such as seminars, conferences, and so on.
Association Professional Liability Insurance
Also referred to as Directors and Officers Liability coverage, this insurance serves to ensure designated officers and directors of an organization insurance coverage that protects the individual from personal liability as a result of decisions or situations that occurred during the officer’s term in office.
Volunteer Protection Act
The Volunteer Protection Act is intended to protect volunteers from liability for negligence that occurs within the scope of their work for the organization. It does have limitations and provides no protection for the organization itself.
Because the insurance area is complex and the ramifications are great, seek a knowledgeable agent or broker to assist your Affiliate with adequate and appropriate coverage.
Q. What should my Affiliate know about the Americans with Disabilities Act (ADA) requirements?
A. Each Affiliate offers a variety of professional development offerings, and Affiliates must become aware of the ADA requirements. This act requires organizations to provide full and equal accommodations to individuals with disabilities (defined as a condition that impairs major functions such as mobility, sight, or hearing).
One area of significant impact is at conferences. The conference host, at its own expense, must provide reasonable accommodations for those individuals protected by law. This includes ensuring that the meeting facilities and displays are accessible to individuals with disabilities, as well as providing auxiliary aides, such as qualified sign interpreters, Braille programs, listening devices, and so on for those requesting them.
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NCTM’s services are available to assist with many questions regarding Affiliate management. However, NCTM does not have the staff or legal resources to assist with matters related to legal and tax issues. The issues addressed above are complex and require each Affiliate to obtain legal guidance.