AR – Seperately Incorporated

Incorporation is a complicated subject. The IRS does not require subordinates (chapters) under a group exemption (which TU holds) to become incorporated within the states in which they operate. However, each state may have different registration requirements, and chapter and council leaders should become familiar with local regulations and comply with state or local laws. In general, there is no advantage for a chapter or council to separately incorporate. For tax exemption purposes, chapters and councils are covered by TU’s 501(c)(3) exemption and do not need to seek separate nonprofit status. Chapters, councils and their officers and directors are also covered by TU’s GCL policy and its directors and officers coverage. The primary reason for incorporating (protecting individual members and directors from liability) is largely dealt with through TU insurance. A chapter or council that is separately incorporated has the same coverage under TU’s insurance policies as a chapter or council that is not separately incorporated. An additional barrier to separate incorporation is the administrative burden (different in each state) of technical rules and requirements to create and maintain corporations. Most states have an annual filing requirement and filing fees.

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