Understanding Booster Club NTEE Codes for the IRS

Understanding Booster Club NTEE Codes for the IRS

Managing booster clubs is all about effective leadership. You want to make sure that you are leading your booster club in the right direction. This includes making sure that you are on time for meetings, communicating with booster club members and your associated school and the various levels of government.  One area you will inevitibly run across is picking your booster club NTEE codes for the IRS.  This can be confusing, so we thought we would break down what they are, why they are important and what happens if you do not pick one!

Couple trying to understand Boooster Club NTEE Codes

What Are NTEE Codes?

The National Taxonomy of Exempt Entities (NTEE) is a guide that defines how nonprofit organizations should be classified. The Internal Revenue Service (IRS) uses the NTEE codes to classify all types of organizations that apply for tax-exempt status. This is a list that is divided into ten different categories. Each category has its own set of rules, which will determine what type of organization is and what type of benefits it is eligible to receive. They are important and useful for determining what organizations can receive certain tax benefits and what types of organizations can be included in certain studies.

The codes are based on the organization’s purpose:

  1. Arts, Culture, and Humanities – A
  2. Education – B
  3. Environment and Animals – C, D
  4. Health – E, F, G, H
  5. Human Services- I, J, K, L, M, N, O, P
  6. International, Foreign Affairs – Q
  7. Public, Societal Benefit – R, S, T, U, V, W
  8. Religion-Related – X
  9. Mutual/ Membership Benefit – Y
  10. Unknown, Unclassified – Z

 

Working through Booster Club Tax Paperwork

Why Your Booster Club Needs an NTEE Code

An NTEE code is a five-digit code that is required on all nonprofit organization tax forms. This code easily tells the IRS what type of nonprofit organization you are when they receive any tax documents from the club. Your NTEE designation is important because it will determine how your nonprofit organization is taxed. These codes can also change how much money you receive from grants and charitable contributions.

The first step in classifying an NTEE code for a booster club is to determine what type of business your booster club is and the NTEE code that best describes it.

Once you have determined your Booster Club NTEE code, it is important to understand what the code means. The best way to understand the meaning of a code is to read the description in the IRS’s Publication 78.

The United States government has determined the NTEE Codes based on the types of activities that organizations engage in allowing or not for their eligibility for grants or funding. The IRS keeps a list of all organizations and makes sure they are classified correctly.

 

Picking A Booster Club NTEE Code that fits your organization

The Best NTEE Codes for Booster Club

To help guide your club a little further we put together a list of NTEE codes we believe are the best classifications for most booster clubs. However, it is possible your club might not fit specifically with these suggestions below. If that is the case you should study the entire NTEE classification system to find the best NTEE code that fits your organization.

  • O- This Booster Club NTEE code is for charities that provide services to youth. This code is very broad, but it is very applicable to Booster Clubs that help children in many ways. They help children who are struggling in school, who need tutoring, or who need a place to play after school. They also provide programs that keep kids off the streets and give them something productive to do.
  • O12- This code is for charities that provide recreational facilities and activities for children and adults. This would also be a very good code for Booster Club because it is for organizations that provide funding to other groups that run youth recreational activities. Booster Club provides money for after-school activities as well as team sports like basketball, football, baseball, and soccer.
  • O20 – This Booster Club NTEE code is specifically for charities that help youth overcome personal difficulties or problems. If your Booster Club runs its own activities and helps children with many problems, including poor grades, lack of a mentor, or a lack of a positive role model, you may want to consider this code.
  • O21 – This code is for Boys Clubs, which specifically cater to Youth Development and activities for Boys. Only use this if your Booster only caters to Boys and runs its own programs.
  • O 22- This code is for Girls Clubs, clubs exclusively for Youth Development for girls. Use this Booster Club NTEE code if your booster runs its own programs and only caters to Girls.

Even if these codes don’t work for you, search the O category and find the best one for an organization that can be used when submitting an application to get 501(c)(3) status with the IRS or when applying for grant money from different foundations or organizations.

 

Filing taxes for your Booster club

What Happens if You Do Not Choose an NTEE Code

It is important to find the right Booster Club NTEE code for your organization. If you do not fill out the NTEE code properly, then you will be ineligible for grant money. The main reason for filling this out is to help your non-profit get the funding it needs to continue operating, and ensure its tax-exempt status.

If you do not choose a code, then your application will be put on hold and you will not be given an EIN number. This means that your application cannot be accepted and cannot be processed. If your application is put on hold, you will need to call the IRS and get it sorted out- a big headache. They will let you know what the next steps are to take in order to get your application processed.

If your organization is approved, then you will be given a Form 1023-EZ, which is a short form application for public charities and non-profits that have annual gross incomes of less than $50,000.

 

Booster club manager working through taxes

Conclusion

Choosing the right Booster Club NTEE codes is an important part of applying for nonprofit status. If you fail to choose a Booster Club NTEE code, it can jeopardize your ability to get tax exempt status and be eligible for grants and federal funding. There are many benefits of understanding the NTTE codes used by the IRS for nonprofit organizations. Understanding these codes can help you to understand how your booster club is viewed by the IRS.

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May 25, 2021 / by / in

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