ADXA Folks,

You will recall just after the first of the year we requested a halt to using PayPal for your membership renewal, owing to the fact that PayPal (and all monetary companies) are being forced to adhere to the new IRS law that any transactions over $600, regardless of the transaction type, must be reported to the IRS. PayPal requested that ADXA provide our tax ID number to them so, at the end of each calendar year, they could provide ADXA with a form 1099 indicating the total distribution to us via PayPal. It is then the recipients (ADXA) responsibility to comply with whatever tax may be required. ADXA doesn't owe any tax, our income is from membership dues and not any business activity. Of course, PayPal does not know this and is simply complying with the new law. The federal government late last year delayed implementation of the new law for a time while companies prepared to comply however those that had already established procedures to do so moved forward with the new requirement.

I'll restate that ADXA will NOT owe any tax, however in order for PayPal to comply with the new law, if we do not provide a tax ID number once the transfer distribution from PayPal to ADXA hits the magic $600 mark, PayPal will be required to automatically withhold 24% of the distribution amount and send it to the IRS! ADXA is not the only amateur radio club impacted by this new rule, there are others.

In order to avoid the automatic withholding, ADXA will need to obtain a tax ID number however before we can apply we must be incorporated. ADXA has never been formally incorporated. Several radio clubs are, including my local club in Searcy. The ADXA Board of Directors has discussed this at length and unanimously decided to formally apply for non-profit corporation status. ADXA VP Pat, W5VY, is leading this effort with assistance from Dawn, N5QT, who handled the NCAARS filing. There may be some minor changes to our Articles of Association required for the incorporation. If that is required it will be discussed at our March meeting. Once the incorporation is complete, we can then file for a tax ID number, provide it to PayPal, and once again be able to conduct transfers.

I want to emphasize that ADXA will NOT owe any tax. There may be a minimal amount of annual filing required to comply with all of this new BS, and we will adhere to any new laws.

Stay tuned and we'll keep you updated as things move forward.

73 Joel W5ZN
ADXA President