Each subordinate lodge of the Grand Lodge is responsible for the correct filing of all tax returns unless otherwise notified specifically by the Grand Lodge. In order to assist the officers of various lodges to maintain an efficient filing of returns, an outline is presented below.
A. Federal and State Withholding
Who must withhold and file tax returns?
Each subordinate lodge
Who is subject to Withholding?
Every employee of each subordinate lodge
Who are employees?
All persons rendering services to the lodge for a salary or wage, which are under the direction and control of the lodge.
How much must be withheld?
– Federal: A table is provided by U.S. Treasury Department
– State: 3.07% of the compensation paid
– Social Security Federal: Employer @ 7.65% / Employee @ 7.65%
When must returns be filed and tax paid?
For each calendar quarter with an annual reconciliation
– January 1 to March 31: Due April 30
– April 1 to June 30: July 31
– July 1 to September 30: October 31
– October 1 to December 31: January 31
– Annual reconciliation is due: January 31
B. Unemployment Compensation Tax
Who must file tax returns?
Federal: Each subordinate Pennsylvania lodge with employees
Who is required to pay the tax?
Federal: The lodge, not employees; Pennsylvania: The lodge
What is the tax rate?
Rates are set annually by the government
Who are employees?
Same as for withholding
When must returns be filed?
Federal: January 31 once a year; Pennsylvania: Same as Federal withholding
When must tax be paid?
Federal: When the return is filed; Pennsylvania: When the return is filed
C. Local Wage Taxes
Who is subject?
Many cities, townships, boroughs and other political subdivisions levy a tax on wages, salaries or compensation. Usually, the employer (the lodges) are required to withhold the tax from the employees (the secretary, etc.) and remit the tax periodically to the appropriate tax authority. In most cases a lodge will be considered as an employer for withholding purposes.
How taxing jurisdiction is determined?
The political sub-division in which the lodge is domiciled (located) will generally be the jurisdiction to which the lodge is responsible for any requirement for withholding of tax. In most cases, the domicile will be considered as the location in which the lodge holds its stated meetings.
Who is responsible for withholding?
Each lodge is responsible for determining whether it is required to withhold and remit wage taxes for its employees to the political sub-division in which it is domiciled.
D. Pennsylvania Sales and Use Tax
Who is subject to tax?
Each lodge must pay the sales or use tax on taxable items purchased. No lodge may give a sales tax exemption certificate for any reason whatsoever.
What is subject to tax?
Generally speaking, all items of tangible personal property and certain services with which tangible personal property is an integral part. Since specific enumeration of taxable and nontaxable items would cover at least nine pages in detail, the following general rule should be followed. If a vendor would charge another customer for an item the lodge purchased, then the lodge is subject to the tax. Subordinate lodges can not claim an exemption from sales or use tax as either a “non-profit” or charitable organization. Certain items related to lodge activities are set forth hereunder for your guidance. Fraternal accouterments and related articles are specifically subject to tax. Formal day or evening wear is subject to the tax. Aprons are exempt, unless the value of the lambskin is more than three times the value of the next most valuable component material of the apron. Jewelry is taxable,; books are taxable and Bibles are non-taxable. All furnishings for a lodge room are subject to tax.
Must a Lodge secure a license?
No Sales and Use Tax License is required by a lodge, since lodges are prohibited from engaging in commercial or business activities or making sales in commerce. Lodge dues and assessments and income from interest or dividends will not cause an incident of sales or use tax.
E. Federal Income Tax Returns
The Grand Lodge is filing federal non-profit tax returns Form 990 – entitled “Return of Organization Exempt from Income Tax” for and on behalf of each subordinate lodge as to the receipts and disbursements reported by the secretary of each lodge in the annual audit report. Therefore, no subordinate lodge will be required to file a federal non-profit tax return unless it is specifically advised to do so by the Grand Lodge. Each subordinate lodge is required to file an appropriate federal income tax for any ancillary organization, such as a Temple Association. The Grand Lodge must be notified of any situation in which no return is filed and furnished with an opinion from legal counsel of the subordinate lodge as to the status of the non-filing.
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