At the February 3rd Membership Breakfast and in subsequent GCAR Communications, membership was made aware of pending proposed amendments to the GCAR Charter & Bylaws. While the original intent was to conduct the online voting on February 12-17, the GCAR Executive Committee slightly delayed voting to give leadership additional time to confirm a few related issues.
GCAR now is ready to proceed with the vote, which will take place electronically April 15-20. Each member eligible to vote will receive an email on Friday, April 15, from announcement@associationvoting.com. The email will contain the member's unique voting credentials link to the online voting platform. Voting will remain open until 5 pm on Wednesday, April 20. Should you not receive the email, please send an email to communications@gcar.net so our Staff may assist you.
The following overview supersedes any previous notice given the membership regarding the proposed amendments for which, if there is a successful vote, would:
- Dissolve the MLS as a wholly-owned subsidiary.
- Establish MLS Committee with authorities in line with those of the wholly-owned subsidiary.
- Merge the MLS activities into GCAR.
- GCAR terminate its federal tax-exempt [IRS Section 501(c)(6)] status, but it will continue as it currently is, as a Tennessee nonprofit corporation
RATIONALE: Moving to a one-company structure will:
- Reduce the amount of members’ volunteer time currently spent preparing and managing two budgets and supporting the two companies’ shared income and expenses.
- Eliminate current time, expenses, and risks related to allocation of income and expenses between the two companies.
- Enable significant annual savings of actual costs and staff time supporting the two companies’ shared income and expenses.
BACKGROUND: In contemplating this decision, input and guidance were obtained from:
- Financial consultants (Bookkeeper, CPA, Auditor)
- Primary legal counsel plus outside attorneys practicing in specific areas related to the proposed amendments (i.e., business, governance, MLS, tax law)
- 2015 Budget & Finance Committee
- 2015 & 2016 GCAR & MLS Boards of Directors
- 2015 Presidential Advisory Group
Benefits & Changes
GENERAL
- Members will not be impacted as day-to-day operations and services will remain the same.
- Less volunteer time will be spent operating, preparing and managing two budgets for two companies with shared income and expenses.
- Members should realize an improved level of service from Staff who will no longer be managing and supporting two entities.
- Anticipated financial savings will free up monies to enhance member services.
TAX STATUS
- GCAR is and will remain a Tennessee non-profit entity.
- With MLS activities merged into GCAR, GCAR will replace the MLS as the taxable entity from a federal/IRS perspective.
- Although a TN non-profit, GCAR would not be prohibited from making a profit, provided any revenue is used according to GCAR’s mission and purpose.
AUDIT & TAX FILING
- Auditing of one, not two, companies.
- Preparing one, not two, tax returns.
- MLS’s Tennessee taxes will be eliminated.
- Risk of potential IRS audit and loss of tax-exempt status related to allocation of expenses and operations between two companies will be eliminated.
BOOKKEEPING, BUDGET & FINANCE MANAGEMENT
- Eliminate time/expense to allocate expenses/revenue
- Streamlined member application process
- MLS Committee retains same responsibility for setting and use of MLS fees; establishing contractual obligations related to MLS activities; and adopting an annual budget.
GOVERNANCE
- MLS Chair would be a GCAR Officer. GCAR Executive Committee expanded to include GCAR Immediate Past President & MLS Chair.
- Participants would retain responsibility for MLS Rules & Policies, MLS data, MLS platforms and general manner in which the MLS is utilized.
- Establishes staggered terms on MLS Committee to provide for continuity.
- Maintains requirement that MLS leadership be Participants.
- Maintains GCAR President’s authority to appoint his/her other Committee Chairs.
- Maintains cap on number of GCAR Board persons per company (no more than 3 per firm).
MISCELLANEOUS
- The sooner the dissolution/merger occurs, the (1) fewer number of days the MLS will be a separate taxable entity; and (2) sooner inefficiencies and risks regarding income/expense allocations are eliminated.
- One-time tax for the days in which the MLS exists in current year.
- GCAR’s loans from MLS & First Tennessee are non-issues, as both were paid in full in 2015.
- Current vendor contracts on behalf of the MLS would remain in effect.
- One-time fees for filings with Secretary of State & Tennessee Department of Revenue (approximately $200-$300) and related attorney's fees ($1250-$1750).