Exempt status can be requested for “other exempt organizations” that do not operate primarily for one or more of the purposes described as a 501(c)(3) organization. Many “other exempt organizations” are operated primarily to serve members. For more information on Other Exempt Organizations including how to request exempt status review Pub. 557, Tax Exempt Status for Your Organization and Form 1024, Application for Recognition of Exemption Under Section 501(a). The Application may look overwhelming but you can save money and learn a lot by completing as much as you can then sending in the Application and letting the IRS tell you what additional information they want before exempt status will be granted. The following are the types of “other exempt organizations”, exempt status can be requested for:
- 501(c)(2), Title holding companies
- 501(c)(4), Social Welfare organizations
- 501(c)(5), Labor, Agriculture and horticultural organizations
- 501(c)(6), Business Leagues, Chambers of Commerce and similar organizations
- 501(c)(7), Social clubs
- 501(c)(8), Fraternal beneficiary societies
- 501(c)(9), Voluntary employees’ beneficiary associations
- 501(c)(10), Domestic fraternal societies, orders, etc.
- 501(c)(12), Benevolent life insurance associations
- 501(c)13), Cemeteries, crematoria, and like corporations
- 501(c)(15), Mutual insurance companies or associations, other than life or marine
- 501(c)(17), Trusts providing for the payment of supplemental unemployment compensation benefits
- 501(c)(19), a Post, Organization, or Auxiliary Unit
- 501(c)(25), Title holding corporations or trusts
Form 1024, Application for Recognition of Exemption under Section 501(a)
Like with charitable organizations, exempt status can be requested for “other exempt organizations” (or non-501(c)(3) organizations). Similar organizing documents such as articles of incorporation and bylaws will be needed, and a user fee will have to be paid before the application will be processed. An individual or individuals who start the organization can complete the application or an attorney, accountant, other professional, or other individual with knowledge of the organizations activities, operations and plans can complete the application. Information needed to complete the application includes:
- Name, address and contact information
- EIN
- governing board members, directors, and key employees
- list and description of activities the organization plans to engage in
- income, expenses, assets, and liabilities
- related parties
Common Other Exempt Organizations
501(c)(4) Social Welfare organizations – are organized primarily to further the common good and general welfare of the people of the community. Seeking legislation germane to the organization’s program is a permissible means of attaining social welfare. These organizations may also engage in political activities, so long as such activities are not the primary purpose of the organization. Organizations engaged in legislative activities may be required to notify members that a percentage of their dues will be used for lobbying activities. Examples of 501(c)(4) organizations include Social welfare or Community organizations that work to improve public services, housing, or residential parking; publication of a free community newspaper; sponsorship of a community sports league; preservation of the community’s traditions, architecture and appearance by representing it before the local legislature and administrative agencies in zoning, traffic and parking matters.
501(c)(5) – Labor unions and agricultural or horticultural organizations
501(c)(6) – Business leagues, chambers of commerce – is an association of persons having some common business interest that is to promote such common interest and not engage in a regular business of a king carried on for profit. The organizations’ activity must be devoted to improving business conditions of one or more lines of business; the organization must have meaningful membership support which is shown by dues paying members; and the revenues of the organization must not be for the benefit of a private shareholder or individual. Examples of 501(c)(6) organizations include: (i) Chambers of Commerce which promote the common economic interests of all commercial enterprises in a given trade or business; (ii) Board of Trade that consists of persons engaged in a similar line of business; (iii) Real Estate Board that consists of members interested in improving the business conditions of the real estate field; and (iv) Professional Football Leagues.
Form 990-T, Exempt Organization Business Income Tax Return
Like with 501(c)(3) organizations, other exempt organizations can be subject to tax on activities that are unrelated to the purpose for which exempt status is granted. Unrelated business activities are activities that does not significantly further the exempt purpose of the organization. This will vary by subsection under which exempt status was granted and by primary activity of an organization. That’s why is it important to understand what information is put in the application and then used by the IRS to determine exempt status.
Review Pub. 598, Tax on Unrelated Business Income of Exempt Organizations for additional information on unrelated business activities and when Form 990-T may apply to your organization.