501(c) organization
[1] For example, a nonprofit organization may be tax-exempt under section 501(c)(3) if its primary activities are charitable, religious, educational, scientific, literary, testing for public safety, fostering amateur sports competition, or preventing cruelty to children or animals.Prior to 2008, an annual return was not generally required from an exempt organization accruing less than $25,000 in gross income yearly.[18] 501(c)(3) tax-exemptions apply to entities that are organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes; or for testing for public safety, to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals.The 501(c)(3) exemption also applies for any unincorporated community chest, fund, cooperating association, or foundation that is organized and operated exclusively for those purposes.§ 170, provides a deduction, for federal income tax purposes, for some donors who make charitable contributions to most types of 501(c)(3) organizations, among others.[27] Organizations described in section 501(c)(3) are prohibited from conducting political campaign activities to intervene in elections to public office.[28] On the other hand, public charities (but not private foundations) may conduct a limited amount of lobbying to influence legislation.[42] In addition, the 501(c)(4) organization must either inform its members the amount it spends on lobbying or pay a proxy tax to the Internal Revenue Service.[42] The use of 501(c)(4), 501(c)(5), and 501(c)(6) organizations has been affected by the 2007 case FEC v. Wisconsin Right to Life, Inc., in which the Supreme Court struck down the part of the McCain-Feingold Act that prohibited 501(c)(4)s, 501(c)(5)s, and 501(c)(6)s from broadcasting electioneering communications.[53][54][55][56] The former complete lack of disclosure led to extensive use of the 501(c)(4) provisions for organizations that are actively involved in lobbying, and has become controversial.[18] In 2017 revocations of 501(c)(4) groups comprised 58% which usually is only 15% of the total nonprofits which have their tax status revoked by the IRS for their failure to file Form 990.[75] Because associations involved in fishing and seafood harvesting were having difficulties qualifying for reduced postal rates,[76] in 1976 Congress established Internal Revenue Code Section 501(5) to define "agriculture" as the art or science of cultivating land, harvesting crops or aquatic resources, or raising livestock.[81] Similarly, providing a service for a specific type of business is also not typically qualifying, as that would usually be more of a commercial enterprise.[81][82] An association that promotes the common interests of certain hobbyists would not qualify because the Internal Revenue Service does not consider hobbies to be activities conducted as businesses.The names and addresses of contributors are not required to be made available for public inspection,[74] with the exception of a 501(c)(6) organization that makes independent expenditures.The U.S. Chamber of Commerce is a large political spender, and Freedom Partners used its status as a 501(c)(6) organization to raise and distribute over $250 million during the 2012 election campaigns without disclosing its donors.[91] IRC 501(c)(6) amendment was enacted in 1966 to ensure that a professional football league's exemption would not be jeopardized because it administered a players' pension fund.[105] The organization is subject to unrelated business income tax for the revenue derived from nonmember use of its facilities and services, less allowable deductions.[106] Public use of the organization's facilities must be minimal, generally either less than $2,500 per year or less than five percent of its total gross receipts from normal and usual activities of the club.[101] Having written policies that limit its membership by ethnic origin and gender would not jeopardize the organization's tax-exempt status.[88] Congress justified the tax-exemption with the reasoning that the members join to provide themselves with recreational or social organization without further tax consequences, similar as if they had paid for the benefits directly.[110] The members must have a common bond, which may be based on religious beliefs, gender, occupation, ethnicity, or shared values.[111] The society must have a supreme governing body and subordinate lodges into which members are elected, initiated, or admitted in accordance with its laws.[111] Revenue generated from providing benefits to non-members must be insubstantial to the society and may be taxable as unrelated business income.[118] A nonprofit cemetery corporation must be incorporated solely for the purpose of the burial or the cremation of bodies and no part of its net earnings inures to the benefit of any private shareholder or individual.[124] A cemetery company wishing to be recognized under Section 501(c)(13) needs to prepare and file Form 1024 with the Internal Revenue Service.[119] The Tariff Act of 1913 provided an exemption from federal income taxes for mutual cemetery companies that were organized and operated exclusively "for the benefit of their members".