Organization 501 (c) is a nonprofit organization in United States federal law under 26 U.S.C.Ã,§§ 501 and is one of 29 types of nonprofit organizations exempt from some federal income taxes. Sections 503 to 505 specify requirements for such exceptions. Many countries refer to Section 501 (c) for definitions of organizations that are exempt from state taxes as well. 501 (c) the organization may receive unlimited contributions from individuals, corporations, and unions.
For example, nonprofits may be tax-exempt under section 501 (c) (3) if the main activities are charity, religion, education, scientific, literature, testing for public safety, fostering amateur sport competitions, preventing child cruelty, or preventing animal cruelty.
Video 501(c) organization
Jenis
According to Section 511, organization 501 (c) is taxed on "unrelated business income", whether the organization actually generates profit, but excludes the sale of donated merchandise or other businesses or trades by volunteers, or certain bingo games. Disposal of donated goods worth more than $ 2,500, or receipt of goods valued in excess of $ 5,000 may also trigger the requirement of archiving and storage of special records.
The tax exemption does not relieve the organization from maintaining proper records and filing the required annual or special tax returns, for example, 26 U.S.C.Ã, Ã,§ 6033 and 26 U.S.C.Ã, Ã,§Ã, 6050L. Prior to 2008, annual returns were generally not required from an exclusion organization that earned less than $ 25,000 in gross revenue each year. Since 2008, most organizations whose annual gross receipts of less than $ 50,000 must file an annual return of information known as Form 990-N. The 990-N form must be submitted electronically using an official IRS e-file provider. Form 990, Form 990-EZ, and Form 990-PF may be submitted either by mail or electronically through an authorized e-file provider.
Failure to file required returns such as Form 990 (Return of Excluded Organization from Income Tax) may result in a fine of up to $ 250,000 per year. Free or political organizations, excluding churches or similar religious entities, shall make their returns, reports, notices and applications of exceptions available for public inspection. The 990-organization form (or similar public record such as Form 990-EZ or Form 990-PF) is available for public inspection and photocopying at the office of a free organization, by written request and payment for photocopy by mail from an organization exclusion, or through Direct Form 4506-A "Request for a Public Inspection or Copies or Political Organization of the IRS Form" request to the IRS for the last three taxable years. Form 4506-A also allows public inspection or photocopying access to 1023 "Application for Recognition of Exemption" Form 1024, Form 8871 "Political Organization Notification Section 527 Status", and Form 8872 "Political Organization Report on Contribution and Expenditure". Internet access to many organizations' 990 and some other forms is available through GuideStar. Certain organizations are exempt from filling in Form 990, such as churches, integrated aides, and church conventions or associations; the exclusive religious activity of any religious order; and religious organizations; and most organizations whose annual gross receipts are less than $ 5,000. Failure to file such timely returns and to make other publicly available information is also prohibited.
Maps 501(c) organization
501 (c) (3)
501 (c) (3) tax exemptions apply to entities organized and operated exclusively for religious, charitable, scientific, literary or educational purposes, or for testing for public safety, or to foster a national or international amateur sporting competition; prevention of cruelty to children or animals. Exemption 501 (c) (3) also applies to any community, fund, cooperative association, or unrelated foundation that is organized and operated exclusively for that purpose. There are also support organizations - often referred to in the abbreviation form as "Friends" organization. 26 U.S.C.Ã, §§§ 170, provides a deduction, for federal income tax purposes, for some donors who donate charities to most types of organizations 501 (c) (3), among others.
The organizations described in section 501 (c) (3) are prohibited from engaging in political campaign activities to intervene in elections for public office. On the other hand, public charities (but not private foundations) can do a limited number of lobbying to influence legislation. Although the law states that "No important part..." of public charity activities may go to the lobby, charities may register for the 501 (h) election which allows them to legitimately engage in lobbying activities as long as their financial expenses do not exceed the amount which is determined. 501 (c) (3) the organization risks losing tax-exempt status if any of these rules are violated.
Organizations 501 (c) (3) are allowed to engage in some or all charitable activities outside the United States. Donor contributions to the 501 (c) (3) organization can only be deducted from taxes if its contribution to the use of 501 (c) (3) organizations, and that 501 (c) (3) organizations not only serve as agents or channels of foreign charity organizations. Additional procedures are required from 501 (c) (3) organizations that are private foundations.
501 (c) (4)
Organizations 501 (c) (4) are social welfare organizations, such as civil organizations or environmental associations. An organization is considered by the IRS to be operated exclusively for the promotion of social welfare if it is primarily engaged in promoting the general welfare and public welfare. Net income should be exclusively used for charitable, educational, or recreational purposes.
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This groups are allowed to participate in politics, as long as politics is not their primary focus. What it means in practice is that they have to spend less than 50 percent of their money on politics. As long as they do not collide with that threshold, groups can influence elections, which they usually do through advertising.
Activity allowed
501 (c) (4) similar to 501 (c) (5) and 501 (c) (6) in the organization may inform the public on controversial subjects and attempt to influence legislation relevant to its program and, unlike 501 (c (3) organizations, they can also participate in political campaigning and election, as long as their main activity is the promotion of social welfare and related to organizational goals.
Exemption of income tax for 501 (c) (4) organizations applies to most of their operations, but the income spent on political activity - generally advocacy of certain candidates in the election - is taxable. Organization "action" generally qualifies as organization 501 (c) (4). An organization of "action" means an organization whose activities substantially include, or exclusively, direct or grassroots lobbying related to advocacy for or against the law or propose, endorse, or challenge the law relating to its purpose.
Organizations 501 (c) (4) may directly or indirectly support or oppose candidates for public office as long as such activities are not a substantial amount of its activities.
The 501 (c) (4) lobbying organization must register with the DPR clerk if he or she lobbied members of the DPR or their staff. Likewise, 501 (c) (4) organizations should register with the Senate Secretary if it is lobbying members of the Senate or their staff. In addition, the 501 (c) (4) organization must inform its members of the amount spent in lobbying or paying proxy taxes to the Internal Revenue Service. Lobbying political spending and expenses can not be deducted as business expenses.
Electioneering communications
The use of organizations 501 (c) (4), 501 (c) (5), and 501 (c) (6) has been influenced by FEC v. Wisconsin Right to Life, Inc. 2007, in which the Supreme Court strikes part of the McCain-Feingold Act which prohibits 501 (c) (4), 501 (c) (5), and 501 (c) (6) from broadcasting broadcasting communications. The law defines election communications as communication that names candidates 60 days prior to the primary or 30 days before the general election.
Contribution
Contributions to 501 (c) (4) organizations can not be deducted from taxes as charitable contributions unless the organization is a volunteer firefighter or a veterans organization. Contributions or contributions to 501 (c) (4) organizations may be deducted as business expenses under IRC 162, although the amount paid for intervention or participation in political campaigns, direct lobbying, grassroots lobbying, and contact with certain federal officials is not deductible. If 501 (c) (4) is involved in a large number of these activities, only the amount of contributions or contributions that can be attributed to other activities can be deducted as a business expense.
The organization shall provide notice to its members which contains a reasonable estimate of the amount associated with the expenditure of political campaigns and lobbying, or else subject to a proxy tax on lobbying and spending on its political campaigns. It should also state that contributions to the organization can not be deducted as charitable contributions during fundraising.
501 (c) (4) organizations are not required to disclose their donors publicly. Lack of disclosure has led to extensive use of the 501 (c) (4) provision for organizations actively engaged in lobbying, and has become controversial. Criticized as "black money", spending from these organizations on political TV ads has exceeded the spending of Super PACs. Spending by organizations that did not disclose their donors has increased from less than $ 5.2 million in 2006 to over $ 300 million in 2012 elections.
History
The origin of the organization 501 (c) (4) dates back to the Revenue Act of 1913, which created a new group of tax-exempt organizations dedicated to social welfare in precursors to what is now Internal Revenue Code Section 501 (c) (4).
The Protecting Americans of the Tax Hikes Act of 2015 introduced new requirements in 501 (c) (4) organizations. Within 60 days of the organization's establishment, the 501 (c) (4) organization is required to file Form 8976 with the Internal Revenue Service as a notice that it operates as part of 501 (c) (4) organization. The Internal Revenue Service will recognize the receipt of the notice, but its recognition is not a stipulation that the organization is eligible for section 501 (c) (4) tax-exempt status. Organizations 501 (c) (4) are not required to send notices if the organization is formed on or before July 8, 2016, and it is also applied to the decree using Form 1024 or submitting Form 990 between December 19, 2015 and July 8, 2016.
501 (c) (5)
Organizations 501 (c) (5) are labor organizations, agricultural organizations, or horticultural organizations. Unions, fairs, and flower clubs are examples of such groups. The trade union organization is the main benefactor of this type of organization, dating from the nineteenth century. According to the Internal Revenue Service, the 501 (c) (5) organization has the task of providing services to its members first. The benefits of an organization may not be attached to a particular member, but the tightening rules vary among three different organizational types under this segment. Organization 501 (c) (5) may make unlimited corporate, individual, or union contributions.
The organization of labor may pay benefits to its members because paying benefits improves working conditions with all members. An agricultural organization can provide financial assistance to its members to improve the conditions of those engaged in agricultural activities in general. Members may benefit incidentally from organizational exclusion activities as long as the benefits are available to everyone.
History
The first exceptions to the labor organization of the corporate income tax were enacted as part of the 1909 Payne-Aldrich Tariff Act.
The Revenue Act of 1913 excluded "labor, agricultural or horticultural organizations" from income tax liabilities.
Contributions and activities
Just as organizations 501 (c) (4) and 501 (c) (6), 501 (c) (5) organizations can also perform some political activities. 501 (c) (5) the organization is permitted to try to influence legislation relating to the interests of its member union.
501 (c) (5) the organization may receive unlimited contributions from companies, individuals and unions. Donor names and addresses need not be provided for public scrutiny. All other information, including contribution amounts, non-cash contribution description, and other information, should be made available for public examination unless it clearly identifies the contributor.
The union membership fee paid to the 501 (c) (5) organization is generally normal and necessary business expenses. Membership fee is deducted in full unless a substantial part of organizational activity 501 (c) (5) consists of political activity, in which case the tax deduction is only allowed for the membership fee part which for other activities.
Since the associations involved in fishing and seafood had difficulty qualifying for postage reductions, in 1976 Congress established the Internal Revenue Code Section 501 (5) to define "agriculture" as an art or science of cultivation of land, crops or water resources , or raising livestock.
Organizations 501 (c) (6) are business leagues, chambers of commerce such as the US Chamber of Commerce, real estate council, trade council, professional football league, or organizations such as Edison Electric Institute and Security Industry Association not organized for profit and no share of net income is beneficial to shareholders or private individuals.
Qualification for exceptions
Business leagues can qualify if it is an association of people who have the same business interests, whose purpose is to promote common business interests and whose activities improve business conditions rather than actually do the business itself. Members of the organization must be from the same trade, business, occupation or profession to qualify. A trading chamber or trade council may qualify for the same reasons except that they may promote the common economic interests of all commercial enterprises in a particular trade or community.
An association will not be eligible if the main activity consists of obtaining benefits and performing special services for members.
An association promoting the common interest of a particular fan will not qualify because the Internal Revenue Service does not consider the hobby as an activity that is done as a business.
Organizations whose main activities advertise the product or service of its members are not eligible because the organization performs services for its members rather than promoting mutual interests. If the organization's primary activity is to advertise the products or services of its member industry as a whole, however, the organization will generally qualify if it also performs other services for its members.
Contributions and activities
Just as organizations 501 (c) (4) and 501 (c) (5), 501 (c) (6) organizations can also perform some political activities. 501 (c) (6) organizations are permitted to try to influence legislation relating to the general business interests of their members.
501 (c) (6) the organization may receive unlimited contributions from companies, individuals, and unions. Donor names and addresses need not be provided for public scrutiny. All other information, including contribution amounts, non-cash contribution description, and other information, should be made available for public examination unless it clearly identifies the contributor. The US Chamber of Commerce is a great political spender, and Freedom Partners uses its status as a 501 (c) (6) organization to collect and distribute over $ 250 million during the 2012 election campaign without revealing its donors. The group's existence was not publicly known until almost a year after the election.
A membership fee of a business paid to a 501 (c) (6) organization is generally a normal and necessary business expense. Membership fee is deducted in full unless a substantial part of organizational activity 501 (c) (6) consists of political activity, in which case tax deductions are allowed only for portions of membership dues which are for other activities.
History
Its predecessor IRC 501 (c) (6) is enacted as part of the Revenue Act of 1913 possibly due to the request of the US Chamber of Commerce for exemptions for non-profit "citizenship" and "commercial" organizations, which resulted in IRC 501 (c) (4) for "citizenship" "nonprofit and IRC 501 (c) (6) for nonprofit" nonprofit-oriented "organizations. The Revenue Act of 1928 changed the law to include the real estate council. In 1966, professional football leagues were added to the organization depicted.
The 1913 Revenue Act relating to the professional football league has antitrust and tax provisions: The antitrust provisions are enacted to allow the incorporation of the National and American Football League to progress without fear of antitrust challenges under the Clayton Anti-trust Act of 1914 or Invite -The Federal Trade Commission of 1914. The IRC 501 (c) (6) amendment was enacted in 1966 to ensure the liberation of a professional soccer league would not be jeopardized as it governs players' pension funds. In addition, the exclusion of professional sports leagues will not be jeopardized because the main source of revenue is the sale of television broadcasting rights for the game as broadcasting games increase public awareness of the sport.
In 2013, Senator Tom Coburn introduced a law to ban tax exemptions for the National Football League, Professional Golfers Association, and other professional sports organizations. Coburn estimated the tax exemption cost of $ 100 million, but he said he could not get another congressman to support the law.
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501 (c) (7)
Organizations 501 (c) (7) are social or recreational clubs organized for fun, recreation, and other unfavorable purposes. Members should share interests and have common goals directed at fun and recreation, and organizations should provide opportunities for personal contact among members. The organization's facilities and services must be open to its members and their guests only. Organizations must be individual clubs, and no individual can profit from the organization's net profit. Examples include college alumni associations; college fraternity or college college operations chapter houses for students; country clubs; amateur sports club; a dinner club that provides a meeting place, library, and dining room for members; hobby clubs; and a park club.
Activity
A large number of organizational activities 501 (c) (7) should be related to social and recreational activities for its members. No more than 35 per cent of gross receipts may come from non-members, and no more than 15 per cent of the permitted gross revenue comes from the use of facilities or services by the general public. Organizations that exceed this limit may lose the status of 501 (c) (7).
When groups of eight or fewer, at least one of them are members, using organizational facilities and paying members for other individuals, the Internal Revenue Service will assume nonmembers are guests of the members, and income is considered to be from members. Similarly, if at least 75 per cent of groups using club facilities are members of the organization, the Internal Revenue Service will assume that members are not members of the members, and that revenue is considered to be from members. It is the responsibility of the organization to maintain these records. If the organization does not keep sufficient records to link revenue to members, the Internal Revenue Service assumes revenues from nonmembers.
This organization is subject to unrelated business income taxes for revenues arising from the use of nonmembers of its facilities and services, less any deductions allowed. If an organization sells assets previously used for recreational or social purposes, the results are not considered unrelated business earnings as long as the results are reinvested in the organization.
Organizations 501 (c) (7) can not have discriminatory policies on the ground of race, color, or religion. However, the 501 (c) (7) organization is permitted to restrict its members to certain religions to continue the teachings of that religion. A support from the 501 (c) (8) community benefit society that limits membership of certain religious members is also permitted to do so. The Internal Revenue Service has determined that 501 (c) (7) is not prohibited from discriminating against ethnic groups.
Donations
A person's contribution to fraternity is a tax deductible donation if the donation "will be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of atrocities against children or animals."
History
The predecessor of the Internal Revenue Code Section 501 (c) (7) is part of the Revenue Act of 1913, which provides tax exemptions to "community beneficiaries of fraternity, orders or associations operating under the lodge system or for the exclusive benefit of members of the fraternity itself which operates under a cottage system ". Congress justifies tax exemption on the grounds that members join together to provide themselves with a recreational or social organization without further tax consequences, similar as if they had paid for the benefits directly. Tax exemptions are available to organizations that are exclusively operated for fun, recreation, and other unfavorable purposes.
In 1969, Congress passed a law stating that social and leisure clubs were allowed to engage in some unrelated business income, subject to income taxes.
501 (c) (8)
Organization 501 (c) (8) is the community of brotherly benefit.
Feasibility
The public must have the same member of the vocation, recreation, or profession, or members who work together to achieve a worthy goal. Members have connected themselves to help each other and to promote common goals. Communities must have written documentation of their eligibility standards for membership, membership classes, admissions process, and member privileges and privileges.
Members should have a common bond, which may be based on religious beliefs, sex, work, ethnicity, or shared values.
The public shall have the highest governing body and subordinate subordinates in which members are elected, initiated, or accepted in accordance with its law. The highest governmental body shall consist of delegates elected directly by members or intermediate assemblies.
Communities should offer benefits to members, which may include life insurance, health insurance, scholarships, education programs, travel opportunities, and discount programs. Revenues generated from providing benefits to non-members shall not be substantial to the public and may be taxed as unrelated business income.
History
The community of brotherly benefit traces their lineage back through a mutually beneficial society, a sociable society and finally to the medieval guild. Many fraternal brotherhood communities are established to serve the needs of immigrants and other underserved groups sharing common religious, ethnic, gender, work or shared values.
Section 38 of the 1909 Payne-Aldrich Tariff Act is the first law that provides tax exemptions for fraternal beneficiaries. The tax exemption was then codified as part 501 (c) (8) with the Internal Revenue Code of 1954.
See also
- 527 organizations
- Political action committees
- Non-profit art organizations
Note
References
Further reading
- Hakanson, Bill (2013). How to Succeed with Nonprofit Trading and Professional Associations . ISBN: 1484805747.
External links
- "list of eligible charity IRS to receive searches or downloadable contributions that can be reduced". Internal Revenue Service. Archived from the original on May 15, 2016.
- "IRS 557 Publications" (PDF) . Internal Revenue Service. Ã, Publication 557 organizes 501 organizations (c).
- "Search for funds in 501 (c) (3) (990 searches)". Foundation Center. Archived from the original on May 23, 2013.
- "Historical data on the number of 501 (c) organizations in the US" Data 360.
- "Amount, Finance and other data in 501 (c) organization". National Center for Charity Statistics.
- "Useful Legal Information and Links Legal, Startup and Nonprofit Compliance".
Source of the article : Wikipedia
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