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File free taxes 5. File free taxes   How To Get Tax Help Table of Contents Go online, use a smart phone, call or walk in to an office near you. File free taxes Whether it's help with a tax issue, preparing your tax return or picking up a free publication or form, get the help you need the way you want it. File free taxes Free help with your tax return. File free taxes    Free help in preparing your return is available nationwide from IRS-certified volunteers. File free taxes The Volunteer Income Tax Assistance (VITA) program is designed to help low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers. File free taxes The Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. File free taxes Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. File free taxes Some VITA and TCE sites provide taxpayers the opportunity to prepare their return with the assistance of an IRS-certified volunteer. File free taxes To find the nearest VITA or TCE site, visit IRS. File free taxes gov or call 1-800-906-9887. File free taxes   As part of the TCE program, AARP offers the Tax-Aide counseling program. File free taxes To find the nearest AARP Tax-Aide site, visit AARP's website at www. File free taxes aarp. File free taxes org/money/taxaide or call 1-888-227-7669. File free taxes   For more information on these programs, go to IRS. File free taxes gov and enter “VITA” in the search box. File free taxes Internet. File free taxes IRS. File free taxes gov and IRS2Go are ready when you are — every day, every night, 24 hours a day, 7 days a week. File free taxes Apply for an Employer Identification Number (EIN). File free taxes Go to IRS. File free taxes gov and enter Apply for an EIN in the search box. File free taxes Request an Electronic Filing PIN by going to IRS. File free taxes gov and entering Electronic Filing PIN in the search box. File free taxes Check the status of your 2013 refund with Where's My Refund? Go to IRS. File free taxes gov or the IRS2Go app, and click on Where's My Refund? You'll get a personalized refund date as soon as the IRS processes your tax return and approves your refund. File free taxes If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. File free taxes Check the status of your amended return. File free taxes Go to IRS. File free taxes gov and enter Where's My Amended Return in the search box. File free taxes Download forms, instructions, and publications, including some accessible versions. File free taxes Order free transcripts of your tax returns or tax account using the Order a Transcript tool on IRS. File free taxes gov or IRS2Go. File free taxes Tax return and tax account transcripts are generally available for the current year and past three years. File free taxes Figure your income tax withholding with the IRS Withholding Calculator on IRS. File free taxes gov. File free taxes Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. File free taxes Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. File free taxes gov. File free taxes Locate the nearest Taxpayer Assistance Center using the Office Locator tool on IRS. File free taxes gov or IRS2Go. File free taxes Stop by most business days for face-to-face tax help, no appointment necessary — just walk in. File free taxes An employee can explain IRS letters, request adjustments to your tax account or help you set up a payment plan. File free taxes Before you visit, check the Office Locator for the address, phone number, hours of operation and the services provided. File free taxes If you have an ongoing tax account problem or a special need, such as a disability, you can request an appointment. File free taxes Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. File free taxes Locate the nearest volunteer help site with the VITA Locator Tool on IRS. File free taxes gov. File free taxes Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. File free taxes The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. File free taxes Most VITA and TCE sites offer free electronic filing and some provide IRS-certified volunteers who can help prepare your tax return. File free taxes AARP offers the Tax-Aide counseling program as part of the TCE program. File free taxes Visit AARP's website to find the nearest Tax-Aide location. File free taxes Research your tax questions. File free taxes Search publications and instructions by topic or keyword. File free taxes Read the Internal Revenue Code, regulations, or other official guidance. File free taxes Read Internal Revenue Bulletins. File free taxes Sign up to receive local and national tax news by email. File free taxes Phone. File free taxes You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. File free taxes Download the free IRS2Go mobile app from the iTunes app store or from Google Play. File free taxes Use it to watch the IRS YouTube channel, get IRS news as soon as it's released to the public, order transcripts of your tax returns or tax account, check your refund status, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. File free taxes Call to locate the nearest volunteer help site, 1-800-906-9887. File free taxes Low-to-moderate income, elderly, persons with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. File free taxes The Tax Counseling for the Elderly (TCE) program helps taxpayers 60 and older with their tax returns. File free taxes Most VITA and TCE sites offer free electronic filing. File free taxes Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. File free taxes Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. File free taxes Call to check the status of your 2013 refund, 1-800-829-1954 or 1-800-829-4477. File free taxes The automated Where's My Refund? information is available 24 hours a day, 7 days a week. File free taxes If you e-file, your refund status is usually available within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. File free taxes Before you call, have your 2013 tax return handy so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. File free taxes Where's My Refund? can give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. File free taxes Where's My Refund? includes information for the most recent return filed in the current year and does not include information about amended returns. File free taxes Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. File free taxes Call to order forms, instructions and publications, 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions and publications, and prior-year forms and instructions (limited to 5 years). File free taxes You should receive your order within 10 business days. File free taxes Call to order transcripts of your tax returns or tax account, 1-800-908-9946. File free taxes Follow the prompts to provide your Social Security Number or Individual Taxpayer Identification Number, date of birth, street address and ZIP code. File free taxes Call for TeleTax topics, 1-800-829-4477, to listen to pre-recorded messages covering various tax topics. File free taxes Call to ask tax questions, 1-800-829-1040. File free taxes Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. File free taxes The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. File free taxes These individuals can also contact the IRS through relay services such as the Federal Relay Service available at www. File free taxes gsa. File free taxes gov/fedrelay. File free taxes Walk-in. File free taxes You can find a selection of forms, publications and services — in-person, face-to-face. File free taxes Products. File free taxes You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. File free taxes Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. File free taxes Services. File free taxes You can walk in to your local TAC most business days for personal, face-to-face tax help. File free taxes An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. File free taxes If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local TAC where you can talk with an IRS representative face-to-face. File free taxes No appointment is necessary—just walk in. File free taxes Before visiting, check www. File free taxes irs. File free taxes gov/localcontacts for hours of operation and services provided. File free taxes Mail. File free taxes You can send your order for forms, instructions, and publications to the address below. File free taxes You should receive a response within 10 business days after your request is received. File free taxes  Internal Revenue Service 1201 N. File free taxes Mitsubishi Motorway Bloomington, IL 61705-6613 The Taxpayer Advocate Service Is Here to Help You. File free taxes    The Taxpayer Advocate Service (TAS) is your voice at the IRS. File free taxes Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. File free taxes What can TAS do for you?    We can offer you free help with IRS problems that you can't resolve on your own. File free taxes We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. File free taxes You face (or your business is facing) an immediate threat of adverse action. File free taxes You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. File free taxes   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. File free taxes Here's why we can help: TAS is an independent organization within the IRS. File free taxes Our advocates know how to work with the IRS. File free taxes Our services are free and tailored to meet your needs. File free taxes We have offices in every state, the District of Columbia, and Puerto Rico. File free taxes How can you reach us?    If you think TAS can help you, call your local advocate, whose number is in your local directory and at www. File free taxes irs. File free taxes gov/advocate, or call us toll-free at 1-877-777-4778. File free taxes How else does TAS help taxpayers?    TAS also works to resolve large-scale, systemic problems that affect many taxpayers. File free taxes If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. File free taxes irs. File free taxes gov/sams. File free taxes Low Income Taxpayer Clinics. File free taxes    Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals, and tax collection disputes. File free taxes Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. File free taxes Visit www. File free taxes TaxpayerAdvocate. File free taxes irs. File free taxes gov or see IRS Publication 4134, Low Income Taxpayer Clinic List. File free taxes Prev  Up  Next   Home   More Online Publications
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File free taxes 4. File free taxes   Other Section 501(c) Organizations Table of Contents Introduction 501(c)(4) - Civic Leagues and Social Welfare OrganizationsSpecific Organizations 501(c)(5) - Labor, Agricultural and Horticultural OrganizationsLabor Organizations Agricultural and Horticultural Organizations 501(c)(6) - Business Leagues, etc. File free taxes Line of business. File free taxes Examples. File free taxes Improvement of business conditions. File free taxes Exception for local legislation. File free taxes De minimis exception. File free taxes Grass roots lobbying. File free taxes 501(c)(7) - Social and Recreation ClubsLimited membership. File free taxes Support. File free taxes Facilities open to public. File free taxes Gross receipts from nonmembership sources. File free taxes Gross receipts. File free taxes Nontraditional activities. File free taxes 501(c)(8) and 501(c)(10) - Fraternal Beneficiary Societies and Domestic Fraternal SocietiesFraternal Beneficiary Societies (501(c)(8)) Domestic Fraternal Societies (501(c)(10)) 501(c)(4), 501(c)(9), and 501(c)(17) - Employees' AssociationsLocal Employees' Associations (501(c)(4)) Voluntary Employees' Beneficiary Associations (501(c)(9)) Supplemental Unemployment Benefit Trusts (501(c)(17)) 501(c)(12) - Local Benevolent Life Insurance Associations, Mutual Irrigation and Telephone Companies, and Like OrganizationsMembership. File free taxes Losses and expenses. File free taxes Distributions of proceeds. File free taxes The 85% Requirement Local Life Insurance Associations Mutual or Cooperative Associations 501(c)(13) - Cemetery CompaniesBuying cemetery property. File free taxes Perpetual care organization. File free taxes Care of individual plots. File free taxes 501(c)(14) - Credit Unions and Other Mutual Financial OrganizationsState-Chartered Credit Unions Other Mutual Financial Organizations 501(c)(19) - Veterans' Organizations 501(c)(20) - Group Legal Services Plan Organizations 501(c)(21) - Black Lung Benefit TrustsExcise taxes. File free taxes 501(c)(2) - Title-Holding Corporations for Single Parent CorporationsExpenses. File free taxes Waiver of payment of income. File free taxes 501(c)(25) - Title-Holding Corporations or Trusts for Multiple Parent CorporationsUnrelated Business Income 501(c)(26) - State-Sponsored High-Risk Health Coverage Organizations 501(c)(27) - Qualified State-Sponsored Workers' Compensation Organizations 501(c)(29) - CO-OP Health Insurance Issuers New Guidance for IRC 501(c)(29) Qualified Nonprofit Health Insurance Issuers General Requirements for Exemption under 501(c)(29) and Annual Filing Requirement Additional Guidance for Prospective 501(c)(29) Organizations Introduction This chapter contains specific information for certain organizations described in section 501(c), other than those organizations that are described in section 501(c)(3). File free taxes Section 501(c)(3) organizations are covered in chapter 3 of this publication. File free taxes The Table of Contents at the beginning of this publication, as well as the Organization Reference Chart, may help you locate at a glance the type of organization discussed in this chapter. File free taxes 501(c)(4) - Civic Leagues and Social Welfare Organizations If your organization is not organized for profit and will be operated primarily to promote social welfare to benefit the community, you should file Form 1024 to apply for recognition of exemption from federal income tax under section 501(c)(4). File free taxes The discussion that follows describes the information you must provide when applying. File free taxes For application procedures, see chapter 1. File free taxes To qualify for exemption under section 501(c)(4), the organization's net earnings must be devoted primarily to charitable, educational, or recreational purposes. File free taxes In addition, no part of the organization's net earnings can inure to the benefit of any private shareholder or individual. File free taxes If the organization provides an excess benefit to certain persons, an excise tax may be imposed. File free taxes See Excise tax on excess benefit transactions , under Excess Benefit Transactions in chapter 5 for more information about this tax. File free taxes Examples. File free taxes   Types of organizations that are considered to be social welfare organizations are civic associations and volunteer fire companies. File free taxes Nonprofit operation. File free taxes   You must submit evidence that your organization is organized and will be operated on a nonprofit basis. File free taxes However, such evidence, including the fact that your organization is organized under a state law relating to nonprofit corporations, will not in itself establish a social welfare purpose. File free taxes Social welfare. File free taxes   To establish that your organization is organized primarily to promote social welfare, you should submit evidence with your application showing that your organization will operate primarily to further (in some way) the common good and general welfare of the people of the community (such as by bringing about civic betterment and social improvements). File free taxes   An organization that restricts the use of its facilities to employees of selected corporations and their guests is primarily benefiting a private group rather than the community. File free taxes It therefore does not qualify as a section 501(c)(4) organization. File free taxes Similarly, an organization formed to represent member-tenants of an apartment complex does not qualify, since its activities benefit the member-tenants and not all tenants in the community. File free taxes However, an organization formed to promote the legal rights of all tenants in a particular community may qualify under section 501(c)(4) as a social welfare organization. File free taxes Political activity. File free taxes   Promoting social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. File free taxes However, if you submit proof that your organization is organized primarily to promote social welfare, it can obtain exemption even if it participates legally in some political activity on behalf of or in opposition to candidates for public office. File free taxes See the discussion in chapter 2 under Political Organization Income Tax Return . File free taxes Social or recreational activity. File free taxes   If social activities will be the primary purpose of your organization, you should not file an application for exemption as a social welfare organization but should file for exemption as a social club described in section 501(c)(7). File free taxes Retirement benefit program. File free taxes   An organization established by its members that has as its primary activity providing supplemental retirement benefits to its members or death benefits to their beneficiaries does not qualify as an exempt social welfare organization. File free taxes It may qualify under another paragraph of section 501(c) depending on all the facts. File free taxes   However, a nonprofit association that is established, maintained, and funded by a local government to provide the only retirement benefits to a class of employees may qualify as a social welfare organization under section 501(c)(4). File free taxes Tax treatment of donations. File free taxes   Donations to volunteer fire companies are deductible on the donor's federal income tax return, but only if made for exclusively public purposes. File free taxes Contributions to civic leagues or other section 501(c)(4) organizations generally are not deductible as charitable contributions for federal income tax purposes. File free taxes They may be deductible as trade or business expenses, if ordinary and necessary in the conduct of the taxpayer's business. File free taxes However, see Deduction not allowed for dues used for political or legislative activities , under 501(c)(6) - Business Leagues, etc. File free taxes for more information. File free taxes For more information on social welfare organizations, see Life Cycle of a Social Welfare Organization at IRS. File free taxes gov. File free taxes Specific Organizations The following information should be contained in the application form and accompanying statements of certain types of civic leagues or social welfare organizations. File free taxes Volunteer fire companies. File free taxes   If your organization wishes to obtain exemption as a volunteer fire company or similar organization, you should submit evidence that its members are actively engaged in fire fighting and similar disaster assistance, whether it actually owns the fire fighting equipment, and whether it provides any assistance for its members, such as death and medical benefits in case of injury to them. File free taxes   If your organization does not have an independent social purpose, such as providing recreational facilities for members, it may be exempt under section 501(c)(3). File free taxes In this event, your organization should file Form 1023. File free taxes Homeowners' associations. File free taxes   A membership organization formed by a real estate developer to own and maintain common green areas, streets, and sidewalks and to enforce covenants to preserve the appearance of the development should show that it is operated for the benefit of all the residents of the community. File free taxes The term community generally refers to a geographical unit recognizable as a governmental subdivision, unit, or district thereof. File free taxes Whether a particular association meets the requirement of benefiting a community depends on the facts and circumstances of each case. File free taxes Even if an area represented by an association is not a community, the association can still qualify for exemption if its activities benefit a community. File free taxes   The association should submit evidence that areas such as roadways and park land that it owns and maintains are open to the general public and not just its own members. File free taxes It also must show that it does not engage in exterior maintenance of private homes. File free taxes   A homeowners' association that is not exempt under section 501(c)(4) and that is a condominium management association, a residential real estate management association, or a timeshare association generally can elect under the provisions of section 528 to receive certain tax benefits that, in effect, permit it to exclude its exempt function income from its gross income. File free taxes Other organizations. File free taxes   Other nonprofit organizations that qualify as social welfare organizations include: An organization operating an airport that is on land owned by a local government, which supervises the airport's operation, and that serves the general public in an area with no other airport, A community association that works to improve public services, housing, and residential parking; publishes a free community newspaper; sponsors a community sports league, holiday programs, and meetings; and contracts with a private security service to patrol the community, A community association devoted to preserving the community's traditions, architecture, and appearance by representing it before the local legislature and administrative agencies in zoning, traffic, and parking matters, An organization that tries to encourage industrial development and relieve unemployment in an area by making loans to businesses so they will relocate to the area, and An organization that holds an annual festival of regional customs and traditions. File free taxes 501(c)(5) - Labor, Agricultural and Horticultural Organizations If you are a member of an organization that wants to obtain recognition of exemption from federal income tax as a labor, agricultural, or horticultural organization, you should submit an application on Form 1024. File free taxes You must indicate in your application for exemption and accompanying statements that no part of the organization's net earnings will inure to the benefit of any member. File free taxes In addition, you should follow the procedure for obtaining recognition of exempt status described in chapter 1. File free taxes Submit any additional information that may be required, as described in this section. File free taxes Tax treatment of donations. File free taxes   Contributions to labor, agricultural, and horticultural organizations are not deductible as charitable contributions on the donor's federal income tax return. File free taxes However, such payments may be deductible as business expenses if they are ordinary and necessary in the conduct of the taxpayer's trade or business. File free taxes For more information about certain limits affecting the deductibility of these business expenses, see Deduction not allowed for dues used for political or legislative activities , under 501(c)(6) - Business Leagues, etc. File free taxes Labor Organizations A labor organization is an association of workers who have combined to protect and promote the interests of the members by bargaining collectively with their employers to secure better working conditions. File free taxes To show that your organization has the purpose of a labor organization, you should include in the articles of organization or accompanying statements (submitted with your exemption application) information establishing that the organization is organized to better the conditions of workers, improve the grade of their products, and develop a higher degree of efficiency in their respective occupations. File free taxes In addition, no net earnings of the organization can inure to the benefit of any member. File free taxes Composition of membership. File free taxes   While a labor organization generally is composed of employees or representatives of the employees (in the form of collective bargaining agents) and similar employee groups, evidence that an organization's membership consists mainly of workers does not in itself indicate an exempt purpose. File free taxes You must show in your application that your organization has the purposes described in the preceding paragraph. File free taxes These purposes can be accomplished by a single labor organization acting alone or by several organizations acting together through a separate organization. File free taxes Benefits to members. File free taxes   The payment by a labor organization of death, sick, accident, and similar benefits to its individual members with funds contributed by its members, if made under a plan to better the conditions of the members, does not preclude exemption as a labor organization. File free taxes However, an organization does not qualify for exemption as a labor organization if it has no authority to represent members in job-related matters, even if it provides weekly income to its members in the event of a lawful strike by the members' union, in return for an annual payment by the member. File free taxes   For more information on labor organizations, see Life Cycle of a Labor Organization at IRS. File free taxes gov. File free taxes Agricultural and Horticultural Organizations Agricultural and horticultural organizations are connected with raising livestock, forestry, cultivating land, raising and harvesting crops or aquatic resources, cultivating useful or ornamental plants, and similar pursuits. File free taxes For the purpose of these provisions, aquatic resources include only animal or vegetable life, but not mineral resources. File free taxes The term harvesting, in this case, includes fishing and related pursuits. File free taxes Agricultural organizations can be quasi-public in character and are often designed to encourage the development of better agricultural and horticultural products through a system of awards, using income from entry fees, gate receipts, and donations to meet the necessary expenses of upkeep and operation. File free taxes When the activities are directed toward the improvement of marketing or other business conditions in one or more lines of business, rather than the improvement of production techniques or the betterment of the conditions of persons engaged in agriculture, the organization must qualify for exemption as a business league, board of trade, or other organization, as discussed next in the section on 501(c)(6) organizations. File free taxes The primary purpose of exempt agricultural and horticultural organizations must be to better the conditions of those engaged in agriculture or horticulture, develop more efficiency in agriculture or horticulture, or improve the products. File free taxes The following list contains some examples of activities that show an agricultural or horticultural purpose. File free taxes Promoting various cooperative agricultural, horticultural, and civic activities among rural residents by a state, farm, or home bureau. File free taxes Exhibiting livestock, farm products, and other characteristic features of agriculture and horticulture. File free taxes Testing soil for members and nonmembers of the farm bureau on a cost basis, the results of the tests and other recommendations being furnished to the community members to educate them in soil treatment. File free taxes Guarding the purity of a specific breed of livestock. File free taxes Encouraging improvements in the production of fish on privately owned fish farms. File free taxes Negotiating with processors for the price to be paid to members for their crops. File free taxes For more information on agricultural or horticultural organizations, see Life Cycle of an Agricultural or Horticultural Organization at IRS. File free taxes gov. File free taxes 501(c)(6) - Business Leagues, etc. File free taxes If your association wants to apply for recognition of exemption from federal income tax as a nonprofit business league, chamber of commerce, real estate board, or board of trade, it should file Form 1024. File free taxes For a discussion of the procedure to follow, see chapter 1. File free taxes Your organization must indicate in its application form and attached statements that no part of its net earnings will inure to the benefit of any private shareholder or individual and that it is not organized for profit or organized to engage in an activity ordinarily carried on for profit (even if the business is operated on a cooperative basis or produces only sufficient income to be self-sustaining). File free taxes In addition, your organization must be primarily engaged in activities or functions that are the basis for its exemption. File free taxes It must be primarily supported by membership dues and other income from activities substantially related to its exempt purpose. File free taxes A business league, in general, is an association of persons having some common business interest, the purpose of which is to promote that common interest and not to engage in a regular business of a kind ordinarily carried on for profit. File free taxes Trade associations and professional associations are considered business leagues. File free taxes Chamber of commerce. File free taxes   A chamber of commerce usually is composed of the merchants and traders of a city. File free taxes Board of trade. File free taxes   A board of trade often consists of persons engaged in similar lines of business. File free taxes For example, a nonprofit organization formed to regulate the sale of a specified agricultural commodity to assure equal treatment of producers, warehouse workers, and buyers is a board of trade. File free taxes   Chambers of commerce and boards of trade usually promote the common economic interests of all the commercial enterprises in a given trade community. File free taxes Real estate board. File free taxes   A real estate board consists of members interested in improving the business conditions in the real estate field. File free taxes It is not organized for profit and no part of the net earnings inures to the benefit of any private shareholder or individual. File free taxes Professional football leagues. File free taxes   The Internal Revenue Code specifically defines professional football leagues as exempt organizations under section 501(c)(6). File free taxes They are exempt whether or not they administer a pension fund for football players. File free taxes General purpose. File free taxes   You must indicate in the material submitted with your application that your organization will be devoted to the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual persons. File free taxes It must be shown that the conditions of a particular trade or the interests of the community will be advanced. File free taxes Merely indicating the name of the organization or the object of the local statute under which it is created is not enough to demonstrate the required general purpose. File free taxes Line of business. File free taxes   This term generally refers either to an entire industry or to all components of an industry within a geographic area. File free taxes It does not include a group composed of businesses that market a particular brand within an industry. File free taxes Common business interest. File free taxes   A common business interest of all members of the organization must be established by the application documents. File free taxes Examples. File free taxes   Activities that would tend to illustrate a common business interest are: Promotion of higher business standards and better business methods and encouragement of uniformity and cooperation by a retail merchants association, Education of the public in the use of credit, Establishment of uniform casualty rates and compilation of statistical information by an insurance rating bureau operated by casualty insurance companies, Establishment and maintenance of the integrity of a local commercial market, Operation of a trade publication primarily intended to benefit an entire industry, and Encouragement of the use of goods and services of an entire industry (such as a lawyer referral service whose main purpose is to introduce individuals to the use of the legal profession in the hope that they will enter into lawyer-client relationships on a paying basis as a result). File free taxes Improvement of business conditions. File free taxes   Generally, this must be shown to be the purpose of the organization. File free taxes This is not established by evidence of particular services that provide a convenience or economy to individual members in their businesses, such as advertising that carries the name of members, interest-free loans, assigning exclusive franchise areas, operation of a real estate multiple listing system, or operation of a credit reporting agency. File free taxes Stock or commodity exchange. File free taxes   A stock or commodity exchange is not a business league, chamber of commerce, real estate board, or board of trade and is not exempt under section 501(c)(6). File free taxes Legislative activity. File free taxes   An organization that is exempt under section 501(c)(6) can work for the enactment of laws to advance the common business interests of the organization's members. File free taxes Deduction not allowed for dues used for political or legislative activities. File free taxes   A taxpayer cannot deduct the part of dues or other payments to a business league, trade association, labor union, or similar organization that is reported to the taxpayer by the organization as having been used for any of the following activities. File free taxes Influencing legislation. File free taxes Participating or intervening in a political campaign for, or against, any candidate for public office. File free taxes Trying to influence the general public, or part of the general public, with respect to elections, legislative matters, or referendums (also known as grass roots lobbying). File free taxes Communicating directly with certain executive branch officials to try to influence their official actions or positions. File free taxes See Dues Used for Lobbying or Political Activities under Required Disclosures in chapter 2 for more information. File free taxes Exception for local legislation. File free taxes   Members can deduct dues (or assessments) to an organization that are for expenses of: Appearing before, submitting statements to, or sending communications to members of a local council or similar governing body with respect to legislation or proposed legislation of direct interest to the member, or Communicating information between the member and the organization with respect to local legislation or proposed legislation of direct interest to the organization or the member. File free taxes Legislation or proposed legislation is of direct interest to a taxpayer if it will, or can reasonably be expected to, affect the taxpayer's trade or business. File free taxes De minimis exception. File free taxes   In-house expenditures of $2,000 or less for the year for activities (1) – (4) listed earlier will not prevent a deduction for dues if the dues meet all other tests to be deductible as a business expense. File free taxes Grass roots lobbying. File free taxes   A tax-exempt trade association, labor union, or similar organization is considered to be engaging in grass roots lobbying if it contacts prospective members or calls upon its own members to contact their employees and customers for the purpose of urging such persons to communicate with their elected state or Congressional representatives to support the promotion, defeat, or repeal of legislation that is of direct interest to the organization. File free taxes Any dues or assessments directly related to such activities are not deductible by the taxpayer, since the individuals being contacted, who are not members of the organization, are a segment of the general public. File free taxes Tax treatment of donations. File free taxes   Contributions to organizations described in this section are not deductible as charitable contributions on the donor's federal income tax return. File free taxes They may be deductible as trade or business expenses if ordinary and necessary in the conduct of the taxpayer's business. File free taxes   For more information on business leagues, see Life Cycle of a Business League (Trade Association) on IRS. File free taxes gov. File free taxes 501(c)(7) - Social and Recreation Clubs If your club is organized for pleasure, recreation, and other similar nonprofitable purposes and substantially all of its activities are for these purposes, it should file Form 1024 to apply for recognition of exemption from federal income tax. File free taxes In applying for recognition of exemption, you should submit the information described in this section. File free taxes Also see chapter 1 for the procedures to follow. File free taxes Typical organizations that should file for recognition of exemption as social clubs include: College alumni associations that are not described in chapter 3 under Alumni association , College fraternities or sororities operating chapter houses for students, Country clubs, Amateur hunting, fishing, tennis, swimming, and other sport clubs, Dinner clubs that provide a meeting place, library, and dining room for members, Hobby clubs, Garden clubs, and Variety clubs. File free taxes Discrimination prohibited. File free taxes   Your organization will not be recognized as tax exempt if its charter, bylaws, or other governing instrument, or any written policy statement provides for discrimination against any person on the basis of race, color, or religion. File free taxes   However, a club that in good faith limits its membership to the members of a particular religion to further the teachings or principles of that religion and not to exclude individuals of a particular race or color will not be considered as discriminating on the basis of religion. File free taxes Also, the restriction on religious discrimination does not apply to a club that is an auxiliary of a fraternal beneficiary society (discussed later) if that society is described in section 501(c)(8) and exempt from tax under section 501(a) and limits its membership to the members of a particular religion. File free taxes Private benefit prohibited. File free taxes   No part of the organization's net earnings can inure to the benefit of any person having a personal and private interest in the activities of the organization. File free taxes For purposes of this requirement, it is not necessary that net earnings be actually distributed. File free taxes Even undistributed earnings can benefit members. File free taxes Examples of this include a decrease in membership dues or an increase in the services the club provides to its members without a corresponding increase in dues or other fees paid for club support. File free taxes However, fixed-fee payments to members who bring new members into the club are not an inurement of the club's net earnings, if the payments are reasonable compensation for performance of a necessary administrative service. File free taxes Purposes. File free taxes   To show that your organization possesses the characteristics of a club within the meaning of the exemption law, you should submit evidence with your application that personal contact, commingling, and fellowship exist among members. File free taxes You must show that members are bound together by a common objective of pleasure, recreation, and other nonprofitable purposes. File free taxes   Fellowship need not be present between each member and every other member of a club if it is a material part in the life of the organization. File free taxes A statewide or nationwide organization that is made up of individual members, but is divided into local groups, satisfies this requirement if fellowship is a material part of the life of each local group. File free taxes   The term other nonprofitable purposes means other purposes similar to pleasure and recreation. File free taxes For example, a club that, in addition to its social activities, has a plan for the payment of sick and death benefits is not operating exclusively for pleasure, recreation, and other nonprofitable purposes. File free taxes Limited membership. File free taxes   The membership in a social club must be limited. File free taxes To show that your organization has a purpose that would characterize it as a club, you should submit evidence with your application that there are limits on admission to membership consistent with the character of the club. File free taxes   A social club that issues corporate membership is dealing with the general public in the form of the corporation's employees. File free taxes Corporate members of a club are not the kind of members contemplated by the law. File free taxes Gross receipts from these members would be a factor in determining whether the club qualifies as a social club. File free taxes See Gross receipts from nonmembership sources , later. File free taxes Bona fide individual memberships paid for by a corporation would not have an effect on the gross receipts source. File free taxes   The fact that a social club may have an associate (nonvoting) class of membership will not be, in and of itself, a cause for nonrecognition of exemption. File free taxes However, if one membership class pays substantially lower dues and fees than another membership class, although both classes enjoy the same rights and privileges in using the club facilities, there may be an inurement of income to the benefited class, resulting in a denial of the club's exemption. File free taxes Support. File free taxes   In general, your club should be supported solely by membership fees, dues, and assessments. File free taxes However, if otherwise entitled to exemption, your club will not be disqualified because it raises revenue from members through the use of club facilities or in connection with club activities. File free taxes Business activities. File free taxes   If your club will engage in business, such as selling real estate, timber, or other products or services, it generally will be denied exemption. File free taxes However, evidence submitted with your application form that your organization will provide meals, refreshments, or services related to its exempt purposes only to its own members or their dependents or guests will not cause denial of exemption. File free taxes Facilities open to public. File free taxes   Evidence that your club's facilities will be open to the general public (persons other than members or their dependents or guests) may cause denial of exemption. File free taxes This does not mean, however, that any dealing with outsiders will automatically deprive a club of exemption. File free taxes Gross receipts from nonmembership sources. File free taxes   A section 501(c)(7) organization can receive up to 35% of its gross receipts, including investment income, from sources outside of its membership without losing its tax-exempt status. File free taxes Income from nontraditional business activity with members is not exempt function income, and thus is included as income from sources outside of the membership. File free taxes Of the 35% gross receipts listed above, up to 15% of the gross receipts can be derived from the use of the club's facilities or services by the general public. File free taxes If an organization has outside income that is more than these limits, all the facts and circumstances will be taken into account in determining whether the organization qualifies for exempt status. File free taxes Gross receipts. File free taxes   Gross receipts, for this purpose, are receipts from the normal and usual (traditionally conducted) activities of the club. File free taxes These receipts include charges, admissions, membership fees, dues, assessments, investment income, and normal recurring capital gains on investments. File free taxes Receipts do not include initiation fees and capital contributions. File free taxes Unusual amounts of income, such as from the sale of a clubhouse or similar facility, are not included in gross receipts or in figuring the percentage limits. File free taxes Nontraditional activities. File free taxes   Activities conducted by a social club need to further its exempt purposes. File free taxes Traditional business activities are those that further a social club's exempt purposes. File free taxes Nontraditional business activities do not further the exempt purposes of a social club even if conducted solely on a membership basis. File free taxes Nontraditional business activities are prohibited (subject to an insubstantial, trivial, and nonrecurrent test) for businesses conducted with both members and nonmembers. File free taxes Examples of nontraditional business activities include sale of package liquor, take-out food, and long-term room rental. File free taxes Fraternity foundations. File free taxes   If your organization is a foundation formed for the exclusive purpose of acquiring and leasing a chapter house to a local fraternity chapter or sorority chapter maintained at an educational institution and does not engage in any social or recreational activities, it may be a title holding corporation (discussed later under section 501(c)(2) organizations and under section 501(c)(25) organizations) rather than a social club. File free taxes Tax treatment of donations. File free taxes   Donations to exempt social and recreation clubs are not deductible as charitable contributions on the donor's federal income tax return. File free taxes 501(c)(8) and 501(c)(10) - Fraternal Beneficiary Societies and Domestic Fraternal Societies This section describes the information to be provided upon application for recognition of exemption by two types of fraternal societies: beneficiary and domestic. File free taxes The major distinction is that fraternal beneficiary societies provide for the payment of life, sick, accident, or other benefits to their members or their dependents, while domestic fraternal societies do not provide these benefits but rather devote their earnings to fraternal, religious, charitable, etc. File free taxes , purposes. File free taxes The procedures to follow in applying for recognition of exemption are described in chapter 1. File free taxes If your organization is controlled by a central organization, you should check with your controlling organization to determine whether your unit has been included in a group exemption letter or can be added. File free taxes If so, your organization need not apply for individual recognition of exemption. File free taxes For more information, see Group Exemption Letter in chapter 1 of this publication. File free taxes Tax treatment of donations. File free taxes   Donations by an individual to a domestic fraternal beneficiary society or a domestic fraternal society operating under the lodge system are deductible as charitable contributions only if used exclusively for religious, charitable, scientific, literary, or educational purposes or for the prevention of cruelty to children or animals. File free taxes Fraternal Beneficiary Societies (501(c)(8)) A fraternal beneficiary society, order, or association must file an application for recognition of exemption from federal income tax on Form 1024. File free taxes The application and accompanying statements should establish that the organization: Is a fraternal organization, Operates under the lodge system or for the exclusive benefit of the members of a fraternal organization itself operating under the lodge system, and Provides for the payment of life, sick, accident, or other benefits to the members of the society, order, or association or their dependents. File free taxes Lodge system. File free taxes   Operating under the lodge system means carrying on activities under a form of organization that comprises local branches, chartered by a parent organization and largely self-governing, called lodges, chapters, or the like. File free taxes Payment of benefits. File free taxes   It is not essential that every member be covered by the society's program of sick, accident, or death benefits. File free taxes An organization can qualify for exemption if most of its members are eligible for benefits, and the benefits are paid from contributions or dues paid by those members. File free taxes   The benefits must be limited to members and their dependents. File free taxes If members will have the ability to confer benefits to other than themselves and their dependents, exemption will not be recognized. File free taxes Whole-life insurance. File free taxes   Whole-life insurance constitutes a life benefit under section 501(c)(8) even though the policy may contain investment features such as a cash surrender value or a policy loan. File free taxes Reinsurance pool. File free taxes   Payments by a fraternal beneficiary society into a state-sponsored reinsurance pool that protects participating insurers against excessive losses on major medical health and accident insurance will not preclude exemption as a fraternal beneficiary society. File free taxes Domestic Fraternal Societies (501(c)(10)) A domestic fraternal society, order, or association must file an application for recognition of exemption from federal income tax on Form 1024. File free taxes The application and accompanying statements should establish that the organization: Is a domestic fraternal organization organized in the U. File free taxes S. File free taxes , Operates under the lodge system, Devotes its net earnings exclusively to religious, charitable, scientific, literary, educational, and fraternal purposes, and Does not provide for the payment of life, sick, accident, or other benefits to its members. File free taxes The organization can arrange with insurance companies to provide optional insurance to its members without jeopardizing its exempt status. File free taxes 501(c)(4), 501(c)(9), and 501(c)(17) - Employees' Associations This section describes the information to be provided upon application for recognition of exemption by the following types of employees' associations: A voluntary employees' beneficiary association (including federal employees' associations) organized to pay life, sick, accident, and similar benefits to members or their dependents, or designated beneficiaries, if no part of the net earnings of the association inures to the benefit of any private shareholder or individual, and A supplemental unemployment benefit trust whose primary purpose is providing for payment of supplemental unemployment benefits. File free taxes Both the application form to file and the information to provide are discussed later under the section that describes your employee association. File free taxes Chapter 1 describes the procedures to follow in applying for exemption. File free taxes Tax treatment of donations. File free taxes   Donations to these organizations are not deductible as charitable contributions on the donor's federal income tax return. File free taxes Local Employees' Associations (501(c)(4)) A local association of employees whose membership is limited to employees of a designated person or persons in a particular municipality, and whose income will be devoted exclusively to charitable, educational, or recreational purposes. File free taxes A local employees' association must apply for recognition of exemption by filing Form 1024. File free taxes The organization must submit evidence that: It is of a purely local character, Its membership is limited to employees of a designated person or persons in a particular locality, and Its net earnings will be devoted exclusively to charitable, educational, or recreational purposes. File free taxes A local association of employees that has established a system of paying retirement or death benefits, or both, to its members will not qualify for exemption since the payment of these benefits is not considered as being for charitable, educational, or recreational purposes. File free taxes Similarly, a local association of employees that is operated primarily as a cooperative buying service for its members in order to obtain discount prices on merchandise, services, and activities does not qualify for exemption. File free taxes Voluntary Employees' Beneficiary Associations (501(c)(9)) An application for recognition of exemption as a voluntary employees' beneficiary association must be filed on Form 1024. File free taxes The material submitted with the application must show that your organization: Is a voluntary association of employees, Will provide for payment of life, sick, accident, or other benefits to members or their dependents or designated beneficiaries and substantially all of its operations are for this purpose, and Will not allow any of its net earnings to inure to the benefit of any private individual or shareholder except in the form of scheduled benefit payments. File free taxes To be complete, an application must include a copy of the document (such as the trust instrument) by which the organization was created; a full description of the benefits available to participants and the terms and conditions of eligibility for benefits (usually contained in a plan document); and, if providing benefits pursuant to a collective bargaining agreement, a copy of that agreement. File free taxes Note. File free taxes Under section 4976, the reversion of funds from a section 501(c)(9) organization to the employer who created the beneficiary association may subject the employer to a 100% penalty excise tax on the amount of the reversion. File free taxes Notice requirement. File free taxes   An organization will not be considered tax exempt under this section unless the organization gives notice to the IRS that it is applying for recognition of exempt status. File free taxes The organization gives notice by filing Form 1024. File free taxes If the notice is not given by 15 months after the end of the month in which the organization was created, the organization will not be exempt for any period before notice is given. File free taxes An extension of time for filing the notice can be granted under the same procedures as those described for section 501(c)(3) organizations in chapter 3 under Application for Recognition of Exemption . File free taxes Membership. File free taxes   Membership of a section 501(c)(9) organization must consist of individuals who are employees and have an employment-related common bond. File free taxes This common bond can be a common employer (or affiliated employers), coverage under one or more collective bargaining agreements, membership in a labor union, or membership in one or more locals of a national or international labor union. File free taxes   The membership of an association can include some individuals who are not employees, provided they have an employment-related bond with the employee-members. File free taxes For example, the owner of a business whose employees are members of the association can be a member. File free taxes An association will be considered composed of employees if 90% of its total membership on one day of each quarter of its tax year consists of employees. File free taxes Employees. File free taxes   Employees include individuals who became entitled to membership because they are or were employees. File free taxes For example, an individual will qualify as an employee even though the individual is on a leave of absence or has been terminated due to retirement, disability, or layoff. File free taxes   Generally, membership is voluntary if an affirmative act is required on the part of an employee to become a member. File free taxes Conversely, membership is involuntary if the designation as a member is due to employee status. File free taxes However, an association will be considered voluntary if employees are required to be members of the organization as a condition of their employment and they do not incur a detriment (such as a payroll deduction) as a result of their membership. File free taxes An employer has not imposed involuntary membership on the employee if membership is required as the result of a collective bargaining agreement or as an incident of membership in a labor organization. File free taxes Payment of benefits. File free taxes   The information submitted with your application must show that your organization will pay life, sick, accident, supplemental unemployment, or other similar benefits. File free taxes The benefits can be provided directly by your association or indirectly by your association through the payments of premiums to an insurance company (or fees to a medical clinic). File free taxes Benefits can be in the form of medical, clinical, or hospital services, transportation furnished for medical care, or money payments. File free taxes Nondiscrimination requirements. File free taxes   An organization that is part of a plan will not be exempt unless the plan meets certain nondiscrimination requirements. File free taxes However, if the organization is part of a plan that is a collective bargaining agreement that was the subject of good faith bargaining between employee organizations and employers, the plan need not meet these requirements for the organization to qualify as tax exempt. File free taxes   A plan meets the nondiscrimination requirements only if both of the following statements are true. File free taxes Each class of benefits under the plan is provided under a classification of employees that is set forth in the plan and does not discriminate in favor of employees who are highly compensated individuals. File free taxes The benefits provided under each class of benefits do not discriminate in favor of highly compensated individuals. File free taxes A life insurance, disability, severance pay, or supplemental unemployment compensation benefit does not discriminate in favor of highly compensated individuals merely because the benefits available bear a uniform relationship to the total compensation, or the basic or regular rate of compensation, of employees covered by the plan. File free taxes   For purposes of determining whether a plan meets the nondiscrimination requirements, the employer can elect to exclude all disability or severance payments payable to individuals who are in pay status as of January 1, 1985. File free taxes This will not apply to any increase in such payment by any plan amendment adopted after June 22, 1984. File free taxes   If a plan provides a benefit for which there is a nondiscrimination provision provided under Chapter 1 of the Internal Revenue Code as a condition of that benefit being excluded from gross income, these nondiscrimination requirements do not apply. File free taxes The benefit will be considered nondiscriminatory only if it meets the nondiscrimination provision of the applicable Code section. File free taxes For example, benefits provided under a medical reimbursement plan would meet the nondiscrimination requirements for an association, if the benefits meet the nondiscrimination requirements of section 105(h)(3) and 105(h)(4). File free taxes Excluded employees. File free taxes   Certain employees who are not covered by a plan can be excluded from consideration in applying these requirements. File free taxes These include employees: Who have not completed 3 years of service, Who have not attained age 21, Who are seasonal or less than half-time employees, Who are not in the plan and who are included in a unit of employees covered by a collective bargaining agreement if the class of benefits involved was the subject of good faith bargaining, or Who are nonresident aliens and who receive no earned income from the employer that has United States source income. File free taxes Highly compensated individual. File free taxes   A highly compensated individual is one who: Owned 5 percent or more of the employer at any time during the current year or the preceding year, Received more than $115,000 in compensation from the employer for the preceding year (the amount is annualized for inflation. File free taxes Go to IRS. File free taxes gov, and search “Pension Plan Limitation” for the year), and Was among the top 20% of employees by compensation for the preceding year. File free taxes However, the employer can choose not to have (3) apply. File free taxes Aggregation rules. File free taxes   The employer can choose to treat two or more plans as one plan for purposes of meeting the nondiscrimination requirements. File free taxes Employees of controlled groups of corporations, trades, or businesses under common control, or members of an affiliated service group, are treated as employees of a single employer. File free taxes Leased employees are treated as employees of the recipient. File free taxes One employee. File free taxes   A trust created to provide benefits to one employee will not qualify as a voluntary employees' beneficiary association under section 501(c)(9). File free taxes Supplemental Unemployment Benefit Trusts (501(c)(17)) A trust or trusts forming part of a written plan (established and maintained by an employer, his or her employees, or both) providing solely for the payment of supplemental unemployment compensation benefits must file the application for recognition of exemption on Form 1024. File free taxes The trust must be a valid, existing trust under local law and must be evidenced by an executed document. File free taxes A conformed copy of the plan of which the trust is a part should be attached to the application. File free taxes To be complete, an application must include a copy of the document (such as the trust instrument) by which the organization was created; a full description of the benefits available to participants and the terms and conditions of eligibility for benefits (usually contained in a plan document); and, if providing benefits pursuant to a collective bargaining agreement, a copy of that agreement. File free taxes Note. File free taxes Under section 4976, the reversion of funds from a section 501(c)(17) organization to the employer who created the supplemental unemployment benefit trust may subject the employer to a 100% penalty excise tax on the amount of the reversion. File free taxes Notice requirement. File free taxes   An organization will not be considered tax exempt under this section unless the organization gives notice to the IRS that it is applying for recognition of exempt status. File free taxes The organization gives notice by filing Form 1024. File free taxes If the notice is not given by 15 months after the end of the month in which the organization was created, the organization will not be exempt for any period before such notice is given. File free taxes An extension of time for filing the notice is granted under the same procedures as those described for section 501(c)(3) organizations in chapter 3 under Application for Recognition of Exemption . File free taxes Types of payments. File free taxes   You must show that the supplemental unemployment compensation benefits will be benefits paid to an employee because of the employee's involuntary separation from employment (whether or not the separation is temporary) resulting directly from a reduction-in-force, discontinuance of a plant or operation, or other similar conditions. File free taxes In addition, sickness and accident benefits (but not vacation, retirement, or death benefits) may be included in the plan if these are subordinate to the unemployment compensation benefits. File free taxes Diversion of funds. File free taxes   It must be impossible under the plan (at any time before the satisfaction of all liabilities with respect to employees under the plan) to use or to divert any of the corpus or income of the trust to any purpose other than the payment of supplemental unemployment compensation benefits (or sickness or accident benefits to the extent just explained). File free taxes Discrimination in benefits. File free taxes   Neither the terms of the plan nor the actual payment of benefits can be discriminatory in favor of the company's officers, stockholders, supervisors, or highly paid employees. File free taxes However, a plan is not discriminatory merely because benefits bear a uniform relationship to compensation or the rate of compensation. File free taxes Prohibited transactions and exemption. File free taxes   If your organization is a supplemental unemployment benefit trust and has received a denial of exemption because it engaged in a prohibited transaction, as defined by section 503(b), it can file a claim for exemption in any tax year following the tax year in which the notice of denial was issued. File free taxes It must file the claim on Form 1024. File free taxes The organization must include a written declaration that it will not knowingly again engage in a prohibited transaction. File free taxes An authorized principal officer of your organization must make this declaration under the penalties of perjury. File free taxes   If your organization has satisfied all requirements as a supplemental unemployment benefit trust described in section 501(c)(17), it will be notified in writing that it has been recognized as exempt. File free taxes However, the organization will be exempt only for those tax years after the tax year in which the claim for exemption (Form 1024) is filed. File free taxes Tax year in this case means the established annual accounting period of the organization or, if the organization has not established an annual accounting period, the calendar year. File free taxes For more information about the requirements for reestablishing an exemption previously denied, contact the IRS. File free taxes 501(c)(12) - Local Benevolent Life Insurance Associations, Mutual Irrigation and Telephone Companies, and Like Organizations Each of the following organizations apply for recognition of exemption from federal income tax by filing Form 1024. File free taxes Benevolent life insurance associations of a purely local character and like organizations. File free taxes Mutual ditch or irrigation companies and like organizations. File free taxes Mutual or cooperative telephone companies and like organizations. File free taxes A like organization is an organization that performs a service comparable to that performed by any one of the above organizations. File free taxes The information to be provided upon application by each of these organizations is described in this section. File free taxes For information as to the procedures to follow in applying for exemption, see chapter 1. File free taxes General requirements. File free taxes   These organizations must use their income solely to cover losses and expenses, with any excess being returned to members or retained to cover future losses and expenses. File free taxes They must collect at least 85% of their income from members for the sole purpose of meeting losses and expenses. File free taxes Mutual character. File free taxes   These organizations, other than benevolent life insurance associations, must be organized and operated on a mutual or cooperative basis. File free taxes They are associations of persons or organizations, or both, banded together to provide themselves a mutually desirable service approximately at cost and on a mutual basis. File free taxes To maintain the mutual characteristic of democratic ownership and control, they must be so organized and operated that their members have the right to choose the management, to receive services at cost, to receive a return of any excess of payments over losses and expenses, and to share in any assets upon dissolution. File free taxes   The rights and interests of members in the annual savings of the organization must be determined in proportion to their business with the organization. File free taxes Upon dissolution, gains from the sale of appreciated assets must be distributed to all persons who were members during the period the assets were owned by the organization in proportion to the amount of business done during that period. File free taxes The bylaws must not provide for forfeiture of a member's rights and interest upon withdrawal or termination. File free taxes Membership. File free taxes   Membership of a mutual organization consists of those who join the organization to obtain its services, and have a voice in its management. File free taxes In a stock company, the stockholders are members. File free taxes However, a mutual life insurance organization cannot have policyholders other than its members. File free taxes Losses and expenses. File free taxes   In furnishing services substantially at cost, an organization must use its income solely for paying losses and expenses. File free taxes Any excess income not retained in reasonable reserves for future losses and expenses belongs to members in proportion to their patronage or business done with the organization. File free taxes If such patronage refunds are retained in reasonable amounts for purposes of expanding and improving facilities, retiring capital indebtedness, acquiring other assets, and unexpected expenses, the organization must maintain records sufficient to reflect the equity of each member in the assets acquired with the funds. File free taxes Distributions of proceeds. File free taxes   The cooperative may distribute the unexpended balance of collections or assessments remaining on hand at the end of the year to members or patrons prorated on the basis of their patronage or business done with the cooperative. File free taxes Such distribution represents a refund in the costs of services rendered to the member. File free taxes The 85% Requirement All of the organizations listed above must submit evidence with their application that they receive 85% or more of their gross income from their members for the sole purpose of meeting losses and expenses. File free taxes Nevertheless, certain items of income are excluded from the computation of the 85% requirement if the organization is a mutual or cooperative telephone or electric company. File free taxes Mutual or cooperative telephone company. File free taxes   A mutual or cooperative telephone company will exclude from the computation of the 85% requirement any income received or accrued from: A nonmember telephone company for the performance of communication services involving the completion of long distance calls to, from, or between members of the mutual or cooperative telephone company, Qualified pole rentals, The sale of display listings in a directory furnished to its members, or The prepayment of a loan created in 1987, 1988, or 1989, under section 306A, 306B, or 311 of the Rural Electrification Act of 1936. File free taxes Mutual or cooperative electric company. File free taxes   A mutual or cooperative electric company will exclude from the computation of the 85% requirement any income received or accrued from: Qualified pole rentals, Any provision or sale of electric energy transmission services or ancillary service if the services are provided on a nondiscriminatory open access basis under an open access transmission tariff approved or accepted by the Federal Energy Regulatory Commission (FERC) or under an independent transmission provider agreement approved or accepted by FERC (other than income received or accrued directly or indirectly from a member), The provision or sale of electric energy distribution services or ancillary services if the services are provided on a nondiscriminatory open-access basis to distribute electric energy not owned by the mutual or electric cooperative company: To end-users who are served by distribution facilities not owned by the company or any of its members (other than income received or accrued directly or indirectly from a member), or Generated by a generation facility not owned or leased by the company or any of its members and which is directly connected to distribution facilities owned by the company or any of its members (other than income received or accrued directly or indirectly from a member), Any nuclear decommissioning transaction, or Any asset exchange or conversion transaction. File free taxes   An electric cooperative's sale of excess fuel at cost in the year of purchase is not income for purposes of determining compliance with the 85% requirement. File free taxes Qualified pole rental. File free taxes   The term qualified pole rental means any rental of a pole (or other structure used to support wires) if the pole (or other structure) is used: By the telephone or electric company to support one or more wires that are used by the company in providing telephone or electric services to its members, and Pursuant to the rental to support one or more wires (in addition to wires described in (1)) for use in connection with the transmission by wire of electricity or of telephone or other communications. File free taxes   The term rental, for this purpose, includes any sale of the right to use the pole (or other structure). File free taxes The 85% requirement is applied on the basis of an annual accounting period. File free taxes Failure of an organization to meet the requirement in a particular year precludes exemption for that year, but has no effect upon exemption for years in which the 85% requirement is met. File free taxes Gain from the sale or conversion of the organization's property is not considered an amount received from members in determining whether the organization's income consists of amounts collected from members. File free taxes Because the 85% income test is based on gross income, capital losses cannot be used to reduce capital gains for purposes of this test. File free taxes Example. File free taxes   The books of an organization reflect the following for the calendar year. File free taxes Collections from members $2,400 Short-term capital gains 600 Short-term capital losses 400 Other income None Gross income ($2,400 + $600 =$3000) 100% Collected from members ($2,400) 80%   Since amounts collected from members do not constitute at least 85% of gross income, the organization is not entitled to exemption from federal income tax for the year. File free taxes   Voluntary contributions in the nature of gifts are not taken into account for purposes of the 85% computation. File free taxes   Other tax-exempt income besides gifts is considered as income received from other than members in applying the 85% test. File free taxes   If the 85% test is not met, your organization, if classifiable under this section, will not qualify for exemption as any other type of organization described in this publication. File free taxes Tax treatment of donations. File free taxes   Donations to an organization described in this section are not deductible as charitable contributions on the donor's federal income tax return. File free taxes Local Life Insurance Associations A benevolent life insurance association or an organization seeking recognition of exemption on grounds of similarity to a benevolent life insurance association must submit evidence upon applying for recognition of exemption that it will be of a purely local character, that its excess funds will be refunded to members or retained in reasonable reserves to meet future losses and expenses, and that it meets the 85% income requirement. File free taxes If an organization issues policies for stipulated cash premiums, or if it requires advance deposits to cover the cost of the insurance and maintains investments from which more than 15% of its income is derived, it will not be entitled to exemption. File free taxes To establish that your organization is of a purely local character, it should show that its activities will be confined to a particular community, place, or district irrespective of political subdivisions. File free taxes If the activities of an organization are limited only by the borders of a state, it cannot be purely local in character. File free taxes A benevolent life insurance association that does not terminate membership when a member moves from the local area in which the association operates will qualify for exemption if it meets the other requirements. File free taxes A copy of each type of policy issued by your organization should be included with the application for recognition of exemption. File free taxes Organizations similar to local benevolent life insurance companies. File free taxes   These organizations include those that in addition to paying death benefits also provide for the payment of sick, accident, or health benefits. File free taxes However, an organization that pays only sick, accident, or health benefits, but not life insurance benefits, is not an organization similar to a benevolent life insurance association and should not apply for recognition of exemption as described in this section. File free taxes Burial and funeral benefit insurance organization. File free taxes   This type of organization can apply for recognition of exemption as an organization similar to a benevolent life insurance company if it establishes that the benefits are paid in cash and if it is not engaged directly in the manufacture of funeral supplies or the performance of funeral services. File free taxes An organization that provides its benefits in the form of supplies and service is not a life insurance company. File free taxes Such an organization can seek recognition of exemption from federal income tax, however, as a mutual insurance company other than life. File free taxes Mutual or Cooperative Associations Mutual ditch or irrigation companies, mutual or cooperative telephone companies, and like organizations need not establish that they are of a purely local character. File free taxes They can serve noncontiguous areas. File free taxes Like organization. File free taxes   A like organization is a cooperative or mutual organization that performs a service similar to mutual ditch, irrigation, telephone, or electric companies. File free taxes Examples include the following: cooperatives that provide protection of river banks to prevent erosion, water and sewer services, cable television, satellite, television, cellular phone services, two-way radio service, or natural gas services. File free taxes 501(c)(13) - Cemetery Companies If your organization wishes to obtain recognition of exemption from federal income tax as a cemetery company or a corporation chartered solely for the purpose of the disposal of human bodies by burial or cremation, it must file an application on Form 1024. File free taxes For the procedure to follow to file an application, see Application, Approval, and Appeal Procedures in chapter 1. File free taxes A nonprofit mutual cemetery company that seeks recognition of exemption should submit evidence with its application that it is owned and operated exclusively for the benefit of its lot owners who hold lots for bona fide burial purposes and not for purposes of resale. File free taxes A mutual cemetery company that also engages in charitable activities, such as the burial of paupers, will be regarded as operating within this standard. File free taxes The fact that a mutual cemetery company limits its membership to a particular class of individuals, such as members of a family, will not affect its status as mutual so long as all the other requirements of section 501(c)(13) are met. File free taxes If your organization is a nonprofit corporation chartered solely for the purpose of the disposal of human bodies by burial or cremation, you should show that it is not permitted by its charter to engage in any business not necessarily incident to that purpose. File free taxes Operating a mortuary is not permitted. File free taxes However, selling monuments, markers, vaults, and flowers solely for use in the cemetery is permitted if the profits from these sales are used to maintain the cemetery as a whole. File free taxes How income can be used. File free taxes   You should show that your organization's earnings are or will be used only in one or more of the following ways. File free taxes To pay the ordinary and necessary expenses of operating, maintaining, and improving the cemetery or crematorium. File free taxes To buy cemetery property. File free taxes To create a fund that will provide a source of income for the perpetual care of the cemetery or a reasonable reserve for any ordinary or necessary purpose. File free taxes No part of the net earnings of your organization can inure to the benefit of any private shareholder or individual. File free taxes Ordinary and necessary expenses in connection with the operation, management, maintenance, and improvement of the cemetery are permitted, as are reasonable fees for the services of a manager. File free taxes Buying cemetery property. File free taxes   Payments can be made to amortize debt incurred to buy land, but cannot be in the nature of profit distributions. File free taxes You must show the method used to finance the purchase of the cemetery property and that the purchase price of the land at the time of its sale to the cemetery was not unreasonable. File free taxes   Except for holders of preferred stock (discussed later), no person can have any interest in the net earnings of a tax-exempt cemetery company or crematorium. File free taxes Therefore, if property is transferred to the organization in exchange for an interest in the organization's net earnings, the organization will not