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Irs Form 1040ez Instructions

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Irs Form 1040ez Instructions

Irs form 1040ez instructions 4. Irs form 1040ez instructions   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. Irs form 1040ez instructions Line of business. Irs form 1040ez instructions Examples. Irs form 1040ez instructions Improvement of business conditions. Irs form 1040ez instructions Exception for local legislation. Irs form 1040ez instructions De minimis exception. Irs form 1040ez instructions Grass roots lobbying. Irs form 1040ez instructions 501(c)(7) - Social and Recreation ClubsLimited membership. Irs form 1040ez instructions Support. Irs form 1040ez instructions Facilities open to public. Irs form 1040ez instructions Gross receipts from nonmembership sources. Irs form 1040ez instructions Gross receipts. Irs form 1040ez instructions Nontraditional activities. Irs form 1040ez instructions 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. Irs form 1040ez instructions Losses and expenses. Irs form 1040ez instructions Distributions of proceeds. Irs form 1040ez instructions The 85% Requirement Local Life Insurance Associations Mutual or Cooperative Associations 501(c)(13) - Cemetery CompaniesBuying cemetery property. Irs form 1040ez instructions Perpetual care organization. Irs form 1040ez instructions Care of individual plots. Irs form 1040ez instructions 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. Irs form 1040ez instructions 501(c)(2) - Title-Holding Corporations for Single Parent CorporationsExpenses. Irs form 1040ez instructions Waiver of payment of income. Irs form 1040ez instructions 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). Irs form 1040ez instructions Section 501(c)(3) organizations are covered in chapter 3 of this publication. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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). Irs form 1040ez instructions The discussion that follows describes the information you must provide when applying. Irs form 1040ez instructions For application procedures, see chapter 1. Irs form 1040ez instructions To qualify for exemption under section 501(c)(4), the organization's net earnings must be devoted primarily to charitable, educational, or recreational purposes. Irs form 1040ez instructions In addition, no part of the organization's net earnings can inure to the benefit of any private shareholder or individual. Irs form 1040ez instructions If the organization provides an excess benefit to certain persons, an excise tax may be imposed. Irs form 1040ez instructions See Excise tax on excess benefit transactions , under Excess Benefit Transactions in chapter 5 for more information about this tax. Irs form 1040ez instructions Examples. Irs form 1040ez instructions   Types of organizations that are considered to be social welfare organizations are civic associations and volunteer fire companies. Irs form 1040ez instructions Nonprofit operation. Irs form 1040ez instructions   You must submit evidence that your organization is organized and will be operated on a nonprofit basis. Irs form 1040ez instructions 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. Irs form 1040ez instructions Social welfare. Irs form 1040ez instructions   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). Irs form 1040ez instructions   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. Irs form 1040ez instructions It therefore does not qualify as a section 501(c)(4) organization. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Political activity. Irs form 1040ez instructions   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. Irs form 1040ez instructions 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. Irs form 1040ez instructions See the discussion in chapter 2 under Political Organization Income Tax Return . Irs form 1040ez instructions Social or recreational activity. Irs form 1040ez instructions   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). Irs form 1040ez instructions Retirement benefit program. Irs form 1040ez instructions   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. Irs form 1040ez instructions It may qualify under another paragraph of section 501(c) depending on all the facts. Irs form 1040ez instructions   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). Irs form 1040ez instructions Tax treatment of donations. Irs form 1040ez instructions   Donations to volunteer fire companies are deductible on the donor's federal income tax return, but only if made for exclusively public purposes. Irs form 1040ez instructions Contributions to civic leagues or other section 501(c)(4) organizations generally are not deductible as charitable contributions for federal income tax purposes. Irs form 1040ez instructions They may be deductible as trade or business expenses, if ordinary and necessary in the conduct of the taxpayer's business. Irs form 1040ez instructions However, see Deduction not allowed for dues used for political or legislative activities , under 501(c)(6) - Business Leagues, etc. Irs form 1040ez instructions for more information. Irs form 1040ez instructions For more information on social welfare organizations, see Life Cycle of a Social Welfare Organization at IRS. Irs form 1040ez instructions gov. Irs form 1040ez instructions 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. Irs form 1040ez instructions Volunteer fire companies. Irs form 1040ez instructions   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. Irs form 1040ez instructions   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). Irs form 1040ez instructions In this event, your organization should file Form 1023. Irs form 1040ez instructions Homeowners' associations. Irs form 1040ez instructions   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. Irs form 1040ez instructions The term community generally refers to a geographical unit recognizable as a governmental subdivision, unit, or district thereof. Irs form 1040ez instructions Whether a particular association meets the requirement of benefiting a community depends on the facts and circumstances of each case. Irs form 1040ez instructions 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. Irs form 1040ez instructions   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. Irs form 1040ez instructions It also must show that it does not engage in exterior maintenance of private homes. Irs form 1040ez instructions   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. Irs form 1040ez instructions Other organizations. Irs form 1040ez instructions   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. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions In addition, you should follow the procedure for obtaining recognition of exempt status described in chapter 1. Irs form 1040ez instructions Submit any additional information that may be required, as described in this section. Irs form 1040ez instructions Tax treatment of donations. Irs form 1040ez instructions   Contributions to labor, agricultural, and horticultural organizations are not deductible as charitable contributions on the donor's federal income tax return. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions In addition, no net earnings of the organization can inure to the benefit of any member. Irs form 1040ez instructions Composition of membership. Irs form 1040ez instructions   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. Irs form 1040ez instructions You must show in your application that your organization has the purposes described in the preceding paragraph. Irs form 1040ez instructions These purposes can be accomplished by a single labor organization acting alone or by several organizations acting together through a separate organization. Irs form 1040ez instructions Benefits to members. Irs form 1040ez instructions   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. Irs form 1040ez instructions 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. Irs form 1040ez instructions   For more information on labor organizations, see Life Cycle of a Labor Organization at IRS. Irs form 1040ez instructions gov. Irs form 1040ez instructions 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. Irs form 1040ez instructions For the purpose of these provisions, aquatic resources include only animal or vegetable life, but not mineral resources. Irs form 1040ez instructions The term harvesting, in this case, includes fishing and related pursuits. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions The following list contains some examples of activities that show an agricultural or horticultural purpose. Irs form 1040ez instructions Promoting various cooperative agricultural, horticultural, and civic activities among rural residents by a state, farm, or home bureau. Irs form 1040ez instructions Exhibiting livestock, farm products, and other characteristic features of agriculture and horticulture. Irs form 1040ez instructions 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. Irs form 1040ez instructions Guarding the purity of a specific breed of livestock. Irs form 1040ez instructions Encouraging improvements in the production of fish on privately owned fish farms. Irs form 1040ez instructions Negotiating with processors for the price to be paid to members for their crops. Irs form 1040ez instructions For more information on agricultural or horticultural organizations, see Life Cycle of an Agricultural or Horticultural Organization at IRS. Irs form 1040ez instructions gov. Irs form 1040ez instructions 501(c)(6) - Business Leagues, etc. Irs form 1040ez instructions 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. Irs form 1040ez instructions For a discussion of the procedure to follow, see chapter 1. Irs form 1040ez instructions 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). Irs form 1040ez instructions In addition, your organization must be primarily engaged in activities or functions that are the basis for its exemption. Irs form 1040ez instructions It must be primarily supported by membership dues and other income from activities substantially related to its exempt purpose. Irs form 1040ez instructions 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. Irs form 1040ez instructions Trade associations and professional associations are considered business leagues. Irs form 1040ez instructions Chamber of commerce. Irs form 1040ez instructions   A chamber of commerce usually is composed of the merchants and traders of a city. Irs form 1040ez instructions Board of trade. Irs form 1040ez instructions   A board of trade often consists of persons engaged in similar lines of business. Irs form 1040ez instructions 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. Irs form 1040ez instructions   Chambers of commerce and boards of trade usually promote the common economic interests of all the commercial enterprises in a given trade community. Irs form 1040ez instructions Real estate board. Irs form 1040ez instructions   A real estate board consists of members interested in improving the business conditions in the real estate field. Irs form 1040ez instructions It is not organized for profit and no part of the net earnings inures to the benefit of any private shareholder or individual. Irs form 1040ez instructions Professional football leagues. Irs form 1040ez instructions   The Internal Revenue Code specifically defines professional football leagues as exempt organizations under section 501(c)(6). Irs form 1040ez instructions They are exempt whether or not they administer a pension fund for football players. Irs form 1040ez instructions General purpose. Irs form 1040ez instructions   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. Irs form 1040ez instructions It must be shown that the conditions of a particular trade or the interests of the community will be advanced. Irs form 1040ez instructions 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. Irs form 1040ez instructions Line of business. Irs form 1040ez instructions   This term generally refers either to an entire industry or to all components of an industry within a geographic area. Irs form 1040ez instructions It does not include a group composed of businesses that market a particular brand within an industry. Irs form 1040ez instructions Common business interest. Irs form 1040ez instructions   A common business interest of all members of the organization must be established by the application documents. Irs form 1040ez instructions Examples. Irs form 1040ez instructions   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). Irs form 1040ez instructions Improvement of business conditions. Irs form 1040ez instructions   Generally, this must be shown to be the purpose of the organization. Irs form 1040ez instructions 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. Irs form 1040ez instructions Stock or commodity exchange. Irs form 1040ez instructions   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). Irs form 1040ez instructions Legislative activity. Irs form 1040ez instructions   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. Irs form 1040ez instructions Deduction not allowed for dues used for political or legislative activities. Irs form 1040ez instructions   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. Irs form 1040ez instructions Influencing legislation. Irs form 1040ez instructions Participating or intervening in a political campaign for, or against, any candidate for public office. Irs form 1040ez instructions 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). Irs form 1040ez instructions Communicating directly with certain executive branch officials to try to influence their official actions or positions. Irs form 1040ez instructions See Dues Used for Lobbying or Political Activities under Required Disclosures in chapter 2 for more information. Irs form 1040ez instructions Exception for local legislation. Irs form 1040ez instructions   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. Irs form 1040ez instructions 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. Irs form 1040ez instructions De minimis exception. Irs form 1040ez instructions   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. Irs form 1040ez instructions Grass roots lobbying. Irs form 1040ez instructions   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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Tax treatment of donations. Irs form 1040ez instructions   Contributions to organizations described in this section are not deductible as charitable contributions on the donor's federal income tax return. Irs form 1040ez instructions They may be deductible as trade or business expenses if ordinary and necessary in the conduct of the taxpayer's business. Irs form 1040ez instructions   For more information on business leagues, see Life Cycle of a Business League (Trade Association) on IRS. Irs form 1040ez instructions gov. Irs form 1040ez instructions 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. Irs form 1040ez instructions In applying for recognition of exemption, you should submit the information described in this section. Irs form 1040ez instructions Also see chapter 1 for the procedures to follow. Irs form 1040ez instructions 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. Irs form 1040ez instructions Discrimination prohibited. Irs form 1040ez instructions   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. Irs form 1040ez instructions   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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Private benefit prohibited. Irs form 1040ez instructions   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. Irs form 1040ez instructions For purposes of this requirement, it is not necessary that net earnings be actually distributed. Irs form 1040ez instructions Even undistributed earnings can benefit members. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Purposes. Irs form 1040ez instructions   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. Irs form 1040ez instructions You must show that members are bound together by a common objective of pleasure, recreation, and other nonprofitable purposes. Irs form 1040ez instructions   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. Irs form 1040ez instructions 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. Irs form 1040ez instructions   The term other nonprofitable purposes means other purposes similar to pleasure and recreation. Irs form 1040ez instructions 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. Irs form 1040ez instructions Limited membership. Irs form 1040ez instructions   The membership in a social club must be limited. Irs form 1040ez instructions 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. Irs form 1040ez instructions   A social club that issues corporate membership is dealing with the general public in the form of the corporation's employees. Irs form 1040ez instructions Corporate members of a club are not the kind of members contemplated by the law. Irs form 1040ez instructions Gross receipts from these members would be a factor in determining whether the club qualifies as a social club. Irs form 1040ez instructions See Gross receipts from nonmembership sources , later. Irs form 1040ez instructions Bona fide individual memberships paid for by a corporation would not have an effect on the gross receipts source. Irs form 1040ez instructions   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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Support. Irs form 1040ez instructions   In general, your club should be supported solely by membership fees, dues, and assessments. Irs form 1040ez instructions 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. Irs form 1040ez instructions Business activities. Irs form 1040ez instructions   If your club will engage in business, such as selling real estate, timber, or other products or services, it generally will be denied exemption. Irs form 1040ez instructions 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. Irs form 1040ez instructions Facilities open to public. Irs form 1040ez instructions   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. Irs form 1040ez instructions This does not mean, however, that any dealing with outsiders will automatically deprive a club of exemption. Irs form 1040ez instructions Gross receipts from nonmembership sources. Irs form 1040ez instructions   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. Irs form 1040ez instructions Income from nontraditional business activity with members is not exempt function income, and thus is included as income from sources outside of the membership. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Gross receipts. Irs form 1040ez instructions   Gross receipts, for this purpose, are receipts from the normal and usual (traditionally conducted) activities of the club. Irs form 1040ez instructions These receipts include charges, admissions, membership fees, dues, assessments, investment income, and normal recurring capital gains on investments. Irs form 1040ez instructions Receipts do not include initiation fees and capital contributions. Irs form 1040ez instructions 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. Irs form 1040ez instructions Nontraditional activities. Irs form 1040ez instructions   Activities conducted by a social club need to further its exempt purposes. Irs form 1040ez instructions Traditional business activities are those that further a social club's exempt purposes. Irs form 1040ez instructions Nontraditional business activities do not further the exempt purposes of a social club even if conducted solely on a membership basis. Irs form 1040ez instructions Nontraditional business activities are prohibited (subject to an insubstantial, trivial, and nonrecurrent test) for businesses conducted with both members and nonmembers. Irs form 1040ez instructions Examples of nontraditional business activities include sale of package liquor, take-out food, and long-term room rental. Irs form 1040ez instructions Fraternity foundations. Irs form 1040ez instructions   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. Irs form 1040ez instructions Tax treatment of donations. Irs form 1040ez instructions   Donations to exempt social and recreation clubs are not deductible as charitable contributions on the donor's federal income tax return. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions , purposes. Irs form 1040ez instructions The procedures to follow in applying for recognition of exemption are described in chapter 1. Irs form 1040ez instructions 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. Irs form 1040ez instructions If so, your organization need not apply for individual recognition of exemption. Irs form 1040ez instructions For more information, see Group Exemption Letter in chapter 1 of this publication. Irs form 1040ez instructions Tax treatment of donations. Irs form 1040ez instructions   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. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Lodge system. Irs form 1040ez instructions   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. Irs form 1040ez instructions Payment of benefits. Irs form 1040ez instructions   It is not essential that every member be covered by the society's program of sick, accident, or death benefits. Irs form 1040ez instructions 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. Irs form 1040ez instructions   The benefits must be limited to members and their dependents. Irs form 1040ez instructions If members will have the ability to confer benefits to other than themselves and their dependents, exemption will not be recognized. Irs form 1040ez instructions Whole-life insurance. Irs form 1040ez instructions   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. Irs form 1040ez instructions Reinsurance pool. Irs form 1040ez instructions   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. Irs form 1040ez instructions 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. Irs form 1040ez instructions The application and accompanying statements should establish that the organization: Is a domestic fraternal organization organized in the U. Irs form 1040ez instructions S. Irs form 1040ez instructions , 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. Irs form 1040ez instructions The organization can arrange with insurance companies to provide optional insurance to its members without jeopardizing its exempt status. Irs form 1040ez instructions 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. Irs form 1040ez instructions Both the application form to file and the information to provide are discussed later under the section that describes your employee association. Irs form 1040ez instructions Chapter 1 describes the procedures to follow in applying for exemption. Irs form 1040ez instructions Tax treatment of donations. Irs form 1040ez instructions   Donations to these organizations are not deductible as charitable contributions on the donor's federal income tax return. Irs form 1040ez instructions 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. Irs form 1040ez instructions A local employees' association must apply for recognition of exemption by filing Form 1024. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Note. Irs form 1040ez instructions 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. Irs form 1040ez instructions Notice requirement. Irs form 1040ez instructions   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. Irs form 1040ez instructions The organization gives notice by filing Form 1024. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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 . Irs form 1040ez instructions Membership. Irs form 1040ez instructions   Membership of a section 501(c)(9) organization must consist of individuals who are employees and have an employment-related common bond. Irs form 1040ez instructions 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. Irs form 1040ez instructions   The membership of an association can include some individuals who are not employees, provided they have an employment-related bond with the employee-members. Irs form 1040ez instructions For example, the owner of a business whose employees are members of the association can be a member. Irs form 1040ez instructions 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. Irs form 1040ez instructions Employees. Irs form 1040ez instructions   Employees include individuals who became entitled to membership because they are or were employees. Irs form 1040ez instructions 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. Irs form 1040ez instructions   Generally, membership is voluntary if an affirmative act is required on the part of an employee to become a member. Irs form 1040ez instructions Conversely, membership is involuntary if the designation as a member is due to employee status. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Payment of benefits. Irs form 1040ez instructions   The information submitted with your application must show that your organization will pay life, sick, accident, supplemental unemployment, or other similar benefits. Irs form 1040ez instructions 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). Irs form 1040ez instructions Benefits can be in the form of medical, clinical, or hospital services, transportation furnished for medical care, or money payments. Irs form 1040ez instructions Nondiscrimination requirements. Irs form 1040ez instructions   An organization that is part of a plan will not be exempt unless the plan meets certain nondiscrimination requirements. Irs form 1040ez instructions 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. Irs form 1040ez instructions   A plan meets the nondiscrimination requirements only if both of the following statements are true. Irs form 1040ez instructions 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. Irs form 1040ez instructions The benefits provided under each class of benefits do not discriminate in favor of highly compensated individuals. Irs form 1040ez instructions 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. Irs form 1040ez instructions   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. Irs form 1040ez instructions This will not apply to any increase in such payment by any plan amendment adopted after June 22, 1984. Irs form 1040ez instructions   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. Irs form 1040ez instructions The benefit will be considered nondiscriminatory only if it meets the nondiscrimination provision of the applicable Code section. Irs form 1040ez instructions 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). Irs form 1040ez instructions Excluded employees. Irs form 1040ez instructions   Certain employees who are not covered by a plan can be excluded from consideration in applying these requirements. Irs form 1040ez instructions 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. Irs form 1040ez instructions Highly compensated individual. Irs form 1040ez instructions   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. Irs form 1040ez instructions Go to IRS. Irs form 1040ez instructions gov, and search “Pension Plan Limitation” for the year), and Was among the top 20% of employees by compensation for the preceding year. Irs form 1040ez instructions However, the employer can choose not to have (3) apply. Irs form 1040ez instructions Aggregation rules. Irs form 1040ez instructions   The employer can choose to treat two or more plans as one plan for purposes of meeting the nondiscrimination requirements. Irs form 1040ez instructions 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. Irs form 1040ez instructions Leased employees are treated as employees of the recipient. Irs form 1040ez instructions One employee. Irs form 1040ez instructions   A trust created to provide benefits to one employee will not qualify as a voluntary employees' beneficiary association under section 501(c)(9). Irs form 1040ez instructions 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. Irs form 1040ez instructions The trust must be a valid, existing trust under local law and must be evidenced by an executed document. Irs form 1040ez instructions A conformed copy of the plan of which the trust is a part should be attached to the application. Irs form 1040ez instructions 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. Irs form 1040ez instructions Note. Irs form 1040ez instructions 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. Irs form 1040ez instructions Notice requirement. Irs form 1040ez instructions   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. Irs form 1040ez instructions The organization gives notice by filing Form 1024. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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 . Irs form 1040ez instructions Types of payments. Irs form 1040ez instructions   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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Diversion of funds. Irs form 1040ez instructions   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). Irs form 1040ez instructions Discrimination in benefits. Irs form 1040ez instructions   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. Irs form 1040ez instructions However, a plan is not discriminatory merely because benefits bear a uniform relationship to compensation or the rate of compensation. Irs form 1040ez instructions Prohibited transactions and exemption. Irs form 1040ez instructions   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. Irs form 1040ez instructions It must file the claim on Form 1024. Irs form 1040ez instructions The organization must include a written declaration that it will not knowingly again engage in a prohibited transaction. Irs form 1040ez instructions An authorized principal officer of your organization must make this declaration under the penalties of perjury. Irs form 1040ez instructions   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. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions For more information about the requirements for reestablishing an exemption previously denied, contact the IRS. Irs form 1040ez instructions 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. Irs form 1040ez instructions Benevolent life insurance associations of a purely local character and like organizations. Irs form 1040ez instructions Mutual ditch or irrigation companies and like organizations. Irs form 1040ez instructions Mutual or cooperative telephone companies and like organizations. Irs form 1040ez instructions A like organization is an organization that performs a service comparable to that performed by any one of the above organizations. Irs form 1040ez instructions The information to be provided upon application by each of these organizations is described in this section. Irs form 1040ez instructions For information as to the procedures to follow in applying for exemption, see chapter 1. Irs form 1040ez instructions General requirements. Irs form 1040ez instructions   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. Irs form 1040ez instructions They must collect at least 85% of their income from members for the sole purpose of meeting losses and expenses. Irs form 1040ez instructions Mutual character. Irs form 1040ez instructions   These organizations, other than benevolent life insurance associations, must be organized and operated on a mutual or cooperative basis. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions   The rights and interests of members in the annual savings of the organization must be determined in proportion to their business with the organization. Irs form 1040ez instructions 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. Irs form 1040ez instructions The bylaws must not provide for forfeiture of a member's rights and interest upon withdrawal or termination. Irs form 1040ez instructions Membership. Irs form 1040ez instructions   Membership of a mutual organization consists of those who join the organization to obtain its services, and have a voice in its management. Irs form 1040ez instructions In a stock company, the stockholders are members. Irs form 1040ez instructions However, a mutual life insurance organization cannot have policyholders other than its members. Irs form 1040ez instructions Losses and expenses. Irs form 1040ez instructions   In furnishing services substantially at cost, an organization must use its income solely for paying losses and expenses. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Distributions of proceeds. Irs form 1040ez instructions   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. Irs form 1040ez instructions Such distribution represents a refund in the costs of services rendered to the member. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Mutual or cooperative telephone company. Irs form 1040ez instructions   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. Irs form 1040ez instructions Mutual or cooperative electric company. Irs form 1040ez instructions   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. Irs form 1040ez instructions   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. Irs form 1040ez instructions Qualified pole rental. Irs form 1040ez instructions   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. Irs form 1040ez instructions   The term rental, for this purpose, includes any sale of the right to use the pole (or other structure). Irs form 1040ez instructions The 85% requirement is applied on the basis of an annual accounting period. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Because the 85% income test is based on gross income, capital losses cannot be used to reduce capital gains for purposes of this test. Irs form 1040ez instructions Example. Irs form 1040ez instructions   The books of an organization reflect the following for the calendar year. Irs form 1040ez instructions 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. Irs form 1040ez instructions   Voluntary contributions in the nature of gifts are not taken into account for purposes of the 85% computation. Irs form 1040ez instructions   Other tax-exempt income besides gifts is considered as income received from other than members in applying the 85% test. Irs form 1040ez instructions   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. Irs form 1040ez instructions Tax treatment of donations. Irs form 1040ez instructions   Donations to an organization described in this section are not deductible as charitable contributions on the donor's federal income tax return. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions If the activities of an organization are limited only by the borders of a state, it cannot be purely local in character. Irs form 1040ez instructions 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. Irs form 1040ez instructions A copy of each type of policy issued by your organization should be included with the application for recognition of exemption. Irs form 1040ez instructions Organizations similar to local benevolent life insurance companies. Irs form 1040ez instructions   These organizations include those that in addition to paying death benefits also provide for the payment of sick, accident, or health benefits. Irs form 1040ez instructions 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. Irs form 1040ez instructions Burial and funeral benefit insurance organization. Irs form 1040ez instructions   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. Irs form 1040ez instructions An organization that provides its benefits in the form of supplies and service is not a life insurance company. Irs form 1040ez instructions Such an organization can seek recognition of exemption from federal income tax, however, as a mutual insurance company other than life. Irs form 1040ez instructions 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. Irs form 1040ez instructions They can serve noncontiguous areas. Irs form 1040ez instructions Like organization. Irs form 1040ez instructions   A like organization is a cooperative or mutual organization that performs a service similar to mutual ditch, irrigation, telephone, or electric companies. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions For the procedure to follow to file an application, see Application, Approval, and Appeal Procedures in chapter 1. Irs form 1040ez instructions 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. Irs form 1040ez instructions A mutual cemetery company that also engages in charitable activities, such as the burial of paupers, will be regarded as operating within this standard. Irs form 1040ez instructions 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. Irs form 1040ez instructions 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. Irs form 1040ez instructions Operating a mortuary is not permitted. Irs form 1040ez instructions 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. Irs form 1040ez instructions How income can be used. Irs form 1040ez instructions   You should show that your organization's earnings are or will be used only in one or more of the following ways. Irs form 1040ez instructions To pay the ordinary and necessary expenses of operating, maintaining, and improving the cemetery or crematorium. Irs form 1040ez instructions To buy cemetery property. Irs form 1040ez instructions 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. Irs form 1040ez instructions No part of the net earnings of your organization can inure to the benefit of any private shareholder or individual. Irs form 1040ez instructions 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. Irs form 1040ez instructions Buying cemetery property. Irs form 1040ez instructions   Payments can be made to amortize debt incurred to buy land, but cannot be in the nature of profit distributions. Irs form 1040ez instructions 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. Irs form 1040ez instructions   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. Irs form 1040ez instructions Therefore, if property is transferred to the organization in exchange for an interest in the organization's net earnings, the organization will not
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Stakeholder Liaison Local Contacts

Stakeholder Liaison establishes relationships with practitioner and industry organizations representing small business and self-employed taxpayers. We provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. We also elevate issues that affect tax administration. To establish a relationship with us or report an issue, use this list to find a contact in your state.

Please note, the contacts on this page are intended for practitioner and industry stakeholders, not to respond to tax law questions. For tax law questions, please refer to the “Help and Resources” tab on the irs.gov home page.

Stakeholder Liaison Area Phone Email
Mid-Atlantic - PA, NJ, DE, WV, CT, ME, VT, RI (412) 395-5243 cassandra.l.hellmann@irs.gov
New York - NY, MA, NH (212) 436-1638 sbse.sl.newyork@irs.gov
Great Lakes - IN, MI, OH (216) 522-2563 sbse.sl.great.lakes@irs.gov
Midwest - MN, MT, WI, ND, SD, IA (651) 312-7836 betty.l.mueller@irs.gov
Southwest - AZ, TX, NM (513) 263-4092 sl.southwest@irs.gov
Central - IL, MO, KS, NE, OK (412) 395-5243 cassandra.l.hellmann@irs.gov
Mid-South - KY, TN, AL, MS, AR, LA (405) 297-4045 patricia.y.wright@irs.gov
Southeast - FL, GA, PR (954) 423-7686 cheri.kirsch@irs.gov
South Atlantic - MD, VA, NC, SC, DC (336) 574-6311 terza.d.lowdermilk@irs.gov
Northwest - AK, CO, WA, OR, UT, ID, WY (206) 220-5300 sl.northwest@irs.gov
Western - CA, HI, NV (510) 637-4541 sbse.sl.western.area@irs.gov

 

Please feel free to download and print Stakeholder Liaison Local Contacts list. (PDF)

Page Last Reviewed or Updated: 30-Aug-2013

The Irs Form 1040ez Instructions

Irs form 1040ez instructions Index A Acquisition indebtedness, Average acquisition indebtedness. Irs form 1040ez instructions Annuity obligations, Annuity obligation. Irs form 1040ez instructions By gift or bequest of mortgaged property, Exception for property acquired by gift, bequest, or devise. Irs form 1040ez instructions Change in property use, Change in use of property. Irs form 1040ez instructions Continued debt, Continued debt. Irs form 1040ez instructions Debt modifying existing, Modifying existing debt. Irs form 1040ez instructions Federal financing, Certain federal financing. Irs form 1040ez instructions For performing exempt purpose, Debt incurred in performing exempt purpose. Irs form 1040ez instructions Obligation to return collateral, Securities loans. Irs form 1040ez instructions Property subject to mortgage or lien, Property acquired subject to mortgage or lien. Irs form 1040ez instructions Real property, Real property debts of qualified organizations. Irs form 1040ez instructions Advertising income, Exploitation of Exempt Activity—Advertising Sales Agricultural organization dues, Dues of Agricultural Organizations and Business Leagues Assistance (see Tax help) B Business league dues, Dues of Agricultural Organizations and Business Leagues C Churches, Churches. Irs form 1040ez instructions Contributions deduction, Charitable contributions deduction. Irs form 1040ez instructions Convention or trade show activity, Convention or trade show activity. Irs form 1040ez instructions D Debt-financed property, Income From Debt-Financed Property Acquired in liquidation, Basis for debt-financed property acquired in corporate liquidation. Irs form 1040ez instructions Dues, agricultural organizations and business leagues, Dues of Agricultural Organizations and Business Leagues E Exchange or rental of member lists, Exchange or rental of member lists. Irs form 1040ez instructions Excluded trade or business activities, Excluded Trade or Business Activities Exclusions, Volunteer workforce. Irs form 1040ez instructions Sponsorship, Qualified sponsorship activities. Irs form 1040ez instructions Exempt function income, Exempt function income. Irs form 1040ez instructions Exploitation of exempt activity Advertising income, Exploitation of Exempt Activity—Advertising Sales Exploitation of exempt functions, Exploitation of exempt functions. Irs form 1040ez instructions F Form 990-T, Returns and Filing Requirements Free tax services, How to Get Tax Help H Help (see Tax help) I Income from research, Income from research. Irs form 1040ez instructions L Limits, Limits. Irs form 1040ez instructions M More information (see Tax help) N Net operating loss deduction, Modifications Nonrecognition of gain, Nonrecognition of gain. Irs form 1040ez instructions P Publications (see Tax help) R Rents, Rents. Irs form 1040ez instructions Return, Returns and Filing Requirements Royalties, Royalties. Irs form 1040ez instructions S Specific deduction, Specific deduction. Irs form 1040ez instructions T Tax, Organizations Subject to the Tax Alternative minimum, Alternative minimum tax. Irs form 1040ez instructions Colleges and universities, Colleges and universities. Irs form 1040ez instructions Deposits, Federal Tax Deposits Must be Made by Electronic Funds Transfer Estimated, Payment of Tax Organizations affected, Organizations Subject to the Tax Payment, Public Inspection Requirements of Section 501(c)(3) Organizations. Irs form 1040ez instructions Rates, The Tax and Filing Requirements Return, Returns and Filing Requirements Title-holding corporations, Title-holding corporations. Irs form 1040ez instructions U. Irs form 1040ez instructions S. Irs form 1040ez instructions instrumentalities, U. Irs form 1040ez instructions S. Irs form 1040ez instructions instrumentalities. Irs form 1040ez instructions Tax help, How to Get Tax Help Taxpayer Advocate, Contacting your Taxpayer Advocate. Irs form 1040ez instructions Title-holding corporations, Title-holding corporations. Irs form 1040ez instructions TTY/TDD information, How to Get Tax Help U Unrelated business Hospital laboratory, Nonpatient laboratory testing. Irs form 1040ez instructions Unrelated business income, Unrelated Business Taxable Income, Income Advertising income, Exploitation of Exempt Activity—Advertising Sales Certain trusts, Special Rules for Social Clubs, VEBAs, SUBs, and GLSOs Controlled organizations, Income From Controlled Organizations Debt-financed property, Income From Debt-Financed Property Deductions, Deductions Employees beneficiary associations, Special Rules for Social Clubs, VEBAs, SUBs, and GLSOs Exclusions, Exclusions Foreign organizations, Special Rules for Foreign Organizations Income from gambling activities, Legal definition. Irs form 1040ez instructions Income from lending securities, Income from lending securities. Irs form 1040ez instructions Modifications, Modifications Partnership income or loss, Partnership Income or Loss Products of exempt functions, Selling of products of exempt functions. Irs form 1040ez instructions S corporation income, S Corporation Income or Loss S corporation income or loss, S Corporation Income or Loss Social clubs, Special Rules for Social Clubs, VEBAs, SUBs, and GLSOs Veterans organizations, Special Rules for Veterans' Organizations Unrelated debt-financed income, Certain federal financing. Irs form 1040ez instructions Average acquisition indebtedness, Average acquisition indebtedness. Irs form 1040ez instructions Average adjusted basis, Average adjusted basis. Irs form 1040ez instructions Computation, Computation of Debt-Financed Income Debt/basis percentage, Computation of debt/basis percentage. Irs form 1040ez instructions Deductions, Deductions for Debt-Financed Property Gains from dispositions, Gain or loss from sale or other disposition of property. Irs form 1040ez instructions Indeterminate property price, Indeterminate price. Irs form 1040ez instructions Unrelated trade or business, Unrelated Trade or Business Artists facilities, Artists' facilities. Irs form 1040ez instructions Book publishing, Book publishing. Irs form 1040ez instructions Broadcasting rights, Broadcasting rights. Irs form 1040ez instructions Business league's parking and bus services, Business league's parking and bus services. Irs form 1040ez instructions Convenience of members, Convenience of members. Irs form 1040ez instructions Convention or trade show, Convention or trade show activity. Irs form 1040ez instructions Directory of members, Directory of members. Irs form 1040ez instructions Distribution of low cost articles, Distribution of low cost articles. Irs form 1040ez instructions Dual use facilities, etc. Irs form 1040ez instructions , Dual use of assets or facilities. Irs form 1040ez instructions Employees association sales, Employee association sales. Irs form 1040ez instructions Exclusions, Excluded Trade or Business Activities Exploitation of exempt functions, Exploitation of exempt functions. Irs form 1040ez instructions Gambling activities other than bingo, Gambling activities other than bingo. Irs form 1040ez instructions Halfway house, Halfway house workshop. Irs form 1040ez instructions Health club program, Health club program. Irs form 1040ez instructions Hearing aid sales, Sales of hearing aids. Irs form 1040ez instructions Hospital facilities, Hospital facilities. Irs form 1040ez instructions Hospital services, Hospital services. Irs form 1040ez instructions Insurance programs, Insurance programs. Irs form 1040ez instructions Magazine publishing, Magazine publishing. Irs form 1040ez instructions Member lists rentals, etc. Irs form 1040ez instructions , Exchange or rental of member lists. Irs form 1040ez instructions Membership list sales, Membership list sales. Irs form 1040ez instructions Miniature golf course, Miniature golf course. Irs form 1040ez instructions Museum eating facilities, Museum eating facilities. Irs form 1040ez instructions Museum greeting card sales, Museum greeting card sales. Irs form 1040ez instructions Pet boarding and grooming services, Pet boarding and grooming services. Irs form 1040ez instructions Pole rentals, Pole rentals. Irs form 1040ez instructions Public entertainment activity, Public entertainment activity. Irs form 1040ez instructions Publishing legal notices, Publishing legal notices. Irs form 1040ez instructions Regularly conducted, Regularly conducted. Irs form 1040ez instructions Sales commissions, Sales commissions. Irs form 1040ez instructions Sales of advertising space, Sales of advertising space. Irs form 1040ez instructions School facilities, School facilities. Irs form 1040ez instructions School handicraft shop, School handicraft shop. Irs form 1040ez instructions Selling donated merchandise, Selling donated merchandise. Irs form 1040ez instructions Selling endorsements, Selling endorsements. Irs form 1040ez instructions Sponsoring entertainment events, Sponsoring entertainment events. Irs form 1040ez instructions Substantially related, Not substantially related. Irs form 1040ez instructions Trade or business defined, Trade or business. Irs form 1040ez instructions Travel tour programs, Travel tour programs. Irs form 1040ez instructions Volunteer workforce, Volunteer workforce. Irs form 1040ez instructions Yearbook advertising, Yearbook advertising. Irs form 1040ez instructions Youth residence, Youth residence. Irs form 1040ez instructions Unstated trade or business Bingo games, Bingo games. Irs form 1040ez instructions V Volunteer fire company, Excluded Trade or Business Activities W When to file, When to file. Irs form 1040ez instructions Prev  Up     Home   More Online Publications