Form 1023 Paperwork, In Millions of Hours, 1986 to 2016

Source: U.S. Office of Management and Budget. Click image to learn more.

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501(c)(5) Agricultural Organizations


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Labor, agricultural or horticultural organizations.
                                                                                                                                                                      - Internal Revenue Code Section 501(c)(5)

Exemption Application

  • Form 1024, including Schedule C (current form is dated 9/98).
  • $400 for organizations with gross receipts normally $10,000 or less; $850 for larger organizations.
  • Submit fee using Form 8718.
  • There is no filing deadline for a 501(c)(5) application. 
  • In late 2015, 501(c)(5) organizations were given the right to go to court to seek a Declaratory Judgment when the IRS denies an exemption application.


Annual filing

  • Gross receipts normally less than $50,000 - file Form 990-N
  • Gross receipts normally less than $200,000 - file Form 990-EZ
  • Gross receipts normally more than $200,000 - file Form 990
  • Check instructions: an organization's assets can also affect which form must be filed

Caution: An organization that fails to file a required return for three years in a row will have its exempt status automatically revoked.

Basic Rules

  • For purposes of 501(c)(5), the term "agricultural" includes cultivating land, harvesting crops or aquatic resources, or raising livestock.
  • The primary purpose of the organization must be to better the conditions of those engaged in the listed pursuits, to improve their products, or to achieve a higher degree of efficiency in their operations.
  • The term "aquatic resources" includes animal and vegetable life, but not mineral resources.
  • Donations are not deductible as charitable contributions
  • Larger organizations may be required to disclose that contributions are not deductible in their solicitation materials
  • Check with your local postmaster to see if your 501(c)(5) can qualify for low-rate non-profit bulk mailing.
  • Unlike (c)(3)s, 501(c)(5) organizations are permitted to have more than incidental amounts of social activity.


Lobbying

  • 501(c)(5) organizations are permitted unlimited amounts of legislative activity as long as it is in furtherance of the exempt purpose.
  • In some cases, (c)(5)s may be required to notify members that a portion of dues is not deductible because of lobbying carried on by the organization.  Organizations may elect to pay a proxy tax instead of making this notification.


Political Activity

  • Political activity is permitted, but cannot be the organization's primary purpose, and will in most cases incur a penalty tax.
  • In some cases, (c)(5)s may be required to notify members that a portion of dues is not deductible because of political activity carried on by the organization.  Organizations may elect to pay a proxy tax instead of making this notification.


Examples

  • Farm bureaus 
  • grange 
  • organizations
  • breeders' associations
  • soil testing groups
  • exhibitions featuring livestock or other farm products
  • ​At the end of fiscal year 2015, there were 46,576 501(c)(5) organizations, about 3.01% of all 501(c) organizations


Links

  • Information about points of intersection between agricultural organizations and the IRS.  Life Cycle of an Agricultural or Horticultural Organization
  • IRS Publication 557, Tax Exempt Status for Your Organizations
  • There are a few Exempt Organizations Continuing Professional Education articles on agricultural organizations.  The best way to access these is through the Exempt Organizations CPE Topical Index.
  • IRC 501(c)(5) Organizations, 2003 Exempt Organizations Continuing Professional Education Technical Instruction Program, Topic I.  This is the most recent CPE article.
  • Compliance Guide for Tax-Exempt Organizations (Other than 501(c)(3) Public Charities and Private Foundations) IRS Publication 4221-NC
  • Section 7.25.5 of the Internal Revenue Manual​​


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