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

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

​​​​​​​​​​​Real Help With Your 501(c)(3) Application


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This website has only a fraction of the information you can find in Prepare Your Own 501(c)(3) Application:

Business leagues, chambers of commerce, real-estate boards, boards of trade, or professional football leagues (whether or not administering a pension fund for football players), not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.
                                                                                                                                                         
 - Internal Revenue Code Section 501(c)(6)

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)(6) application.  
  • ​In late 2015, 501(c)(6) 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

  • To qualify, an organization must be primarily engaged in promoting the common business interests of the members through exchange of information, continuing education, labor negotiations, lobbying or similar activities
  • 501(c)(6) organizations may not allow any part of their net earnings to inure to the benefit of any private shareholder or individual
  • Specific services that merely provide a convenience or economy to individual members in their businesses are not qualifying activities
  • Donations are not deductible as charitable contributions, but dues or similar amounts may be deductible as a business expense
  • Larger organizations may be required to disclose that contributions are not deductible in their solicitation materials
  • (c)(6)s usually cannot qualify for the special low-rate non-profit bulk mailing permit.


Lobbying

  • 501(c)(6) organizations are permitted to have unlimited amounts of legislative activity as long as it is in furtherance of the exempt purpose.
  • In some cases, (c)(6)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)(6)s may be required to notify members that a portion of dues is not deductible because of political expenditures made by the organization. Organizations may elect to pay a proxy tax instead of making this notification.


Examples

  • Professional associations
  • Trade associations
  • Chambers of commerce
  • Convention and visitors bureaus
  • Better business bureaus
  • Business and professional women’s clubs
  • At the end of fiscal year 2015, there were 63,919 501(c)(6) organizations, about 4.13% of all 501(c) organizations


Links

  • Information about points of intersection between business leagues and the IRS. Life Cycle of a Business League.
  • IRS Publication 557, Tax Exempt Status for Your Organization
  • Business leagues organizations are the third most common type of 501(c) organizations after 501(c)(3) and 501(c)(4).  There are many Exempt Organizations Continuing Professional Education articles on trade associations.  The best way to access these is through the Exempt Organizations CPE Topical Index.
  • IRC 501(c)(6) 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)s]   IRS Publication 4221-NC
  • Section 7.25.6 of the Internal Revenue Manual- Business and professional women’s clubs


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