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Appendixes
Summary
This report answers frequently asked questions about tax-exempt organizations. It provides basic answers and refers to sources of additional information that might be useful. The report focuses on the types of organizations described in Internal Revenue Code (IRC) SectionI.R.C.) § 501(c), with the main emphasis on Section§ 501(c)(3) charitable organizations and § 501(c)(4) social welfare organizations.
.
One set of questions addresses some of the primary characteristics of tax-exempt organizations, including whether they may participate in lobbying and election-related activities, and defines the terms "tax-exempt," "nonprofit (not-for-profit)," "charity," and "private foundation."
Another group of questions provides general information on how to form a tax-exempt organization, what information must be disclosed to the IRSInternal Revenue Service (IRS) and the public, and how an organization might lose its tax-exempt status.
The report ends with questions intended to help the reader find resources that provide information on specific organizations and additional information on tax-exempt organizations in general.
This report summarizes information with respect to tax-exempt organizations. It should not be relied on for specific tax advice. Such advice shouldmay be sought directly from the IRS or qualified tax professionals.
The term "tax-exempt organization" generally refers to an organization that is exempt from federal income taxes under the Internal Revenue Code (IRCI.R.C.). Although the IRCI.R.C. describes more than 30thirty types of organizations that qualify for exemption, the most common type and the type that people often mean when using the term "tax-exempt organization" is found in Section§ 501(c)(3). That section describes entities
organized:
[O]rganized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals....
. . . .
Other types of organizations that qualify for tax-exempt status include social welfare organizations, labor unions, trade associations, social clubs, veterans' organizations, and fraternal organizations. A list of the types of tax-exempt organizations appears at the end of this report (see Table A-1). The different types of organizations that qualify for tax exemption under the I.R.C. have different requirements to obtain and maintain tax exemption, although some requirements can overlap.1 An organization may be able to qualify as multiple types of organizations, although it typically must identify which type of organization it is claiming tax exemption as.
2. What is a nonprofit organization?
Table A-1).
The term "tax-exempt organization" is often used interchangeably with the term "nonprofit organization."2 This can be misleading depending on the context. The term "tax-exempt organization" generally refers to an organization that meets the criteria in federal law (the IRCI.R.C.) to be exempt from federal income taxes. (See Question 1.) The term "nonprofit organization" can be used to mean a corporation that is not intended to be a profit-making corporation and is organizedtypically organized and governed as such under state law.3 The status and privileges of the entity are determined under state law. The requirementsnonprofit organizations—including limited liability protection—are generally determined under state law. For example, some states have adopted, either in whole or as modified, the Model Nonprofit Corporation Act, a model legislation developed by the American Bar Association.4 The requirements of nonprofit organizations can vary by state but usually take into account the fact that nonprofit corporationsorganizations typically do not have shareholders or the same business motives as for-profit corporations.
A nonprofit corporation is not automatically Nonprofit organizations are generally barred from distributing assets to those who control the organization; rather, the organization's assets must be used to further the nonprofit's purpose.5
A nonprofit organization is not necessarily a tax-exempt organization. Because the qualifications for nonprofit status vary among states, it is possible for the term "nonprofit organization" to be broader than, narrower than, or identical to the term "tax-exempt organization." For a nonprofit organization to be exempt from federal income taxes, it must meet the statutory requirements found in the IRCI.R.C. and, in some cases, file an application with the IRS.
Internal Revenue Service (IRS). Some statutory requirements for tax exemption under the I.R.C. parallel certain requirements of nonprofit organizations found in state law. For example, § 501(c)(3) requires that "no part of the net earnings [of the organization] . . . inures to the benefit of any private shareholder or individual," and the organization must be "organized and operated exclusively" for an enumerated exempt purpose.6
3. What is a charity?
The term "charitable organization" is also often used interchangeably with "tax-exempt" and "nonprofit" organizations. This can be misleading depending on the context. Charity is generally a common law concept.7 The IRS has explained that charity can include the following:8
While a "charitable" purpose is one of several exempt purposes under § 501(c)(3), all § 501(c)(3) organizations must operate as a common law charity.9 Thus, § 501(c)(3) organizations must meet both the statutory requirements for tax exemption under the I.R.C. and the common law standard of charity. The common law standard of charity forbids § 501(c)(3) organizations from having an illegal purpose or a purpose contrary to established public policy.10
4. What are the differences between § 501(c)(3) and § 501(c)(4) organizations?
Section 501(c) describes many types of organizations that qualify for tax-exempt status. When an organization applies for exemption or files an annual return with the IRS, it must tell the IRS under which paragraph of Section§ 501(c) it qualifies. In general, this is not difficult to determine because most paragraphs describe discrete categories—for example, Section§ 501(c)(8) describes fraternal societies and Section§ 501(c)(14) describes credit unions. However, Sections§§ 501(c)(3) and 501(c)(4) describe organizations with some overlapping characteristics in that both types can operate for charitable purposes.1
Despite these similarities, Section 501(c)(3) and Section11 Section 501(c)(3) organizations are sometimes referred to as "charitable organizations." Section 501(c)(4) organizations are sometimes referred to as "social welfare organizations."
Despite these similarities, § 501(c)(3) and § 501(c)(4) organizations differ in two significant ways. First, Section§ 501(c)(3) organizations are eligible to receive tax-deductible charitable contributions, while Section§ 501(c)(4) organizations generally are not.12 When a contribution is deductible, the donor may subtract it from his or her income when calculating federal income tax liability, subject to restrictions found in Section§ 170. (See Question 67.) This is an important benefit for the organization because it may encourage donors to contribute to the organization in order to lower their taxable income and to make larger contributions since the after-tax cost of each contribution is reduced.213 The second difference is that Section§ 501(c)(3) organizations are substantially limited in their ability to lobby and are prohibited from engaging in campaign activity; Section§ 501(c)(4) organizations are not so limited. (See Questions 78 and 8.)
9.)
These two differences are important when an organization is choosing whether to be a Section§ 501(c)(3) or Section§ 501(c)(4) organization. If the group's agenda depends on influencing public opinion or the legislative process, it may be appropriate to form as a Sectionseek tax exemption as a § 501(c)(4) organization. Otherwise, it will usually make more sense to be a Section§ 501(c)(3) organization in order to have the advantage of tax-deductible contributions.
While an organization must identify itself as one type of Section§ 501(c) organization, it may be linked with another Section§ 501(c) organization under certain circumstances. For example, it is common to seefor a group that wants to lobby as well as conduct charitable activities to set up both a Section§ 501(c)(4) organization and a Section§ 501(c)(3) organization.
Another common example is for a Section§ 501(c)(6) trade association, such as the American Bar Association or American Medical Association, to have a similarly named foundation that conducts charitable activities. In addition, a Section§ 501(c) organization may be linked with another type of tax-exempt organization, such as a Section 527 political organization. (See Question 8.) In all of these situations, the organizations must be legally separate entities, and their activities and funds must be kept separate.
The I.R.C. and Treasury Regulations recognize and regulate various relationships between tax-exempt organizations. For example, "supporting organizations" are § 501(c)(3) organizations that qualify for public charity status by reason of close ties to another public charity, the "supported organization."14 (See Question 6.) Parts of the I.R.C. provide for aggregation of activities of related organizations, including supporting and supported organizations.15 Tax-exempt organizations must disclose related organizations on the IRS Form 990, Schedule R.16A Section 501(c)(3) organization is either a public charity or private foundation§ 527 political organization. The sharing of managers and resources between related organizations can jeopardize tax-exemption if it violates restrictions on exemption, for example, if a § 501(c)(4) organization uses a § 501(c)(3) organization's resources to conduct political campaign activity that the latter is prohibited from doing. (See Question 9.)
carrycarrying out charitable activities.18 Because these factors create the potential for self-dealing or abuse of position by the small group controlling the entity, private foundations are more closely regulated than public charities. As such, private foundations are subject to penalty taxes for doing things such as failing to distribute a certain amount of their income each year;, making investments that jeopardize their charitable purpose;, having excess business holdings;, and failing to maintain expenditure responsibility over certain grants.319 Private foundations also have more substantial reporting and public disclosure requirements than public charities. (See Questions 13 and 14.) Private foundations annually file the IRS Form 990-PF rather than the other versions of the Form 990.20 Section 501(c)(3) organizations are presumed to be private foundations and, if they want to be treated as a public charity, must generally tell the IRS how they qualify for public charity status based on the support and control tests found in IRC Section 509.
Under Section?
Under I.R.C. § 170, contributions made for charitable purposes are tax -deductible when made to qualifying Section§ 501(c)(3) organizations, governmental units, veterans' organizations, fraternal organizations, and cemetery companies.22 The IRS determines whether a Section§ 501(c)(3) organization is eligible to receive tax-deductible contributions at the time it considers the organization's application for exempt status. A donor can check to see whether an organization is eligible to receive tax-deductible charitable contributions using the "Exempt Organizations Select Check" search engineTax Exempt Organization Search Tool" on the IRS website.4
23
Charitable contributions that otherwise meet the requirements of Section§ 170 are not deductible if the organization provides goods or services in exchange for the contribution (a "quid pro quo contribution"). However, if the contribution exceeds the fair market value of the goods or services provided, then the excess may be deductible.24 When an organization receives more than $75 in exchange for goods or services, it must inform the donor of the amount of the contribution, if any, that is tax-deductible.5
25
Even if a contribution is deductible, individual taxpayers may not be able to deduct the entire contribution. For example, only individuals who itemize deductions may deduct their charitable contributions,6 and Section 170 may restrict the amount of the deduction depending on the size and nature of the contribution.26 In addition, taxpayers must comply with certain substantiation and record keeping requirements, including that (1) a written acknowledgment be obtained from the organization for any contribution that exceeds $250 in value and (2) any cash donation be substantiated by(1) for any contribution that exceeds $250 in value, a written acknowledgment obtained from the organization;27 (2) for any monetary donation, a bank record or written communication from the organization showing its name and the date and amount of the contribution.
;28 (3) for noncash contributions over $500, additional information must be reported on Form 8283;29 and (4) for noncash contributions over $5,000, a qualified appraisal is generally required.30
When a contribution to a tax-exempt organization is not deductible, the organization must generally notify the potential contributor of that fact at the time of solicitation.731 An organization that fails to provide the notification faces a fine of $1,000 for each day the failure occurs, with an annual cap of $10,000.832 The fines arecan be higher and the cap is eliminated for organizations that intentionally disregard the notification requirement.
Dues to some tax-exempt organizations, such as Section 501(c)(5) labor unions and Section 501(c)(6) trade associations, may be deductible as business expenses under IRC Section 162. If an organization conducts lobbying or political activities, Section 162(e) disallows a deduction for the portion of dues that represents lobbying or political expenditures.9 In general, an organization must notify its members of the amount that is nondeductible or be subject to a proxy tax on its lobbying or political expenditures.10 Furthermore, individuals face additional restrictions in being able to deduct their dues. For example, only individuals who itemize deductions and have significant business expenses (i.e., exceeding 2% of adjusted gross income) may deduct the dues.
Under the IRCI.R.C., some types of tax-exempt organizations are restricted in the amount of lobbying (i.e., attempting to influence legislation) they may engage inthey may do and the rest may conduct unlimited lobbying.11
have no restrictions on their engagement in lobbying activities.34
Section 501(c)(3) organizations are the primary example of entities that are limited in the amount of lobbying they may do: "no substantial part" of their activities can be lobbying.1235 The IRC§ 501(c)(3) does not define "no substantial part." In interpreting the term, courts have looked at the amount of expenditures or time spent on lobbying,13 or examined the lobbying in the broad context of the organization's purpose and activities.14examined the lobbying in the broad context of the organization's purpose and activities by looking at such things as how important lobbying is to the organization's purpose, the amount of time devoted to lobbying compared to other activities, and the extent to which the organization is continuously involved in lobbying.36 Because the "no substantial part" standard is indefinite, Section§ 501(c)(3) organizations, with the exception of churches and related organizationsprivate foundations, may elect to have their lobbying activities measured by a numerical limit found in IRC SectionI.R.C. § 4911.1537 Most organizations do not make this election. A Section§ 501(c)(3) organization that conducts substantial lobbying may lose its exempt status and face possible excise taxes under Sections 4911§§ 527(f),38 4911, and 4912. Notably, private foundations (discussed in Question 56) are taxed under IRC SectionI.R.C. § 4945 on any lobbying expenditures made during the year, regardless of whether such activities are substantial.
Most other types of tax-exempt organizations are not subject to any tax law limits onexplicit limits in the I.R.C. related to the amount of lobbying that can be done.16 These include Section§ 501(c)(4) social welfare organizations, Section§ 501(c)(5) labor unions, and Section§ 501(c)(6) trade associations. A tax-exempt organization's lobbying may affect the amount that its contributors would otherwise be able to deduct as dues (See Question 6.)
Although SectionSuch organizations can engage in an unlimited amount of lobbying, provided the activity is related to their tax-exempt purpose.39
Although § 501(c)(4) organizations may lobby under the tax laws, Section§ 18 of the Lobbying Disclosure Act of 1995 (P.L. 104-65) prohibits them from receiving federal grants, loans, or other awards if they engage in lobbying activities.1740 This prohibition applies even if the lobbying is conducted with the organization's own funds. The Lobbying Disclosure Act also imposes registration and disclosure requirements on organizations with paid lobbyists whose lobbying activities exceed time and monetary limits.
Some tax-exempt organizations are prohibited from participating in political campaign activity.1841 For example, Section§ 501(c)(3) organizations are prohibited from participating in "any political campaign on behalf of (or in opposition to) any candidate for public office."1942 This means Section§ 501(c)(3) organizations can lose their tax-exempt status for engaging in activity that is specifically linked to election periods and supports or opposes particular candidates. Whether an activity constitutes prohibited campaign intervention depends on the facts and circumstances of each case.43
Section 501(c)(3) organizations may, however, participate in activities that might be described as political in nature, so long as they are not campaign intervention. Permissible activities include—so long as no candidate is endorsed or opposed—conducting public forums, publishing candidate responses to a questionnaire on a variety of subjects, issue advertising, nonpartisan public opinion polling, and nonpartisan voter registration drives.20 Although these non-campaign-related, political activities are not prohibited, they may be subject to tax under IRC Sections 527I.R.C. §§ 527(f), 4945, and 4955, or treated as lobbying activities. (See Question 7.)
The IRC generally allows most other8.)
Other types of Section§ 501(c) organizations21 to can engage in campaign activity so long as it (and any other non-exempt purpose activities) is not the organization's primary activity. Thus, for example, Section§ 501(c)(4) social welfare organizations, Section§ 501(c)(5) labor unions, and Section§ 501(c)(6) trade associations may conduct a limited amount of campaign activity under the IRC.I.R.C.44 It is important to note that, while the IRCI.R.C. may allow these organizations to participate in such activities, the organizations must still comply with applicable election laws.2245 For example, organizations may be required to report certain election spending to the Federal Election Commission.23
46
Even though some Section§ 501(c) organizations may engage in campaign activity, they arecan be subject to tax under Section§ 527(f) if they make an expenditure for influencing the selection, nomination, election, or appointment of an individual to public office or certain related activities. The tax under § 527(f) can be lawfully avoided if the campaign expenditures are made from a separate, segregated fund to receive contributions and make expenditures in a political campaign.47 The tax is imposed at the highest corporate rate (currently 21%) on the lesser of the expenditures or the organization's net investment income. Thus, for organizations with little or no net investment income or those making low-cost expenditures, the tax is of minimal import. For others, however, it might serve as a disincentive to directly engage in the activities, in which case the group might choose to set up a separate, segregated fund to conduct them.24
48
Finally, one type of tax-exempt organization—Section§ 527 political organizations—is expected to primarily engage in electioneering and similar activities. Although considered tax-exempt organizations, Section§ 527 organizations are subject to special tax rules that exempt income used for political activities from tax and tax other types of income (e.g., investment income).25
The U.S. Constitution empowers Congress "[t]o lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States . . . ."49 This clause provides Congress broad discretion to tax.50 Congress's taxing power includes the power to exempt certain categories of entities or activities from taxation and to set restrictions on such exemption.51 Some restrictions that Congress has placed on tax-exempt organizations have been challenged in courts as a violation of the organization's right to freedom of speech under the First Amendment. Court considerations of the constitutionality of such restrictions can depend on the characterization of the restriction as either conditions of tax exemption or restrictions on free speech. In 1983, the Supreme Court ruled in Regan v. Taxation with Representation of Washington that the I.R.C.'s restrictions on lobbying by § 501(c)(3) organizations (see Question 8) are constitutional and did not violate the organization's right to freedom of speech under the First Amendment.52 The Court found that Congress had not prevented § 501(c)(3) organizations from speaking, but had chosen not to subsidize lobbying by means of the tax exemption and tax-deductible contributions.53 The Court characterized tax exemption as a voluntary subsidy that Congress can condition much like a cash grant.54 Reporting requirements (see Question 13) for tax-exempt and nonprofit organizations have also been subject to First Amendment challenges. Certain requirements, such as heightened disclosure of donor information at the state level, have been found to implicate First Amendment protections.55 In 2021, the Supreme Court in Americans for Prosperity Foundation v. Bonta struck down a California regulation that required organizations to disclose their substantial donors in order to register as an organization to operate and solicit funds in the state, because the disclosure did not meet "exacting scrutiny" requiring the regulation be "narrowly tailored to the government's asserted interest."56 Although the Court did not decide on the constitutionality of donor disclosure requirements under the I.R.C., both the Court's decision and an amicus brief filed by the United States briefly distinguish California's requirement for registration from the I.R.C.'s reporting requirements for federal tax exemption.57 Both the decision and the brief cite to Regan as support for Congress's power to set conditions of federal tax-exempt status. In a pending case, the U.S. Court of Appeals for the Sixth Circuit is considering the constitutionality of the donor reporting requirements for § 501(c)(3) organizations.58 In that case, the U.S. District Court, citing Bonta, applied "exacting scrutiny" to deny cross motions for summary judgment.59 On interlocutory appeal, the government argued for application of the rational basis standard of review applicable to conditions on government subsidies rather than a higher standard for restrictions on First Amendment activities.60 The interlocutory appeal is pending as of the writing of this report.For many tax-exempt organizations, the first step is to incorporate the organization. Incorporation is not required for federal tax-exempt status, but organizations incorporate for a variety of reasons, including to receive limited personal liability for their members. Formation of the organization is
10. What authority does Congress have to regulate tax-exempt organizations?
achieved under state law and requirements vary by state. An organization will likely need to register with the appropriate Secretary of State26 to reserve that organization's name and to enable the group to solicit charitable contributions, do business, and own property in the state. If the organization incorporates, it62 To incorporate, the organization will also usually have to file articles of incorporation that include the organization's purposes and the names of its incorporators.
Whether or not the organization incorporates, it63
To obtain tax-exempt status, the organization may need to file for recognition of tax-exempt status from the IRS depending on its tax status. If the organization will be a Section§ 501(c)(3) organization, it is generally required to file an application for tax-exempt status with the IRS.2764 Some organizations that qualify for Section§ 501(c)(3) status, including organizationspublic charities with gross receipts of normally not more than $5,000 and churches, are excused from the filing requirement.65 Organizations seeking Section§ 501(c)(3) status file IRS Form 1023.66 Notably, in 2014, the IRS released a simplified application form (Form 1023-EZ) for Section§ 501(c)(3) groups that meet certain size and other requirements (e.g., the organization must expect that its annual gross receipts will not annually exceed $50,000 for the current and next two years). An organization filing the Form 1023 or Form 1023-EZ must pay a fee, as described below (called a "user fee"). It must also obtain an employer identification number (IRS Form SS-4), even if it does not have any employees.
Other types of
Section 501(c)(4) organizations are generally not required to file an application for tax-exempt status, although they may choose to do so.28 If they so choose, these groups would file an application using the IRS Form 1024.
Organizations filing for recognition of tax-exempt status must pay a filing fee with IRS Form 8718 (User Fee for Exempt Organization Determination Letter Request). For an organization filing for exemption under Section 501 that has had annual gross receipts averaging $10,000 or less during the past four years, or for a new organization that anticipates gross receipts averaging $10,000 or less during the next four years, the application fee is $400. The application fee is $850 for a Section 501(c) organization with more than an average of $10,000 in gross receipts for the prior four years, as well as for a new Section 501(c) organization anticipating gross receipts in excess of an average of more than $10,000 in gross receipts for the coming four years.
using the IRS Form 1024-A. Section 501(c)(4) organizations are required to notify the IRS of their intent to operate as such an organization within 60 days of formation.67 Organizations do so with the IRS Form 8976.
If the IRS does not act on the application of a Section 501(c)(3) organization within 270 days, the organization may seek a declaratory judgment in federal court regarding its status.29 This provision does not apply to other types of Section 501(c) entities.
In general, once an organization has tax-exempt status, it can continue as a tax-exempt organization unless there is a material change in its character, purposes, or methods of operation.69 The IRS may revoke an organization's exempt status because it violates the law (e.g., if a Sectionengages in activities prohibited by the I.R.C. (e.g., if a § 501(c)(3) organization engages in prohibited campaign activity) or because of changes in the law or regulations or for other good cause.. The IRS may also revoke an organization's exempt status because the organization violates the law or fundamental public policy.70 Furthermore, the IRS can suspend the tax-exempt status of an organization that is (1) designated a terrorist organization by executive order or under authority found in the Immigration and Nationality Act, the International Emergency Economic Powers Act, or the United Nations Participation Act or (2) designated by executive order as supporting terrorism or engaging in terrorist activity.3071 With the exception of organizations whose status is suspended due to terrorism issues, organizations may ask for court review of any IRS attempt to revoke their exempt status.
72
Revocation of tax-exempt status has two primary consequences. First, the organization becomes a taxable entity and is subject to federal income tax. Second, if the organization had been eligible to receive tax-deductible charitable contributions, loss of tax-exempt status also means loss of eligibility to receive such contributions. Form. The complaint may cause the IRS to review the propriety of the organization's exempt status, but the IRS cannot reveal whether it has followed up on a particular complaint because of confidentiality rules.31
73
It does not appear possible to bring a legal suit to challenge the IRS's granting of an exemption to an organization. Although prior to 1976, third parties had been successful in bringing suits to challenge IRS policies in administering the tax laws,3274 the Supreme Court in 1976 severely limited this practice by requiring plaintiffs to show a direct personal injury that is likely to be redressed by a favorable decision in the case.3375 Subsequently in the 1989 case United States Catholic Conference v. Baker,3476 the Second Circuit Court of Appeals reviewed the standing of various parties to force the IRS to examine the tax-exempt status of the Catholic Church because of its political activities and concluded that it would be a very rare case when a third party would have standing to bring such a suit.
Under SectionI.R.C. § 6033, most tax-exempt organizations are required to file an annual information return (the Form 990 or Form 990-EZits variants) that discloses information related to income, expenses, assets, and officers and employees.3577 The Formform has several schedules that ask for information on such things as the organization's substantial donors (Schedule B); campaign and lobbying activities (Schedule C);, and related organizations (Schedule R). The penalty for failure to file the return is $20 per day for each day the failure continues, which is increased to $100 per day if the organization has annual gross receipts exceeding $1 million in any year.36
Organizations with gross receipts that are normally less than $50,000 must file the Form 990-N with the IRS (unless they choose to file the Form 990 or 990-EZ). The Form 990-N is also known as the e-Postcard. It asks for the organization's basic contact information and must be filed electronically. An organization that fails to file the Form 990-N78 An organization that fails to file a required annual information return for three consecutive years will automatically have its tax-exempt status revoked.37
79
Tax-exempt organizations are sometimes subject to tax, in which case they must file a tax return. For example, an organization that conducts business activities unrelated to its exempt purpose must file a Form 990-T.80 Any exempt organization with political organization taxable income will need to file a Form 1120-POL, and one that has been assessed a penalty taxcertain excise taxes must file Form 4720.
Furthermore, exempt organizations must generally pay the same employment taxes as for-profit employers. Thus, if they have employees, exempt organizations usually must file the employment tax returns for income tax withholding and Social Security and Medicare taxes (Form 941), income reporting (W-2, W-3, Form 1099), and unemployment taxes (Form 940). Exempt organizations are subject to the same penalties as other taxpayers for failing to file a tax return or pay their taxes, including failing to make estimated tax payments and failing to properly handle and deposit employment taxes.38
81
Finally, some organizations are subject to additional requirements. For example, under Section§ 527(j), political organizations must file periodic reports to the IRS that disclose contributions and expenditures (Form 8872) unless they are political committees for purposes of federal election law or otherwise qualify for an exception.39
Under the IRCI.R.C., the application for exempt status and the annual information returnreturns (Form 990) for the past three years are open to public inspection.4083 In addition, Section§ 501(c)(3) organizations must disclose their unrelated business -business-income tax returns (Form 990-T).
This requirement has two parts: theThe organization must allow the public to inspect the documents and must provide copies upon request. For inspection purposes, the information must be made available during normal business hours at the organization's principal office and any district office with more than three employees. With respect to providing copies, requests for copies of the documents may be made in writing or in person. The organization must furnish copies immediately if the request is made in person and within 30thirty days for written requests. The organization is permitted to charge a reasonable fee for reproduction and mailing costs. An organization is not required to provide individual copies if either (1) the organization makes these documents widely available on the internet4184 or (2) the requests are part of a harassment campaign and compliance is not in the public interest.42
85 Certain information does not have to be disclosed. Organizations are generally not required to disclose the names and addresses of any contributors.86 Furthermore, the IRS is permitted to create exceptions to public disclosure of information relating to trade secrets, patents, processes, styles of work, or apparatus, if public disclosure would adversely affect the organization or if the information would adversely affect the national defense.
87
If an organization refuses to provide a copy of its returns, the requestor may file Form 13909 Tax-Exempt Organization Complaint (Referral) Form with the IRS. If an organization fails to provide the return, the IRS may assess statutory penalties under IRC SectionI.R.C. § 6652.
Any return or application that must be disclosed to the public by the organization must also be made publicly available by the IRS.4388 The information may be obtained from the IRS by using Form 4506-A, Request for Public Inspection or Copy of Exempt or Political Organization. In addition, the IRS has some information submitted by Section 527 political organizations on its website.
The organizations listed under Question 13 also provide information on various tax-exempt organizations. In particular, GuideStar [www.guidestar.org] may have copies of the organization's recent Form 990s on its website.
The following are examples of organizations that report on the activities of charities. The information comes from the organizations' websites.
Charity Watch (formerly the American Institute of Philanthropy) is a nonprofit charity watchdog and information service that provides ratings, opinions, and other information on the financial and managerial practices of selected charities. Access to the reports is not free, but the website does list charities that have received the highest grades.
The BBB Wise Giving Alliance collects information and prepares reports on several hundred national charitable organizations. The Alliance does not recommend or rate charities, but serves to report information on the organization's background, staff and governance, financial status and fund raising practices. The report will also state whether the charity meets the Alliance's standards for charitable solicitations. These reports are available on the Alliance's website.
The GuideStar website contains information on more than 1 million organizations. Notably, the site contains the annual returns (Form 990) for many organizations. Access to recent Form 990s and certain other information is free (although registration is required); more in-depth information is available for a membership fee.
The following organizations provide further information on general topics related to tax-exempt organizations, including management, accountability, and fund-raising practices.
http://www.independentsector.org
The Independent Sector is a coalition of charitable organizations and others interested in the nonprofit sector. A prime focus of the group is to help nonprofit organizations implement effective accountability and ethical standards, and the group's website includes various standards and models to address these issues. The group also provides information on public policy issues of interest to nonprofit organizations and conducts and publishes research on various aspects of charitable giving and volunteering in the United States.
The Federal Trade Commission (FTC) website offers information to consumers, businesses, and nonprofit organizations about how to guard against charity fraud. The site provides numerous FTC articles highlighting common scam practices and offering advice on safe methods to donate, as well as ways to determine if a charitable organization is legitimate, such as a Charity Checklist, available at http://www.consumer.ftc.gov/articles/0074-giving-charity.
The Society for Nonprofit Organizations (SNPO) is an organization whose purpose is to provide a forum for the exchange of information on nonprofit organizations, offering services to directors, board members, volunteers, and anyone interested in nonprofit organizations operations. It offers professional support services and referral services to members and maintains an information center of books, periodicals, and tapes.
A list of the type of entities found in IRCReturns and applications can also be obtained online through the IRS's Tax-Exempt Organization Search Tool.89 In addition, the IRS has some information submitted by § 527 political organizations on its website. Nongovernmental websites such as GuideStar [www.guidestar.org] and ProPublica [projects.propublica.org/nonprofits] may also have copies of an organization's recent Forms 990 on their websites.
Appendix.
A list of the type of entities found in I.R.C. Chapter 1, Subchapter F ("Exempt Organizations") is provided in Table A-1.
Table A-1. Exempt Organizations ( Type Examples § 501(c)(1)IRCI.R.C. Chapter 1, Subchapter F)
Chapter 1, Subchapter F)
|
Type |
Examples |
|||||
|
501(c)(1) |
Corporations organized by Act of Congress | |||||
§ 501(c)(2) | Title-holding corporations | |||||
§ 501(c)(3) | Religious, educational, charitable, scientific, literary, testing for public safety, fostering national or international amateur sports competition, prevention of cruelty to children or animals | |||||
§ 501(c)(4) | Civic leagues, social welfare organizations, local associations of employees dedicated to charitable, educational, or recreational purposes | |||||
§ 501(c)(5) | Labor unions, agricultural and horticultural organizations | |||||
§ 501(c)(6) | Trade associations, chambers of commerce, professional football leagues | |||||
§ 501(c)(7) | Social and recreational clubs | |||||
§ 501(c)(8) | Fraternal benefit societies and associations | |||||
§ 501(c)(9) | VEBAs (Voluntary employees' beneficiary associations providing the payment of certain employee benefits) | |||||
§ 501(c)(10) | Domestic fraternal societies whose net earnings are devoted to religious, charitable, scientific, literary, educational, and fraternal purposes, which do not provide benefits to members | |||||
§ 501(c)(11) | Teachers' retirement fund associations | |||||
§ 501(c)(12) | Benevolent life insurance associations | |||||
|
501(c)(13) |
Cemetery companies |
|||||
|
501(c)(14) |
Credit unions |
|||||
|
501(c)(15) |
§ 501(c)(13) Cemetery companies § 501(c)(14) Credit unions § 501(c)(15) | |||||
§ 501(c)(16) | Cooperatives to finance crop operations | |||||
§ 501(c)(17) | Supplemental unemployment benefit trusts | |||||
§ 501(c)(18) | Pre-June 25, 1959, employee | |||||
§ 501(c)(19) |
Veterans' groups |
|||||
|
501(c)(20) |
Veterans' groups
§ 501(c)(20) | |||||
§ 501(c)(21) | Black lung benefit trusts | |||||
§ 501(c)(22) | Multi-employer pension plan trusts | |||||
§ 501(c)(23) |
| |||||
§ 501(c)(24) | ERISA trusts for certain terminated plans | |||||
§ 501(c)(25) | Multi-parent real property title-holding companies | |||||
§ 501(c)(26) | State-sponsored organizations providing health coverage to high | |||||
§ 501(c)(27) | State-sponsored workers' compensation reinsurance organization | |||||
§ 501(c)(28) | National Railroad Retirement Investment Trust | |||||
§ 501(c)(29) |
CO-OP health insurance issuers |
|||||
|
501(d) |
Religious and apostolic organizations with common or communal treasury |
|||||
|
501(e) |
Cooperative hospital service organizations |
|||||
|
501(f) |
Cooperative educational investment organizations |
|||||
|
501(k) |
Child care organizations |
|||||
|
501(n) |
Charitable risk pools |
|||||
|
521 |
Farmers' cooperatives |
|||||
|
526 |
Shipowners' protection and indemnity associations |
|||||
|
527 |
Political organizations |
|||||
|
528 |
Homeowners' associations |
|||||
|
529 |
Qualified tuition programs |
|||||
|
529A |
Qualified ABLE programs |
|||||
|
530 |
Coverdell education savings accounts |
Acknowledgments
[author name scrubbed], former Legislative Attorney, is the initial author of this report.
| 1. | IRC §501(c)(3) reads: CO-OP health insurance issuers
§ 501(d) Religious and apostolic organizations with common or communal treasury § 501(e) Cooperative hospital service organizations § 501(f) Cooperative educational investment organizations § 501(j) Qualified amateur sports organization § 501(k) Child-care organizations § 501(n) Charitable risk pools § 521 Farmers' cooperatives § 526 Shipowners' protection and indemnity associations § 527 Political organizations § 528 Homeowners' associations § 529 Qualified tuition programs § 529A Qualified ABLE programs § 530 Coverdell education savings accounts § 530A Trump accounts Marie B. Morris and Erika K. Lunder authored earlier versions of this report. Some types of tax-exempt organizations have subtypes which are subject to particular requirements, regulations, and tax benefits in addition to those generally applicable to that type of organization. For example, "churches" and "hospitals" are subtypes of § 501(c)(3) organizations. For more information about churches, see CRS In Focus IF12520, What Is a "Church" for Federal Tax Purposes?, by Milan N. Ball (2025); CRS In Focus IF12509, Church Tax Benefits, by Milan N. Ball (2023). For more information about tax-exempt hospitals, see CRS In Focus IF13192, Nonprofit Hospitals, Tax Benefits, and Charity Care, by Jane G. Gravelle (2026); CRS Report R48027, Legal Requirements for Section 501(c)(3) Hospitals, by Edward C. Liu (2024). See, e.g., 42 C.F.R. § 486.303(b) (2026) (interpreting the statutory requirement in 42 U.S.C. § 273(b)(1) that an organization be "a nonprofit entity" as requiring it be tax-exempt under I.R.C. § 501). William L. Boyd III, The New Model Nonprofit Corporation Act, Business Law Today (Oct. 16, 2023), https://www.americanbar.org/groups/business_law/resources/business-law-today/2023-october/the-new-model-nonprofit-corporation-act. See, e.g., D.C. Code § 29–410.03 ("Restrictions on dispositions of assets"). These requirements are referred to as the prohibitions on "private inurement" and "private benefit." For more information on these prohibitions, see CRS Report R48873, The Prohibitions on Private Inurement & Benefit by Tax-Exempt Organizations and Intermediate Sanctions, by Justin C. Chung (2026). Bob Jones Univ. v. United States, 461 U.S. 574, 585 (1983). Treas. Reg. § 1.501(c)(3)-1(d)(2). Bob Jones Univ., 461 U.S. at 586. I.R.C. § 501(c)(3) reads:
(A) Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes. (B) Subparagraph (A) shall not apply to an entity unless no part of the net earnings of such entity inures to the benefit of any private shareholder or individual.
The IRS recognizes that an organization qualifying under | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2. | (2026).
I.R.C. § 170. I.R.C. § 509(a)(3)(B). See, e.g., I.R.C. § 4960(c)(4). IRS, Form 990 Schedule R, Related Organizations and Unrelated Partnerships (2024), https://www.irs.gov/pub/irs-pdf/f990sr.pdf [https://perma.cc/LB5K-Q6M5]. I.R.C. § 509; Treas. Reg. § 1.509(a)-3 (as amended in 2020). I.R.C. § 509; Treas. Reg. § 1.509(a)-3. I.R.C. §§ 4940–4946. IRS, Form 990-PF: Return of Private Foundation (2025) https://www.irs.gov/pub/irs-pdf/f990pf.pdf [https://perma.cc/SX6X-YEYA] (last visited May 22, 2026). I.R.C. § 509; Treas. Reg. § 1.509(a)-3); IRS, Form 990 Schedule A: Public Charity Status and Public Support (2025), https://www.irs.gov/pub/irs-pdf/f990sa.pdf [https://perma.cc/2FK3-84CU] (last visited May 22, 2026). A donor may also be able to take a charitable deduction for contributions to a "donor advised fund." Such contributions are made to a fund, not a specific organization, and the fund sponsor makes grants to active charities as advised by the donor. For more information on donor advised funds, see CRS Report R42595, An Analysis of Charitable Giving and Donor Advised Funds, by Molly F. Sherlock and Jane G. Gravelle (2012). Tax-Exempt Organization Search Tool, IRS, https://www.irs.gov/charities-non-profits/search-for-tax-exempt-organizations [https://perma.cc/X4W2-QCST] (last visited May 21, 2026). United States v. Am. Bar Endowment, 477 U.S. 105, 116–118 (1986). I.R.C. § 6115. I.R.C. § 170(b). I.R.C. § 170(f)(8). I.R.C. § 170(f)(17). I.R.C. § 170(f)(11)(B); Treas. Reg. § 1.170A-16(c)(2) (as amended in 2024); IRS, Form 8283: Noncash Charitable Contributions (2025), https://www.irs.gov/pub/irs-pdf/f8283.pdf [https://perma.cc/ZKC6-VQWV] (last visited May 22, 2026) I.R.C. § 170(f)(11)(C); Treas. Reg. § 1.170A-16(d)(1). I.R.C. § 6113. I.R.C. § 6710. I.R.C. § 6710(c). For more information, see CRS Report RL33377, Tax-Exempt Organizations Under Internal Revenue Code Section 501(c): Political Activity Restrictions, by Justin C. Chung (2025). I.R.C. § 501(c)(3). I.R.C. § 501(h). For more information on the operation of the § 527(f) tax, see Question 9. I.R.C. § 527(f) imposes a tax on "exempt functions," which includes attempting to influence "selection, nomination, . . . or appointment" of an individual to public office. I.R.C. § 527(e)(2). IRS considers lobbying to include attempting to influence Senate confirmation of judicial and executive branch nominations. See I.R.S. Notice 88-76, 1988-2 C.B. 392; I.R.S. Gen. Couns. Mem. 39694 (Jan. 22, 1988). "Exempt functions" also includes political campaign activity (see Question 9). Treas. Reg. § 1.501(c)(4)-1(a)(2)(ii) (as amended in 1990) ("A social welfare organization . . . may qualify under section 501(c)(4) even though it is an action [i.e., lobbying] organization . . . if it otherwise qualifies under this section."); Rev. Rul. 2004-6, 2004-1 C.B. 328 (2003) ("Organizations that are exempt from federal income tax under § 501(a) as organizations described in §§ 501(c)(4), 501(c)(5), or 501(c)(6) may, consistent with their exempt purpose, publicly advocate positions on public policy issues. This advocacy may include lobbying for legislation consistent with these positions."). Pub. L No. 104-65, 109 Stat. 691 (codified as amended at 2 U.S.C. § 1611). For more information about Lobbying Disclosure Act of 1995, see CRS Report R44292, The Lobbying Disclosure Act at 20: Analysis and Issues for Congress, by Jacob R. Straus (2015). For more information, see CRS Report RL33377, Tax-Exempt Organizations Under Internal Revenue Code Section 501(c): Political Activity Restrictions, by Justin C. Chung (2025). I.R.C. § 501(c)(3). This prohibition is sometimes called the "Johnson Amendment" because Senator Lyndon Johnson added the provision as a floor amendment. See 100 Cong. Rec. 9604 (1954). Other entities not allowed to engage in campaign activity are those described in § 501(c)(2), (c)(17), (c)(18), (c)(21), (c)(22), (c)(24), (c)(25), and (c)(29). Most of these are trusts that must use their income exclusively for the purposes for which they are established. See Rev. Rul. 2007-41, 2007-25 I.R.B. 1421. See, e.g., Treas. Reg. § 1.501(c)(4)-1(a)(2) (as amended in 1990) ("An organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community. . . The promotion of 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."). See, e.g., CRS Report R40183, 501(c)(4)s and Campaign Activity: Analysis Under Tax and Campaign Finance Laws, by L. Paige Whitaker (2013). See id. I.R.C. § 527(f)(3); Treas. Reg. § 1.527-6(f) (1980). I.R.C. § 527(f)(3); Treas. Reg. § 1.527-6(f) (1980). U.S. Const. art. I, § 8, cl. 1. For more information about Congress's taxing power, see CRS Report R46551, The Federal Taxing Power: A Primer, by Milan N. Ball. See Ball, supra note 49. Knowlton v. Moore, 178 U.S. 41, 83–110 (1900); Regan v. Taxation with Representation of Washington, 461 U.S. 540, 544 (1983). 461 U.S. 540 (1983). See id. at 544. See id. See, e.g., Ams. for Prosperity Found. v. Bonta, 594 U.S. 595 (2021); Citizens United v. Schneiderman, 882 F.3d 374 (2d Cir. 2018). Bonta, 596 U.S. at 617–18. See also CRS Legal Sidebar LSB10621, Supreme Court Invalidates California Donor Disclosure Rule on First Amendment Grounds, by Victoria L. Killion (2021). Bonta, 596 U.S. at 617–18; Brief for the United States as Amicus Curiae Supporting Vacatur and Remand at 24, Bonta, 594 U.S. 595 (2021) (Nos. 19-251). Buckeye Inst. v. IRS, No. 25-3170 (6th Cir. argued Apr. 29, 2026). Buckeye Inst. v. IRS, No. 22-cv-4297, 2023 WL 7412043, at *4 (S.D. Ohio Nov. 9, 2023), amended, No. 22-cv-4297, 2024 WL 770872 (S.D. Ohio Feb. 26, 2024) Opening Brief for the Appellant, Buckeye, No. 25-3170 (6th Cir. June 20, 2025). Some organizations are federally chartered by acts of Congress. See, e.g., 47 U.S.C. § 396 (establishing the Corporation for Public Broadcasting). See, e.g., D.C. Code § 44–1704 (2026). The National Association of State Charity Officials (NASCO) provides links to state offices that regulate charitable solicitations, see Resources, NASCO, https://www.nasconet.org/resources [https://perma.cc/54B2-YKCH] (last visited May 22, 2026). The site includes the unified registration form for charities seeking to solicit in multiple states. See, e.g., D.C. Code § 29–402.02 (2026); D.C. Code § 29–102.01 (2026). All IRS forms and instructions mentioned in this report are available on the IRS website at https://www.irs.gov. Additionally, IRS Publication 557, Tax-Exempt Status for Your Organization, contains helpful information and is also available on the agency's website. I.R.C. § 508(c)(1); Treas. Reg. § 1.508-1(a)(3) (amended in 2017). Generally, if the organization files the Form 1023 within twenty-seven months of formation, it will be considered exempt from the date of formation. If the organization files the Form 1023 after twenty-seven months from the date of formation, the effective date of exempt status will generally be the date it filed the Form 1023. Rev. Proc. 2021-5, 2021-1 IRB 250; IRS, Instructions for Form 1023 (2024), https://www.irs.gov/pub/irs-pdf/p4220.pdf [https://perma.cc/DN8T-SGAG]; IRS, Pub. No. 4220, Compliance Guide for 501(c)(3) Public Charities 4 (2018), https://www.irs.gov/pub/irs-pdf/p4220.pdf [https://perma.cc/Q74X-35MM]. I.R.C. § 506. I.R.C. § 7428. IRS, Publication 5551: Maintaining Section 501(c)(3) Tax-Exempt Status Overview (2021) https://www.irs.gov/pub/irs-pdf/p5551.pdf [https://perma.cc/A8HF-J5CS]. For more information, see Ball, supra note footnote 10. I.R.C. § 501(p). I.R.C. § 7428. See generally I.R.C. § 6103. See e.g., Green v. Kennedy, 309 F. Supp. 1127 (D.D.C. 1970) (per curiam) (where a class action was brought to force the IRS to stop granting exempt status to racially discriminatory private schools), appeal dismissed sub nom., Cannon v. Green, 398 U.S. 956 (1970) (mem), and appeal dismissed sub nom., Coit v. Green, 400 U.S. 986 (1971) (mem.) (culminating in a summary affirmance). Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26 (1976). In re U.S. Cath. Conf. v. Baker, 885 F.2d 1020 (2d Cir. 1989). Some organizations do not have to file any information return, such as churches and certain church-related organizations. I.R.C. § 6033(a)(3). I.R.C. § 6652(c)(1)(A). The maximum penalty is the lesser of $10,000 or 5% of the organization's gross receipts. For organizations exceeding $1 million in gross receipts, the maximum penalty is $50,000. I.R.C. § 6033(j). The tax on unrelated business income is called the "Unrelated Business Income Tax" (UBIT) and is computed by applying the corporate income tax rate. I.R.C. §§ 511–513. For more information, see Publication 15 (2026) (Circular E), Employer's Tax Guide, IRS, https://www.irs.gov/publications/p15 [https://perma.cc/D243-NT3H] (last visited May 22, 2026). For more information on § 527 reporting requirements, see Filing Requirements for Political Organizations, IRS, https://www.irs.gov/charities-non-profits/political-organizations/filing-requirements-for-political-organizations [https://perma.cc/6DS6-SXUF] (last visited May 21, 2026). I.R.C. § 6104(d). If an organization is denied exempt status, its application for exemption is not open to public inspection. I.R.C. § 6104(d)(4); see also 26 C.F.R. § 301.6104(d)-2, which states that a tax-exempt organization can make its annual information return "widely available" by posting the document on an internet page established and maintained by the organization or by having the document posted, as part of a database of similar documents of other tax-exempt organizations, on an internet page established and maintained by another entity (e.g., GuideStar or ProPublica). This regulation also states what criteria must be met for a document to be considered widely available (e.g., the website must inform readers that the document is available and how it can be downloaded, the document must be an exact reproduction and be accessible without special hardware or software). See 26 C.F.R. § 301.610(d)-3 for discussion of what constitutes harassment. I.R.C. § 6104(b). Private foundations and § 527 political organizations must disclose substantial contributions. Id. I.R.C. § 6104(a)(1)(D). I.R.C. §§ 6104(a), 6110. Tax-Exempt Organization Search Tool, supra note footnote 23. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3. |
IRC §§4940-4946. |
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| 4. |
Available at http://www.irs.gov/Charities-&-Non-Profits/Exempt-Organizations-Select-Check. |
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| 5. |
IRC §6115. |
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| 6. |
For an economic analysis related to individuals who do not itemize deductions, see CRS Report RL31108, Economic Analysis of the Charitable Contribution Deduction for Non-Itemizers, by [author name scrubbed]. |
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| 7. |
IRC §6113. |
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| 8. |
IRC §6710. |
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| 9. |
For more information, see CRS Report R42381, Deductibility of Corporate Campaign Expenditures, by [author name scrubbed]. |
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| 10. |
IRC §6033(e). |
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| 11. |
For more information, see CRS Report RL33377, Tax-Exempt Organizations: Political Activity Restrictions and Disclosure Requirements, by [author name scrubbed]. |
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| 12. |
IRC §501(c)(3). Section 501(c)(29) organizations are similarly limited. Some organizations appear to be generally prohibited from lobbying—those described in Sections 501(c)(2), (c)(17), (c)(18), (c)(21), (c)(22), (c)(24), and (c)(25). Most of these are trusts that must use their income exclusively for the purposes for which they are established. |
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| 13. |
See Seasongood v. Comm'r, 227 F.2d 907 (6th Cir. 1955) (where the court found that an organization whose lobbying was about 5% of its activities was not engaged in a substantial amount of lobbying); League of Women Voters v. United States, 180 F. Supp. 379 (Ct. Cl. 1960) (where the court looked at the amount of hours the organization spent on legislative activities); Haswell v. United States, 205 Ct. Cl. 421 (Ct. Cl. 1975) (where the court found the fact that between 19% and 20.5% of the organization's expenditures were for lobbying was evidence that the organization violated the "no substantial part" rule). |
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| 14. |
See Christian Echoes Nat'l Ministry, Inc. v. United States, 470 F.2d 849 (10th Cir. 1972); Kuper v. Commissioner, 332 F.2d 562 (3rd Cir. 1964); Dulles v. Johnson, 273 F.2d 362 (2nd Cir. 1959); Krohn v. United States, 246 F. Supp. 341 (D. Colo. 1965). |
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| 15. |
IRC §501(h). |
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| 16. |
See footnote 12 for exceptions. |
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| 17. |
For more information, see CRS Report 96-809, Lobbying Regulations on Non-Profit Organizations, by [author name scrubbed]. |
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| 18. |
For more information, see CRS Report RL33377, Tax-Exempt Organizations: Political Activity Restrictions and Disclosure Requirements, by [author name scrubbed]. |
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| 19. |
IRC §501(c)(3). Other entities not allowed to engage in campaign activity are those described in Sections 501(c)(2), (c)(17), (c)(18), (c)(21), (c)(22), (c)(24), (c)(25), and (c)(29). Most of these are trusts that must use their income exclusively for the purposes for which they are established. |
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| 20. |
See also CRS Report R42684, Political Ads: Issue Advocacy or Campaign Activity Under the Tax Code?, by [author name scrubbed]. |
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| 21. |
See footnote 19 for exceptions. |
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| 22. |
See, e.g., CRS Report R40183, 501(c)(4)s and Campaign Activity: Analysis Under Tax and Campaign Finance Laws, by [author name scrubbed] and [author name scrubbed]. |
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| 23. |
See id. |
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| 24. |
IRC §527(f)(3). |
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| 25. |
For more information, see CRS Report RS21716, Political Organizations Under Section 527 of the Internal Revenue Code, by [author name scrubbed]. |
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| 26. |
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| 27. |
All IRS forms and instructions mentioned in this report are available on the IRS website at http://www.irs.gov. Additionally, IRS Publication 557, Tax-Exempt Status for Your Organization, contains helpful information and is also available on the agency's website. |
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| 28. |
Besides §501(c)(3) organizations, the only other types of §501(c) organizations that must file an application for tax-exempt status are §501(c)(9) voluntary employees' benefits trusts (VEBAs) and §501(c)(17) supplement unemployment compensation benefits trusts. See IRC §505(c). |
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| 29. |
IRC §7428 (also providing similar relief for §521 cooperatives). |
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| 30. |
IRC §501(p). |
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| 31. |
IRC §6103. |
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| 32. |
See e.g., Green v. Kennedy, 309 F.Supp. 1127 (D.D.C. 1970) (where a class action was brought to force the IRS to stop granting exempt status to racially discriminatory private schools) and its subsequent history found at 398 U.S. 956 (1970), 330 F.Supp. 1150 (D.D.C. 1971), culminating in a summary affirmance, Coit v. Green, 404 U.S. 997 (1971)). |
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| 33. |
Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26 (1976). |
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| 34. |
United States Catholic Conference v. Baker, 885 F.2d 1020 (2nd Cir. 1989). |
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| 35. |
Some organizations do not have to file any information return, such as churches and certain church-related organizations. IRC §6033(a)(3). |
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| 36. |
IRC §6652(c)(1)(A). The maximum penalty is the lesser of $10,000 or 5% of the organization's gross receipts. For organizations exceeding $1 million in gross receipts, the maximum penalty is $50,000. |
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| 37. |
IRC §6033(j). |
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| 38. |
For more information, see IRS Publication 15, Circular E, Employer's Tax Guide. |
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| 39. |
For more information on §527 reporting requirements, see CRS Report RS21716, Political Organizations Under Section 527 of the Internal Revenue Code, by [author name scrubbed]. |
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| 40. |
IRC §6104(d). If an organization is denied exempt status, its application for exemption is not open to public inspection. |
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| 41. |
IRC §6104(d)(4); see also 26 C.F.R. 301.6104(d)-2, which states that a tax-exempt organization can make its annual information return "widely available" by posting the document on an Internet page established and maintained by the organization or by having the document posted, as part of a database of similar documents of other tax-exempt organizations, on an Internet page established and maintained by another entity. This regulation also states what criteria must be met for a document to be considered widely available (e.g., the website must inform readers that the document is available and how it can be downloaded, the document must be an exact reproduction and be accessible without special hardware or software). |
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| 42. |
See 26 C.F.R. 301.610(d)-3 for discussion of what constitutes harassment. |
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| 43. |
IRC §§6104(a), 6110. |