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An Overview of the Different Sections of 501 c
Posted: Aug 25, 2015
In order to understand the different sections of 501c you first must know what a 501 c is. The term 501 c is referring to Title 26, Section 501(c) of the United States Internal Revenue Code. This specific section allows for certain types of nonprofit organizations to be exempt from paying some federal taxes, which is why so many organizations pursue the 501 c status. Obtaining any 501c status requires an application to be filled out and submitted to the IRS.You must also be able to provide the necessary supporting documentation needed to supplement your request. In order to become a tax exempt organization you must be incorporated within your state, just like any other corporation would be.
There are many different types of organizations that are recognized by the IRS under the code 501 c. There are 26 different types of 501 c organizations ranging from 501c1 through 501c28, with no 501c20 or 501c24. Each of these different numbers indicates a different type of organization or an organization with a specific purpose. The most common type of 501 c organizations is the 501c3. 501c3 nonprofit organizations are typically organized for Religious, Educational, Charitable or Scientific purposes. Most nonprofit organizations fall into this category. One additional benefit of having a 501c3 organization is that all donations made to the organization can be written off as a tax deduction for the donor.
Another common type of 501 c organization is the 501c4. Thesenonprofit organizations are generally civic leagues and other organizationsorganized and operated exclusively for the promotion of social welfare, or local associations of employees with membership limited to a designated company or people in a particular municipality or neighborhood, and with net earnings devoted exclusively to charitable, educational, or recreational purposes.Unlike 501c3 organizations, 501c4 organizations may lobby for legislation; they may also participate in political campaigns and elections, as long as campaigning is not the organization's primary purpose. Contributions to 501c4 organizations are not deductible as charitable contributions. 501c4 organizations are not required to disclose their donors publicly.This aspect of the law has led to extensive use of the 501c4 provisions for organizations that are actively involved in lobbying, and has become controversial.
The tax exemption for 501c4 organizations applies to most of their operations, but contributions may be subject to gift tax, and income spent on political activities - generally the advocacy of a particular candidate in an election - is taxable.
Below is a list of the various types of 501 c organizations along with a brief description of the specific purpose of each.
- 501(c)(1) — Corporations Organized Under Act of Congress (including Federal Credit Unions)
- 501(c)(2) — Title Holding Corporation for Exempt Organization
- 501(c)(3) — Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations
- 501(c)(4) — Civic Leagues, Social Welfare Organizations, and Local Associations of Employees
- 501(c)(5) — Labor, Agricultural, and Horticultural Organizations
- 501(c)(6) — Business Leagues, Chambers of Commerce, Real Estate Boards, etc.
- 501(c)(7) — Social and Recreational Clubs
- 501(c)(8) — Fraternal Beneficiary Societies and Associations
- 501(c)(9) — Voluntary Employees Beneficiary Associations
- 501(c)(10) — Domestic Fraternal Societies and Associations
- 501(c)(11) — Teachers' Retirement Fund Associations
- 501(c)(12) — Benevolent Life Insurance Associations, Mutual Ditch or Irrigation Companies, Mutual or Cooperative Telephone Companies, etc.
- 501(c)(13) — Cemetery Companies
- 501(c)(14) — State-Chartered Credit Unions, Mutual Reserve Funds
- 501(c)(15) — Mutual Insurance Companies or Associations
- 501(c)(16) — Cooperative Organizations to Finance Crop Operations
- 501(c)(17) — Supplemental Unemployment Benefit Trusts
- 501(c)(18) — Employee Funded Pension Trust (created before June 25, 1959)
- 501(c)(19) — Post or Organization of Past or Present Members of the Armed Forces
- 501(c)(21) — Black lung Benefit Trusts
- 501(c)(22) — Withdrawal Liability Payment Fund
- 501(c)(23) — Veterans Organization (created before 1880)
- 501(c)(25) — Title Holding Corporations or Trusts with Multiple Parents
- 501(c)(26) — State-Sponsored Organization Providing Health Coverage for High-Risk Individuals
- 501(c)(27) — State-Sponsored Workers' Compensation Reinsurance Organization
- 501(c)(28) — National Railroad Retirement Investment Trust
Many of these sections are for very specific activities and as a result are not commonly used. Some such as the 501c20 and 501c24 have been combined with other sections or done away with all together. With each different section come slightly different rules and regulations to be aware of. As always, it is a good idea to learn as much as possible about the specific rules before becoming involved with any type of 501 organizations.
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The author of the article has an extensive experience in the field of 501c3 form and how to get 501c3
The author of the article has an extensive experience in the field of above posted article.