What is IRS classification of tax-exempt organizations

January 23, 2013

IRS classification of tax-exempt organizations like those under IRS Code 501(c)(3), 501(c)(3), 501(c)(4), 501(c)(5), 501(c)(6), 501(c)(7), 501(c)(19) is described.

1. List of tax-exempt organizations

Tax-exempt organizations are entities that – without profit motive and private ownership – are organized to serve a societal or group mission; and as the result, these entities are granted a special legal and tax status.

Tax-exempt organizations are distinguished from non-exempt organizations by their:

  • Ownership
  • Motivation
  • Activities
  • Sources of revenue

Tax exempt organizations include many non-for-profits such as charities, churches, schools, hospitals, political parties, unions, etc. As the result, tax-exempt and non-for-profit terms are often used interchangeably. However, the non-for-profit status requirements vary from state to state and can hardly be generalized. On the other hand, tax-exempt status can be generalized as the status that grants exemption from federal income taxes (i.e., to learn more about state exemptions, refer to state requirements).

Tax-exempt status is granted by IRS. Tax-exempt status application process starts by completing the following forms:

  • Form 1023: Application for Recognition of Exemption Under Section 501(c)(3) (i.e., for 501(c)(3) organizations)
  • Form 1024: Application for Recognition of Exemption (i.e., for all other non-for-profits)

There are more than 30 types of tax-exempt organizations under IRS classification. A brief list is presented below:

  • 501(c)(1): entities organized under the act of Congress
  • 501(c)(2): title-holding corporations for tax-exempt entities
  • 501(c)(3): public charities and private foundations
  • 501(c)(4): social welfare organizations
  • 501(c)(5): agriculture, horticulture, labor, and unions
  • 501(c)(6): business leagues, chambers of commerce, professional associations, and real estate boards
  • 501(c)(7): social and recreational clubs
  • 501(c)(8): fraternal organizations providing accident, life, and sickness benefits to their members and dependents
  • 501(c)(9): employee organizations providing accident, life, and sickness benefits to their members, dependents, and beneficiaries
  • 501(c)(10): fraternal organizations providing other than accident, life, and sickness benefits, including educational, religious, scientific, etc.
  • 501(c)(11): local teacher retirement fund associations
  • 501(c)(12): local ditch, irrigation, life insurance, and telephone associations
  • 501(c)(13): burial, cemetery, and cremation organizations
  • 501(c)(14): credit unions (without capital stock)
  • 501(c)(15): insurance companies – other than  life or marine – with receipts under $150,000
  • 501(c)(16): cooperative farmers associations
  • 501(c)(17): supplemental unemployment benefit trusts
  • 501(c)(18): employee-funded pension plans organized before June 25, 1959
  • 501(c)(19): armed forces associations
  • 501(c)(20): legal services plans
  • 501(c)(21): Black Lung Benefit Trusts
  • 501(c)(22): Withdrawal Liability Payment Fund (the Employment Retirement Income Security Act of 1974)
  • 501(c)(23): veteran organizations created before 1880
  • 501(c)(24): Employment Retirement Income  Security Act of 1974 trust under Section 4049
  • 501(c)(25): other title-holding corporations and trusts (e.g., with multiple parents)
  • 501(c)(26): state-sponsored organizations providing health coverage for high-risk Individuals
  • 501(c)(27): state-sponsored workers’ compensation re-insurance organizations
  • 501(c)(28): national railroad retirement investment trust
  • 501(c)(29): qualified nonprofit health insurance issuers (under the Affordable Care Act, section  1322(h)(1))
  • 501(d): religious and apostolic organizations
  • 501(e): cooperative hospital service organizations
  • 501(k): child care organizations
  • 527: political organizations
  • 528: homeowners’ associations
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