What is IRS classification of tax-exempt organizations

2. Characteristics of the major type of tax-exempt organization

Major types of tax-exempt organizations, along with some of their characteristics, are listed below:

501(c)(3) public charities:

  1. Examples:
    1. Amateur sports
    2. Charitable
    3. Educational
    4. Literary
    5. Organized to prevent cruelty to animals or children
    6. Religious
    7. Scientific
  2. Some of their characteristics:

    1. Contributions are deductible by the donors
    2. Exempt from the Federal Unemployment Tax Act (FUTA)
    3. If allowed under state law, exempt from sales or other local state taxes
    4. Clergy: exempt from the Federal Insurance Contributions Act (FICA)
    5. Limited lobbying expenditures
    6. Cannot lobby in election campaigns

501(c)(3) private foundations are similar to public charities. Private foundations, however, have operating restrictions imposed by IRS and have more reporting requirements. There are also limitations on the deduction of donations made to private foundations.

501(c)(4) tax-exempt organizations:

  1. Examples:
    1. Employee associations organized for charitable purposes
    2. Social welfare organizations
  2. Some of their characteristics:
    1. Charitable contributions are not deductible by the donors
    2. Not exempt from  FUTA, FICA, state or local taxes
    3. Unrestricted lobbying activity, except foundations cannot participate in political activities

501(c)(5) tax-exempt organizations:

  1. Examples:
    1. Agriculture
    2. Horticulture
    3. Labor
    4. Unions
  2. Some of their characteristics:
    1. Charitable contributions are not deductible by the donors
    2. Not exempt from FUTA, FICA, state or local taxes
    3. Unrestricted lobbying activity
    4. Can participate in political activities (with the exception of unions of federal government employees which cannot participate in political activities in accordance with  the Hatch Act)

501(c)(6) tax-exempt organizations:

  1. Examples:
    1. Boards of trade
    2. Business leagues
    3. Chambers of commerce
    4. Nonprofit professional football leagues
    5. Professional associations
    6. Real estate boards
  2. Some of their characteristics:
    1. Charitable contributions are not deductible by the donors (except, charitable contributions might be deductible as a business expense)
    2. Not exempt from FUTA, FICA, state or local taxes
    3. Unrestricted lobbying and political activity

501(c)(7) tax-exempt organizations are very similar to 501(c)(6) entities. 501(c)(7) tax-exempt organizations (e.g., social and recreational clubs), however, have stricter limitations on the revenues from nonmembers. For instance, nonmember activity could result in converting a 501(c)(7) tax-exempt entity into a taxable organization. 

501(c)(19) tax-exempt organizations are also very similar to 501(c)(6) entities, with the exception that charitable donations made to 501(c)(19) organizations are deductible by the donors. An example of 501(c)(19) tax-exempt entity is an armed forces organization with 75% or more of its membership consisting of present and past members of the U.S. armed forces.

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