In addition to our 501(c)3 application services, we can prepare applications for the different sections of the 501c code. Our $599 legal fee includes preparing the necessary forms and supporting documents for the IRS and state tax revenue boards, reviewing and amending the organizing documents, and preparing corporate bylaws.
501(c)4 exemptions are given to civic leagues and other organizations operated exclusively for the promotion of social welfare, or local associations of employees the membership of which is limited to a designated company or persons in a particular municipality or neighborhood and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes. Characteristics that set these organizations apart from 501(c)(3) organizations include an unlimited ability to lobby for legislation and the ability to participate in political campaigns.
Unlike donations to 501(c)(3) non-profit organizations, donations to a section 501(c)(4) organization are not deductible by the donor under section 170 of the code unless the recipient organization is either a volunteer fire department as described in revenue ruling 80-77 or a veteran's organization with at least 90% of its membership consisting of war veterans as described in IRS Revenue Ruling 84-140.
The 501(c)(6) is reserved explicitly to Professional and Trade organizations (Associations and Societies), chamber of commerce organizations, economic development corporations, real estate boards, trade boards, professional football leagues, and other types of business leagues. They are characterized by a common business interest, which the organization typically promotes. Organizations under this category are exempt from most federal income taxes. "Membership Dues" for a 501(c)(6) are tax-deductible as business expenses; however, any percentage of these used for political activities (like lobbying) is not tax-deductible. The organization must report what portion of these "dues" is not deductible.
501(c)(6) organizations may engage in limited political activities that inform, educate, and promote their given interest. They may not engage in direct expenditures advocating a vote for a political candidate or cause. Donations to 501(c)(6) organizations are not required to be disclosed.
A section 501(c)(7) organization is permitted to receive up to 35% of its gross receipts, including investment income, outside of its membership without losing its tax-exempt status. However, only 15% of the organization's gross receipts may be derived from the organization's facilities' facilities by the general public.
The existence of private inurement can operate to deprive a social club of its exempt status. The general test is whether the club generates revenue from non-members, the use of which overflows to the personal advantage of the members (such as reduced dues, improved facilities, and the like).
501(c)(10) establishes an exemption from federal income taxes for groups, associations or organizations that operate as a fraternal organization. These groups usually operate as "lodges" or sub-chapters under the parent's control or supervision.
The tax-exempt function is related to the cause that these groups raise funds. While they are a tax-exempt organization, the only charitable, tax-deductible contributions that are allowed must be used exclusively to support a recognized 501(c)(3) public charity.