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Amending My 2012 Tax Return

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Amending My 2012 Tax Return

Amending my 2012 tax return 11. Amending my 2012 tax return   Departing Aliens and the Sailing or Departure Permit Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Aliens Not Required To Obtain Sailing or Departure Permits Aliens Required To Obtain Sailing or Departure PermitsGetting a Sailing or Departure Permit Forms To File Paying Taxes and Obtaining Refunds Bond To Ensure Payment Filing Annual U. Amending my 2012 tax return S. Amending my 2012 tax return Income Tax Returns Introduction Before leaving the United States, all aliens (except those listed under Aliens Not Required To Obtain Sailing or Departure Permits must obtain a certificate of compliance. Amending my 2012 tax return This document, also popularly known as the sailing permit or departure permit, is part of the income tax form you must file before leaving. Amending my 2012 tax return You will receive a sailing or departure permit after filing a Form 1040-C or Form 2063. Amending my 2012 tax return These forms are discussed in this chapter. Amending my 2012 tax return To find out if you need a sailing or departure permit, first read Aliens Not Required To Obtain Sailing or Departure Permits . Amending my 2012 tax return If you do not fall into one of the categories in that discussion, you must obtain a sailing or departure permit. Amending my 2012 tax return Read Aliens Required To Obtain Sailing or Departure Permits . Amending my 2012 tax return Topics - This chapter discusses: Who needs a sailing permit, How to get a sailing permit, and Forms you file to get a sailing permit. Amending my 2012 tax return Useful Items - You may want to see: Form (and Instructions) 1040-C U. Amending my 2012 tax return S. Amending my 2012 tax return Departing Alien Income Tax Return 2063 U. Amending my 2012 tax return S. Amending my 2012 tax return Departing Alien Income Tax Statement See chapter 12 for information about getting these forms. Amending my 2012 tax return Aliens Not Required To Obtain Sailing or Departure Permits If you are included in one of the following categories, you do not have to get a sailing or departure permit before leaving the United States. Amending my 2012 tax return If you are in one of these categories and do not have to get a sailing or departure permit, you must be able to support your claim for exemption with proper identification or give the authority for the exemption. Amending my 2012 tax return Category 1. Amending my 2012 tax return   Representatives of foreign governments with diplomatic passports, whether accredited to the United States or other countries, members of their households, and servants accompanying them. Amending my 2012 tax return Servants who are leaving, but not with a person with a diplomatic passport, must get a sailing or departure permit. Amending my 2012 tax return However, they can get a sailing or departure permit on Form 2063 without examination of their income tax liability by presenting a letter from the chief of their diplomatic mission certifying that: Their name appears on the “White List” (a list of employees of diplomatic missions), and They do not owe to the United States any income tax, and will not owe any tax up to and including the intended date of departure. Amending my 2012 tax return   The statement must be presented to an IRS office. Amending my 2012 tax return Category 2. Amending my 2012 tax return    Employees of international organizations and foreign governments (other than diplomatic representatives exempt under category 1) and members of their households: Whose compensation for official services is exempt from U. Amending my 2012 tax return S. Amending my 2012 tax return tax under U. Amending my 2012 tax return S. Amending my 2012 tax return tax laws (described in chapter 10), and Who receive no other income from U. Amending my 2012 tax return S. Amending my 2012 tax return sources. Amending my 2012 tax return If you are an alien in category (1) or (2), above, who filed the waiver under section 247(b) of the Immigration and Nationality Act, you must get a sailing or departure permit. Amending my 2012 tax return This is true even if your income is exempt from U. Amending my 2012 tax return S. Amending my 2012 tax return tax because of an income tax treaty, consular agreement, or international agreement. Amending my 2012 tax return Category 3. Amending my 2012 tax return   Alien students, industrial trainees, and exchange visitors, including their spouses and children, who enter on an “F-1,” “F-2,” “H-3,” “H-4,” “J-1,” “J-2,” or “Q” visa only and who receive no income from U. Amending my 2012 tax return S. Amending my 2012 tax return sources while in the United States under those visas other than: Allowances to cover expenses incident to study or training in the United States, such as expenses for travel, maintenance, and tuition, The value of any services or food and lodging connected with this study or training, Income from employment authorized by the U. Amending my 2012 tax return S. Amending my 2012 tax return Citizenship and Immigration Services (USCIS), or Interest income on deposits that is not effectively connected with a U. Amending my 2012 tax return S. Amending my 2012 tax return trade or business. Amending my 2012 tax return (See Interest Income in chapter 3. Amending my 2012 tax return ) Category 4. Amending my 2012 tax return   Alien students, including their spouses and children, who enter on an “M-1” or “M-2” visa only and who receive no income from U. Amending my 2012 tax return S. Amending my 2012 tax return sources while in the United States under those visas, other than: Income from employment authorized by the U. Amending my 2012 tax return S. Amending my 2012 tax return Citizenship and Immigration Services (USCIS) or Interest income on deposits that is not effectively connected with a U. Amending my 2012 tax return S. Amending my 2012 tax return trade or business. Amending my 2012 tax return (See Interest Income in chapter 3. Amending my 2012 tax return ) Category 5. Amending my 2012 tax return   Certain other aliens temporarily in the United States who have received no taxable income during the tax year up to and including the date of departure or during the preceding tax year. Amending my 2012 tax return If the IRS has reason to believe that an alien has received income subject to tax and that the collection of income tax is jeopardized by departure, it may then require the alien to obtain a sailing or departure permit. Amending my 2012 tax return Aliens in this category are: Alien military trainees who enter the United States for training under the sponsorship of the Department of Defense and who leave the United States on official military travel orders, Alien visitors for business on a “B-1” visa, or on both a “B-1” visa and a “B-2” visa, who do not remain in the United States or a U. Amending my 2012 tax return S. Amending my 2012 tax return possession for more than 90 days during the tax year, Alien visitors for pleasure on a “B-2” visa, Aliens in transit through the United States or any of its possessions on a “C-1” visa, or under a contract, such as a bond agreement, between a transportation line and the Attorney General, and Aliens who enter the United States on a border-crossing identification card or for whom passports, visas, and border-crossing identification cards are not required, if they are: Visitors for pleasure, Visitors for business who do not remain in the United States or a U. Amending my 2012 tax return S. Amending my 2012 tax return possession for more than 90 days during the tax year, or In transit through the United States or any of its possessions. Amending my 2012 tax return Category 6. Amending my 2012 tax return   Alien residents of Canada or Mexico who frequently commute between that country and the United States for employment, and whose wages are subject to the withholding of U. Amending my 2012 tax return S. Amending my 2012 tax return tax. Amending my 2012 tax return Aliens Required To Obtain Sailing or Departure Permits If you do not fall into one of the categories listed under Aliens Not Required To Obtain Sailing or Departure Permits, you must obtain a sailing or departure permit. Amending my 2012 tax return To obtain a permit, file Form 1040-C or Form 2063 (whichever applies) with your local IRS office before you leave the United States. Amending my 2012 tax return See Forms To File , later. Amending my 2012 tax return You must also pay all the tax shown as due on Form 1040-C and any taxes due for past years. Amending my 2012 tax return See Paying Taxes and Obtaining Refunds , later. Amending my 2012 tax return Getting a Sailing or Departure Permit The following discussion covers when and where to get your sailing permit. Amending my 2012 tax return Where to get a sailing or departure permit. Amending my 2012 tax return   If you have been working in the United States, you should get the permit from an IRS office in the area of your employment, or you may obtain one from an IRS office in the area of your departure. Amending my 2012 tax return When to get a sailing or departure permit. Amending my 2012 tax return   You should get your sailing or departure permit at least 2 weeks before you plan to leave. Amending my 2012 tax return You cannot apply earlier than 30 days before your planned departure date. Amending my 2012 tax return Do not wait until the last minute in case there are unexpected problems. Amending my 2012 tax return Papers to submit. Amending my 2012 tax return   Getting your sailing or departure permit will go faster if you bring to the IRS office papers and documents related to your income and your stay in the United States. Amending my 2012 tax return Bring the following records with you if they apply. Amending my 2012 tax return Your passport and alien registration card or visa. Amending my 2012 tax return Copies of your U. Amending my 2012 tax return S. Amending my 2012 tax return income tax returns filed for the past 2 years. Amending my 2012 tax return If you were in the United States for less than 2 years, bring the income tax returns you filed for that period. Amending my 2012 tax return Receipts for income taxes paid on these returns. Amending my 2012 tax return Receipts, bank records, canceled checks, and other documents that prove your deductions, business expenses, and dependents claimed on your returns. Amending my 2012 tax return A statement from each employer showing wages paid and tax withheld from January 1 of the current year to the date of departure if you were an employee. Amending my 2012 tax return If you were self-employed, you must bring a statement of income and expenses up to the date you plan to leave. Amending my 2012 tax return Proof of estimated tax payments for the past year and this year. Amending my 2012 tax return Documents showing any gain or loss from the sale of personal property and/or real property, including capital assets and merchandise. Amending my 2012 tax return Documents relating to scholarship or fellowship grants including: Verification of the grantor, source, and purpose of the grant. Amending my 2012 tax return Copies of the application for, and approval of, the grant. Amending my 2012 tax return A statement of the amount paid, and your duties and obligations under the grant. Amending my 2012 tax return A list of any previous grants. Amending my 2012 tax return Documents indicating you qualify for any special tax treaty benefits claimed. Amending my 2012 tax return Document verifying your date of departure from the United States, such as an airline ticket. Amending my 2012 tax return Document verifying your U. Amending my 2012 tax return S. Amending my 2012 tax return taxpayer identification number, such as a social security card or an IRS issued Notice CP 565 showing your individual taxpayer identification number (ITIN). Amending my 2012 tax return Note. Amending my 2012 tax return   If you are married and reside in a community property state, also bring the above-listed documents for your spouse. Amending my 2012 tax return This applies whether or not your spouse requires a permit. Amending my 2012 tax return Forms To File If you must get a sailing or departure permit, you must file Form 2063 or Form 1040-C. Amending my 2012 tax return Employees in the IRS office can assist in filing these forms. Amending my 2012 tax return Both forms have a “certificate of compliance” section. Amending my 2012 tax return When the certificate of compliance is signed by an agent of the Field Assistance Area Director, it certifies that your U. Amending my 2012 tax return S. Amending my 2012 tax return tax obligations have been satisfied according to available information. Amending my 2012 tax return Your Form 1040-C copy of the signed certificate, or the one detached from Form 2063, is your sailing or departure permit. Amending my 2012 tax return Form 2063 This is a short form that asks for certain information but does not include a tax computation. Amending my 2012 tax return The following departing aliens can get their sailing or departure permits by filing Form 2063. Amending my 2012 tax return Aliens, whether resident or nonresident, who have had no taxable income for the tax year up to and including the date of departure and for the preceding year, if the period for filing the income tax return for that year has not expired. Amending my 2012 tax return Resident aliens who have received taxable income during the tax year or preceding year and whose departure will not hinder the collection of any tax. Amending my 2012 tax return However, if the IRS has information indicating that the aliens are leaving to avoid paying their income tax, they must file a Form 1040-C. Amending my 2012 tax return Aliens in either of these categories who have not filed an income tax return or paid income tax for any tax year must file the return and pay the income tax before they can be issued a sailing or departure permit on Form 2063. Amending my 2012 tax return The sailing or departure permit detached from Form 2063 can be used for all departures during the current year. Amending my 2012 tax return However, the IRS may cancel the sailing or departure permit for any later departure if it believes the collection of income tax is jeopardized by that later departure. Amending my 2012 tax return Form 1040-C If you must get a sailing or departure permit and you do not qualify to file Form 2063, you must file Form 1040-C. Amending my 2012 tax return Ordinarily, all income received or reasonably expected to be received during the tax year up to and including the date of departure must be reported on Form 1040-C and the tax on it must be paid. Amending my 2012 tax return When you pay any tax shown as due on the Form 1040-C, and you file all returns and pay all tax due for previous years, you will receive a sailing or departure permit. Amending my 2012 tax return However, the IRS may permit you to furnish a bond guaranteeing payment instead of paying the taxes for certain years. Amending my 2012 tax return See Bond To Ensure Payment , discussed later. Amending my 2012 tax return The sailing or departure permit issued under the conditions in this paragraph is only for the specific departure for which it is issued. Amending my 2012 tax return Returning to the United States. Amending my 2012 tax return   If you furnish the IRS with information showing, to the satisfaction of the IRS, that you intend to return to the United States and that your departure does not jeopardize the collection of income tax, you can get a sailing or departure permit by filing Form 1040-C without having to pay the tax shown on it. Amending my 2012 tax return You must, however, file all income tax returns that have not yet been filed as required, and pay all income tax that is due on these returns. Amending my 2012 tax return   Your Form 1040-C must include all income received and reasonably expected to be received during the entire year of departure. Amending my 2012 tax return The sailing or departure permit issued with this Form 1040-C can be used for all departures during the current year. Amending my 2012 tax return However, the Service may cancel the sailing or departure permit for any later departure if the payment of income tax appears to be in jeopardy. Amending my 2012 tax return Joint return on Form 1040-C. Amending my 2012 tax return   Departing husbands and wives who are nonresident aliens cannot file joint returns. Amending my 2012 tax return However, if both spouses are resident aliens, they can file a joint return on Form 1040-C if: Both spouses can reasonably be expected to qualify to file a joint return at the normal close of their tax year, and The tax years of the spouses end at the same time. Amending my 2012 tax return Paying Taxes and Obtaining Refunds You must pay all tax shown as due on the Form 1040-C at the time of filing it, except when a bond is furnished, or the IRS is satisfied that your departure does not jeopardize the collection of income tax. Amending my 2012 tax return You must also pay any taxes due for past years. Amending my 2012 tax return If the tax computation on Form 1040-C results in an overpayment, there is no tax to pay at the time you file that return. Amending my 2012 tax return However, the IRS cannot provide a refund at the time of departure. Amending my 2012 tax return If you are due a refund, you must file either Form 1040NR or Form 1040NR-EZ at the end of the tax year. Amending my 2012 tax return Bond To Ensure Payment Usually, you must pay the tax shown as due on Form 1040-C when you file it. Amending my 2012 tax return However, if you pay all taxes due that you owe for prior years, you can furnish a bond guaranteeing payment instead of paying the income taxes shown as due on the Form 1040-C or the tax return for the preceding year if the period for filing that return has not expired. Amending my 2012 tax return The bond must equal the tax due plus interest to the date of payment as figured by the IRS. Amending my 2012 tax return Information about the form of bond and security on it can be obtained from your IRS office. Amending my 2012 tax return Filing Annual U. Amending my 2012 tax return S. Amending my 2012 tax return Income Tax Returns Form 1040-C is not an annual U. Amending my 2012 tax return S. Amending my 2012 tax return income tax return. Amending my 2012 tax return If an income tax return is required by law, that return must be filed even though a Form 1040-C has already been filed. Amending my 2012 tax return Chapters 5 and 7 discuss filing an annual U. Amending my 2012 tax return S. Amending my 2012 tax return income tax return. Amending my 2012 tax return The tax paid with Form 1040-C should be taken as a credit against the tax liability for the entire tax year on your annual U. Amending my 2012 tax return S. Amending my 2012 tax return income tax return. Amending my 2012 tax return Prev  Up  Next   Home   More Online Publications
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Tax Information For Partnerships

2008 Changes to Form 1065 - Frequently Asked Questions
Form 1065 has a number of changes for 2008. For example, Schedule B and Schedule K-1 require reporting of ownership percentages. The FAQ page on Form 1065 changes offers helpful examples.

Partnership - Audit Techniques Guide (ATG)
The focus is on issues that fall within sections 701 through 761 of the Code (Subchapter K). Subchapter K deals primarily with the formation, operation, and termination of partnerships. Many issues arise during the initial or final year of the partnership.

Starting a Business
If you’re considering starting a business, then start here. This section provides links to everything from a checklist for a new business to selecting a business structure and more.

Notification of Possible Filing Requirement
This reminder is being issued to alert partnerships that they may have an additional filing requirement with the Internal Revenue Service related to a foreign partner(s) on their partnership return.

Modernized e-file (MeF) for Partnerships
This web site provides an overview of electronic filing and more detailed information for those partnerships that prepare and transmit their own income tax returns using MeF. Partnerships that rely upon third party tax professionals to prepare and transmit their tax returns should consult their tax professional.

Partnerships
A partnership is the relationship existing between two or more persons who join to carry on a trade or business.

Publicly Traded Partnerships
This page contains information related to publicly traded partnerships that have effectively connected income, gain, or loss and who must pay withholding tax on any distributions of income made to its foreign partners.

Report of Foreign Bank and Financial Accounts (FBAR)
If you own a foreign bank account, brokerage account, mutual fund, unit trust, or other financial account, then you may be required to report the account yearly to the Internal Revenue Service.

Page Last Reviewed or Updated: 30-Mar-2014

The Amending My 2012 Tax Return

Amending my 2012 tax return 4. Amending my 2012 tax return   Other Section 501(c) Organizations Table of Contents Introduction 501(c)(4) - Civic Leagues and Social Welfare OrganizationsSpecific Organizations 501(c)(5) - Labor, Agricultural and Horticultural OrganizationsLabor Organizations Agricultural and Horticultural Organizations 501(c)(6) - Business Leagues, etc. Amending my 2012 tax return Line of business. Amending my 2012 tax return Examples. Amending my 2012 tax return Improvement of business conditions. Amending my 2012 tax return Exception for local legislation. Amending my 2012 tax return De minimis exception. Amending my 2012 tax return Grass roots lobbying. Amending my 2012 tax return 501(c)(7) - Social and Recreation ClubsLimited membership. Amending my 2012 tax return Support. Amending my 2012 tax return Facilities open to public. Amending my 2012 tax return Gross receipts from nonmembership sources. Amending my 2012 tax return Gross receipts. Amending my 2012 tax return Nontraditional activities. Amending my 2012 tax return 501(c)(8) and 501(c)(10) - Fraternal Beneficiary Societies and Domestic Fraternal SocietiesFraternal Beneficiary Societies (501(c)(8)) Domestic Fraternal Societies (501(c)(10)) 501(c)(4), 501(c)(9), and 501(c)(17) - Employees' AssociationsLocal Employees' Associations (501(c)(4)) Voluntary Employees' Beneficiary Associations (501(c)(9)) Supplemental Unemployment Benefit Trusts (501(c)(17)) 501(c)(12) - Local Benevolent Life Insurance Associations, Mutual Irrigation and Telephone Companies, and Like OrganizationsMembership. Amending my 2012 tax return Losses and expenses. Amending my 2012 tax return Distributions of proceeds. Amending my 2012 tax return The 85% Requirement Local Life Insurance Associations Mutual or Cooperative Associations 501(c)(13) - Cemetery CompaniesBuying cemetery property. Amending my 2012 tax return Perpetual care organization. Amending my 2012 tax return Care of individual plots. Amending my 2012 tax return 501(c)(14) - Credit Unions and Other Mutual Financial OrganizationsState-Chartered Credit Unions Other Mutual Financial Organizations 501(c)(19) - Veterans' Organizations 501(c)(20) - Group Legal Services Plan Organizations 501(c)(21) - Black Lung Benefit TrustsExcise taxes. Amending my 2012 tax return 501(c)(2) - Title-Holding Corporations for Single Parent CorporationsExpenses. Amending my 2012 tax return Waiver of payment of income. Amending my 2012 tax return 501(c)(25) - Title-Holding Corporations or Trusts for Multiple Parent CorporationsUnrelated Business Income 501(c)(26) - State-Sponsored High-Risk Health Coverage Organizations 501(c)(27) - Qualified State-Sponsored Workers' Compensation Organizations 501(c)(29) - CO-OP Health Insurance Issuers New Guidance for IRC 501(c)(29) Qualified Nonprofit Health Insurance Issuers General Requirements for Exemption under 501(c)(29) and Annual Filing Requirement Additional Guidance for Prospective 501(c)(29) Organizations Introduction This chapter contains specific information for certain organizations described in section 501(c), other than those organizations that are described in section 501(c)(3). Amending my 2012 tax return Section 501(c)(3) organizations are covered in chapter 3 of this publication. Amending my 2012 tax return The Table of Contents at the beginning of this publication, as well as the Organization Reference Chart, may help you locate at a glance the type of organization discussed in this chapter. Amending my 2012 tax return 501(c)(4) - Civic Leagues and Social Welfare Organizations If your organization is not organized for profit and will be operated primarily to promote social welfare to benefit the community, you should file Form 1024 to apply for recognition of exemption from federal income tax under section 501(c)(4). Amending my 2012 tax return The discussion that follows describes the information you must provide when applying. Amending my 2012 tax return For application procedures, see chapter 1. Amending my 2012 tax return To qualify for exemption under section 501(c)(4), the organization's net earnings must be devoted primarily to charitable, educational, or recreational purposes. Amending my 2012 tax return In addition, no part of the organization's net earnings can inure to the benefit of any private shareholder or individual. Amending my 2012 tax return If the organization provides an excess benefit to certain persons, an excise tax may be imposed. Amending my 2012 tax return See Excise tax on excess benefit transactions , under Excess Benefit Transactions in chapter 5 for more information about this tax. Amending my 2012 tax return Examples. Amending my 2012 tax return   Types of organizations that are considered to be social welfare organizations are civic associations and volunteer fire companies. Amending my 2012 tax return Nonprofit operation. Amending my 2012 tax return   You must submit evidence that your organization is organized and will be operated on a nonprofit basis. Amending my 2012 tax return However, such evidence, including the fact that your organization is organized under a state law relating to nonprofit corporations, will not in itself establish a social welfare purpose. Amending my 2012 tax return Social welfare. Amending my 2012 tax return   To establish that your organization is organized primarily to promote social welfare, you should submit evidence with your application showing that your organization will operate primarily to further (in some way) the common good and general welfare of the people of the community (such as by bringing about civic betterment and social improvements). Amending my 2012 tax return   An organization that restricts the use of its facilities to employees of selected corporations and their guests is primarily benefiting a private group rather than the community. Amending my 2012 tax return It therefore does not qualify as a section 501(c)(4) organization. Amending my 2012 tax return Similarly, an organization formed to represent member-tenants of an apartment complex does not qualify, since its activities benefit the member-tenants and not all tenants in the community. Amending my 2012 tax return However, an organization formed to promote the legal rights of all tenants in a particular community may qualify under section 501(c)(4) as a social welfare organization. Amending my 2012 tax return Political activity. Amending my 2012 tax return   Promoting 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. Amending my 2012 tax return However, if you submit proof that your organization is organized primarily to promote social welfare, it can obtain exemption even if it participates legally in some political activity on behalf of or in opposition to candidates for public office. Amending my 2012 tax return See the discussion in chapter 2 under Political Organization Income Tax Return . Amending my 2012 tax return Social or recreational activity. Amending my 2012 tax return   If social activities will be the primary purpose of your organization, you should not file an application for exemption as a social welfare organization but should file for exemption as a social club described in section 501(c)(7). Amending my 2012 tax return Retirement benefit program. Amending my 2012 tax return   An organization established by its members that has as its primary activity providing supplemental retirement benefits to its members or death benefits to their beneficiaries does not qualify as an exempt social welfare organization. Amending my 2012 tax return It may qualify under another paragraph of section 501(c) depending on all the facts. Amending my 2012 tax return   However, a nonprofit association that is established, maintained, and funded by a local government to provide the only retirement benefits to a class of employees may qualify as a social welfare organization under section 501(c)(4). Amending my 2012 tax return Tax treatment of donations. Amending my 2012 tax return   Donations to volunteer fire companies are deductible on the donor's federal income tax return, but only if made for exclusively public purposes. Amending my 2012 tax return Contributions to civic leagues or other section 501(c)(4) organizations generally are not deductible as charitable contributions for federal income tax purposes. Amending my 2012 tax return They may be deductible as trade or business expenses, if ordinary and necessary in the conduct of the taxpayer's business. Amending my 2012 tax return However, see Deduction not allowed for dues used for political or legislative activities , under 501(c)(6) - Business Leagues, etc. Amending my 2012 tax return for more information. Amending my 2012 tax return For more information on social welfare organizations, see Life Cycle of a Social Welfare Organization at IRS. Amending my 2012 tax return gov. Amending my 2012 tax return Specific Organizations The following information should be contained in the application form and accompanying statements of certain types of civic leagues or social welfare organizations. Amending my 2012 tax return Volunteer fire companies. Amending my 2012 tax return   If your organization wishes to obtain exemption as a volunteer fire company or similar organization, you should submit evidence that its members are actively engaged in fire fighting and similar disaster assistance, whether it actually owns the fire fighting equipment, and whether it provides any assistance for its members, such as death and medical benefits in case of injury to them. Amending my 2012 tax return   If your organization does not have an independent social purpose, such as providing recreational facilities for members, it may be exempt under section 501(c)(3). Amending my 2012 tax return In this event, your organization should file Form 1023. Amending my 2012 tax return Homeowners' associations. Amending my 2012 tax return   A membership organization formed by a real estate developer to own and maintain common green areas, streets, and sidewalks and to enforce covenants to preserve the appearance of the development should show that it is operated for the benefit of all the residents of the community. Amending my 2012 tax return The term community generally refers to a geographical unit recognizable as a governmental subdivision, unit, or district thereof. Amending my 2012 tax return Whether a particular association meets the requirement of benefiting a community depends on the facts and circumstances of each case. Amending my 2012 tax return Even if an area represented by an association is not a community, the association can still qualify for exemption if its activities benefit a community. Amending my 2012 tax return   The association should submit evidence that areas such as roadways and park land that it owns and maintains are open to the general public and not just its own members. Amending my 2012 tax return It also must show that it does not engage in exterior maintenance of private homes. Amending my 2012 tax return   A homeowners' association that is not exempt under section 501(c)(4) and that is a condominium management association, a residential real estate management association, or a timeshare association generally can elect under the provisions of section 528 to receive certain tax benefits that, in effect, permit it to exclude its exempt function income from its gross income. Amending my 2012 tax return Other organizations. Amending my 2012 tax return   Other nonprofit organizations that qualify as social welfare organizations include: An organization operating an airport that is on land owned by a local government, which supervises the airport's operation, and that serves the general public in an area with no other airport, A community association that works to improve public services, housing, and residential parking; publishes a free community newspaper; sponsors a community sports league, holiday programs, and meetings; and contracts with a private security service to patrol the community, A community association devoted to preserving the community's traditions, architecture, and appearance by representing it before the local legislature and administrative agencies in zoning, traffic, and parking matters, An organization that tries to encourage industrial development and relieve unemployment in an area by making loans to businesses so they will relocate to the area, and An organization that holds an annual festival of regional customs and traditions. Amending my 2012 tax return 501(c)(5) - Labor, Agricultural and Horticultural Organizations If you are a member of an organization that wants to obtain recognition of exemption from federal income tax as a labor, agricultural, or horticultural organization, you should submit an application on Form 1024. Amending my 2012 tax return You must indicate in your application for exemption and accompanying statements that no part of the organization's net earnings will inure to the benefit of any member. Amending my 2012 tax return In addition, you should follow the procedure for obtaining recognition of exempt status described in chapter 1. Amending my 2012 tax return Submit any additional information that may be required, as described in this section. Amending my 2012 tax return Tax treatment of donations. Amending my 2012 tax return   Contributions to labor, agricultural, and horticultural organizations are not deductible as charitable contributions on the donor's federal income tax return. Amending my 2012 tax return However, such payments may be deductible as business expenses if they are ordinary and necessary in the conduct of the taxpayer's trade or business. Amending my 2012 tax return For more information about certain limits affecting the deductibility of these business expenses, see Deduction not allowed for dues used for political or legislative activities , under 501(c)(6) - Business Leagues, etc. Amending my 2012 tax return Labor Organizations A labor organization is an association of workers who have combined to protect and promote the interests of the members by bargaining collectively with their employers to secure better working conditions. Amending my 2012 tax return To show that your organization has the purpose of a labor organization, you should include in the articles of organization or accompanying statements (submitted with your exemption application) information establishing that the organization is organized to better the conditions of workers, improve the grade of their products, and develop a higher degree of efficiency in their respective occupations. Amending my 2012 tax return In addition, no net earnings of the organization can inure to the benefit of any member. Amending my 2012 tax return Composition of membership. Amending my 2012 tax return   While a labor organization generally is composed of employees or representatives of the employees (in the form of collective bargaining agents) and similar employee groups, evidence that an organization's membership consists mainly of workers does not in itself indicate an exempt purpose. Amending my 2012 tax return You must show in your application that your organization has the purposes described in the preceding paragraph. Amending my 2012 tax return These purposes can be accomplished by a single labor organization acting alone or by several organizations acting together through a separate organization. Amending my 2012 tax return Benefits to members. Amending my 2012 tax return   The payment by a labor organization of death, sick, accident, and similar benefits to its individual members with funds contributed by its members, if made under a plan to better the conditions of the members, does not preclude exemption as a labor organization. Amending my 2012 tax return However, an organization does not qualify for exemption as a labor organization if it has no authority to represent members in job-related matters, even if it provides weekly income to its members in the event of a lawful strike by the members' union, in return for an annual payment by the member. Amending my 2012 tax return   For more information on labor organizations, see Life Cycle of a Labor Organization at IRS. Amending my 2012 tax return gov. Amending my 2012 tax return Agricultural and Horticultural Organizations Agricultural and horticultural organizations are connected with raising livestock, forestry, cultivating land, raising and harvesting crops or aquatic resources, cultivating useful or ornamental plants, and similar pursuits. Amending my 2012 tax return For the purpose of these provisions, aquatic resources include only animal or vegetable life, but not mineral resources. Amending my 2012 tax return The term harvesting, in this case, includes fishing and related pursuits. Amending my 2012 tax return Agricultural organizations can be quasi-public in character and are often designed to encourage the development of better agricultural and horticultural products through a system of awards, using income from entry fees, gate receipts, and donations to meet the necessary expenses of upkeep and operation. Amending my 2012 tax return When the activities are directed toward the improvement of marketing or other business conditions in one or more lines of business, rather than the improvement of production techniques or the betterment of the conditions of persons engaged in agriculture, the organization must qualify for exemption as a business league, board of trade, or other organization, as discussed next in the section on 501(c)(6) organizations. Amending my 2012 tax return The primary purpose of exempt agricultural and horticultural organizations must be to better the conditions of those engaged in agriculture or horticulture, develop more efficiency in agriculture or horticulture, or improve the products. Amending my 2012 tax return The following list contains some examples of activities that show an agricultural or horticultural purpose. Amending my 2012 tax return Promoting various cooperative agricultural, horticultural, and civic activities among rural residents by a state, farm, or home bureau. Amending my 2012 tax return Exhibiting livestock, farm products, and other characteristic features of agriculture and horticulture. Amending my 2012 tax return Testing soil for members and nonmembers of the farm bureau on a cost basis, the results of the tests and other recommendations being furnished to the community members to educate them in soil treatment. Amending my 2012 tax return Guarding the purity of a specific breed of livestock. Amending my 2012 tax return Encouraging improvements in the production of fish on privately owned fish farms. Amending my 2012 tax return Negotiating with processors for the price to be paid to members for their crops. Amending my 2012 tax return For more information on agricultural or horticultural organizations, see Life Cycle of an Agricultural or Horticultural Organization at IRS. Amending my 2012 tax return gov. Amending my 2012 tax return 501(c)(6) - Business Leagues, etc. Amending my 2012 tax return If your association wants to apply for recognition of exemption from federal income tax as a nonprofit business league, chamber of commerce, real estate board, or board of trade, it should file Form 1024. Amending my 2012 tax return For a discussion of the procedure to follow, see chapter 1. Amending my 2012 tax return Your organization must indicate in its application form and attached statements that no part of its net earnings will inure to the benefit of any private shareholder or individual and that it is not organized for profit or organized to engage in an activity ordinarily carried on for profit (even if the business is operated on a cooperative basis or produces only sufficient income to be self-sustaining). Amending my 2012 tax return In addition, your organization must be primarily engaged in activities or functions that are the basis for its exemption. Amending my 2012 tax return It must be primarily supported by membership dues and other income from activities substantially related to its exempt purpose. Amending my 2012 tax return A business league, in general, is an association of persons having some common business interest, the purpose of which is to promote that common interest and not to engage in a regular business of a kind ordinarily carried on for profit. Amending my 2012 tax return Trade associations and professional associations are considered business leagues. Amending my 2012 tax return Chamber of commerce. Amending my 2012 tax return   A chamber of commerce usually is composed of the merchants and traders of a city. Amending my 2012 tax return Board of trade. Amending my 2012 tax return   A board of trade often consists of persons engaged in similar lines of business. Amending my 2012 tax return For example, a nonprofit organization formed to regulate the sale of a specified agricultural commodity to assure equal treatment of producers, warehouse workers, and buyers is a board of trade. Amending my 2012 tax return   Chambers of commerce and boards of trade usually promote the common economic interests of all the commercial enterprises in a given trade community. Amending my 2012 tax return Real estate board. Amending my 2012 tax return   A real estate board consists of members interested in improving the business conditions in the real estate field. Amending my 2012 tax return It is not organized for profit and no part of the net earnings inures to the benefit of any private shareholder or individual. Amending my 2012 tax return Professional football leagues. Amending my 2012 tax return   The Internal Revenue Code specifically defines professional football leagues as exempt organizations under section 501(c)(6). Amending my 2012 tax return They are exempt whether or not they administer a pension fund for football players. Amending my 2012 tax return General purpose. Amending my 2012 tax return   You must indicate in the material submitted with your application that your organization will be devoted to the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual persons. Amending my 2012 tax return It must be shown that the conditions of a particular trade or the interests of the community will be advanced. Amending my 2012 tax return Merely indicating the name of the organization or the object of the local statute under which it is created is not enough to demonstrate the required general purpose. Amending my 2012 tax return Line of business. Amending my 2012 tax return   This term generally refers either to an entire industry or to all components of an industry within a geographic area. Amending my 2012 tax return It does not include a group composed of businesses that market a particular brand within an industry. Amending my 2012 tax return Common business interest. Amending my 2012 tax return   A common business interest of all members of the organization must be established by the application documents. Amending my 2012 tax return Examples. Amending my 2012 tax return   Activities that would tend to illustrate a common business interest are: Promotion of higher business standards and better business methods and encouragement of uniformity and cooperation by a retail merchants association, Education of the public in the use of credit, Establishment of uniform casualty rates and compilation of statistical information by an insurance rating bureau operated by casualty insurance companies, Establishment and maintenance of the integrity of a local commercial market, Operation of a trade publication primarily intended to benefit an entire industry, and Encouragement of the use of goods and services of an entire industry (such as a lawyer referral service whose main purpose is to introduce individuals to the use of the legal profession in the hope that they will enter into lawyer-client relationships on a paying basis as a result). Amending my 2012 tax return Improvement of business conditions. Amending my 2012 tax return   Generally, this must be shown to be the purpose of the organization. Amending my 2012 tax return This is not established by evidence of particular services that provide a convenience or economy to individual members in their businesses, such as advertising that carries the name of members, interest-free loans, assigning exclusive franchise areas, operation of a real estate multiple listing system, or operation of a credit reporting agency. Amending my 2012 tax return Stock or commodity exchange. Amending my 2012 tax return   A stock or commodity exchange is not a business league, chamber of commerce, real estate board, or board of trade and is not exempt under section 501(c)(6). Amending my 2012 tax return Legislative activity. Amending my 2012 tax return   An organization that is exempt under section 501(c)(6) can work for the enactment of laws to advance the common business interests of the organization's members. Amending my 2012 tax return Deduction not allowed for dues used for political or legislative activities. Amending my 2012 tax return   A taxpayer cannot deduct the part of dues or other payments to a business league, trade association, labor union, or similar organization that is reported to the taxpayer by the organization as having been used for any of the following activities. Amending my 2012 tax return Influencing legislation. Amending my 2012 tax return Participating or intervening in a political campaign for, or against, any candidate for public office. Amending my 2012 tax return Trying to influence the general public, or part of the general public, with respect to elections, legislative matters, or referendums (also known as grass roots lobbying). Amending my 2012 tax return Communicating directly with certain executive branch officials to try to influence their official actions or positions. Amending my 2012 tax return See Dues Used for Lobbying or Political Activities under Required Disclosures in chapter 2 for more information. Amending my 2012 tax return Exception for local legislation. Amending my 2012 tax return   Members can deduct dues (or assessments) to an organization that are for expenses of: Appearing before, submitting statements to, or sending communications to members of a local council or similar governing body with respect to legislation or proposed legislation of direct interest to the member, or Communicating information between the member and the organization with respect to local legislation or proposed legislation of direct interest to the organization or the member. Amending my 2012 tax return Legislation or proposed legislation is of direct interest to a taxpayer if it will, or can reasonably be expected to, affect the taxpayer's trade or business. Amending my 2012 tax return De minimis exception. Amending my 2012 tax return   In-house expenditures of $2,000 or less for the year for activities (1) – (4) listed earlier will not prevent a deduction for dues if the dues meet all other tests to be deductible as a business expense. Amending my 2012 tax return Grass roots lobbying. Amending my 2012 tax return   A tax-exempt trade association, labor union, or similar organization is considered to be engaging in grass roots lobbying if it contacts prospective members or calls upon its own members to contact their employees and customers for the purpose of urging such persons to communicate with their elected state or Congressional representatives to support the promotion, defeat, or repeal of legislation that is of direct interest to the organization. Amending my 2012 tax return Any dues or assessments directly related to such activities are not deductible by the taxpayer, since the individuals being contacted, who are not members of the organization, are a segment of the general public. Amending my 2012 tax return Tax treatment of donations. Amending my 2012 tax return   Contributions to organizations described in this section are not deductible as charitable contributions on the donor's federal income tax return. Amending my 2012 tax return They may be deductible as trade or business expenses if ordinary and necessary in the conduct of the taxpayer's business. Amending my 2012 tax return   For more information on business leagues, see Life Cycle of a Business League (Trade Association) on IRS. Amending my 2012 tax return gov. Amending my 2012 tax return 501(c)(7) - Social and Recreation Clubs If your club is organized for pleasure, recreation, and other similar nonprofitable purposes and substantially all of its activities are for these purposes, it should file Form 1024 to apply for recognition of exemption from federal income tax. Amending my 2012 tax return In applying for recognition of exemption, you should submit the information described in this section. Amending my 2012 tax return Also see chapter 1 for the procedures to follow. Amending my 2012 tax return Typical organizations that should file for recognition of exemption as social clubs include: College alumni associations that are not described in chapter 3 under Alumni association , College fraternities or sororities operating chapter houses for students, Country clubs, Amateur hunting, fishing, tennis, swimming, and other sport clubs, Dinner clubs that provide a meeting place, library, and dining room for members, Hobby clubs, Garden clubs, and Variety clubs. Amending my 2012 tax return Discrimination prohibited. Amending my 2012 tax return   Your organization will not be recognized as tax exempt if its charter, bylaws, or other governing instrument, or any written policy statement provides for discrimination against any person on the basis of race, color, or religion. Amending my 2012 tax return   However, a club that in good faith limits its membership to the members of a particular religion to further the teachings or principles of that religion and not to exclude individuals of a particular race or color will not be considered as discriminating on the basis of religion. Amending my 2012 tax return Also, the restriction on religious discrimination does not apply to a club that is an auxiliary of a fraternal beneficiary society (discussed later) if that society is described in section 501(c)(8) and exempt from tax under section 501(a) and limits its membership to the members of a particular religion. Amending my 2012 tax return Private benefit prohibited. Amending my 2012 tax return   No part of the organization's net earnings can inure to the benefit of any person having a personal and private interest in the activities of the organization. Amending my 2012 tax return For purposes of this requirement, it is not necessary that net earnings be actually distributed. Amending my 2012 tax return Even undistributed earnings can benefit members. Amending my 2012 tax return Examples of this include a decrease in membership dues or an increase in the services the club provides to its members without a corresponding increase in dues or other fees paid for club support. Amending my 2012 tax return However, fixed-fee payments to members who bring new members into the club are not an inurement of the club's net earnings, if the payments are reasonable compensation for performance of a necessary administrative service. Amending my 2012 tax return Purposes. Amending my 2012 tax return   To show that your organization possesses the characteristics of a club within the meaning of the exemption law, you should submit evidence with your application that personal contact, commingling, and fellowship exist among members. Amending my 2012 tax return You must show that members are bound together by a common objective of pleasure, recreation, and other nonprofitable purposes. Amending my 2012 tax return   Fellowship need not be present between each member and every other member of a club if it is a material part in the life of the organization. Amending my 2012 tax return A statewide or nationwide organization that is made up of individual members, but is divided into local groups, satisfies this requirement if fellowship is a material part of the life of each local group. Amending my 2012 tax return   The term other nonprofitable purposes means other purposes similar to pleasure and recreation. Amending my 2012 tax return For example, a club that, in addition to its social activities, has a plan for the payment of sick and death benefits is not operating exclusively for pleasure, recreation, and other nonprofitable purposes. Amending my 2012 tax return Limited membership. Amending my 2012 tax return   The membership in a social club must be limited. Amending my 2012 tax return To show that your organization has a purpose that would characterize it as a club, you should submit evidence with your application that there are limits on admission to membership consistent with the character of the club. Amending my 2012 tax return   A social club that issues corporate membership is dealing with the general public in the form of the corporation's employees. Amending my 2012 tax return Corporate members of a club are not the kind of members contemplated by the law. Amending my 2012 tax return Gross receipts from these members would be a factor in determining whether the club qualifies as a social club. Amending my 2012 tax return See Gross receipts from nonmembership sources , later. Amending my 2012 tax return Bona fide individual memberships paid for by a corporation would not have an effect on the gross receipts source. Amending my 2012 tax return   The fact that a social club may have an associate (nonvoting) class of membership will not be, in and of itself, a cause for nonrecognition of exemption. Amending my 2012 tax return However, if one membership class pays substantially lower dues and fees than another membership class, although both classes enjoy the same rights and privileges in using the club facilities, there may be an inurement of income to the benefited class, resulting in a denial of the club's exemption. Amending my 2012 tax return Support. Amending my 2012 tax return   In general, your club should be supported solely by membership fees, dues, and assessments. Amending my 2012 tax return However, if otherwise entitled to exemption, your club will not be disqualified because it raises revenue from members through the use of club facilities or in connection with club activities. Amending my 2012 tax return Business activities. Amending my 2012 tax return   If your club will engage in business, such as selling real estate, timber, or other products or services, it generally will be denied exemption. Amending my 2012 tax return However, evidence submitted with your application form that your organization will provide meals, refreshments, or services related to its exempt purposes only to its own members or their dependents or guests will not cause denial of exemption. Amending my 2012 tax return Facilities open to public. Amending my 2012 tax return   Evidence that your club's facilities will be open to the general public (persons other than members or their dependents or guests) may cause denial of exemption. Amending my 2012 tax return This does not mean, however, that any dealing with outsiders will automatically deprive a club of exemption. Amending my 2012 tax return Gross receipts from nonmembership sources. Amending my 2012 tax return   A section 501(c)(7) organization can receive up to 35% of its gross receipts, including investment income, from sources outside of its membership without losing its tax-exempt status. Amending my 2012 tax return Income from nontraditional business activity with members is not exempt function income, and thus is included as income from sources outside of the membership. Amending my 2012 tax return Of the 35% gross receipts listed above, up to 15% of the gross receipts can be derived from the use of the club's facilities or services by the general public. Amending my 2012 tax return If an organization has outside income that is more than these limits, all the facts and circumstances will be taken into account in determining whether the organization qualifies for exempt status. Amending my 2012 tax return Gross receipts. Amending my 2012 tax return   Gross receipts, for this purpose, are receipts from the normal and usual (traditionally conducted) activities of the club. Amending my 2012 tax return These receipts include charges, admissions, membership fees, dues, assessments, investment income, and normal recurring capital gains on investments. Amending my 2012 tax return Receipts do not include initiation fees and capital contributions. Amending my 2012 tax return Unusual amounts of income, such as from the sale of a clubhouse or similar facility, are not included in gross receipts or in figuring the percentage limits. Amending my 2012 tax return Nontraditional activities. Amending my 2012 tax return   Activities conducted by a social club need to further its exempt purposes. Amending my 2012 tax return Traditional business activities are those that further a social club's exempt purposes. Amending my 2012 tax return Nontraditional business activities do not further the exempt purposes of a social club even if conducted solely on a membership basis. Amending my 2012 tax return Nontraditional business activities are prohibited (subject to an insubstantial, trivial, and nonrecurrent test) for businesses conducted with both members and nonmembers. Amending my 2012 tax return Examples of nontraditional business activities include sale of package liquor, take-out food, and long-term room rental. Amending my 2012 tax return Fraternity foundations. Amending my 2012 tax return   If your organization is a foundation formed for the exclusive purpose of acquiring and leasing a chapter house to a local fraternity chapter or sorority chapter maintained at an educational institution and does not engage in any social or recreational activities, it may be a title holding corporation (discussed later under section 501(c)(2) organizations and under section 501(c)(25) organizations) rather than a social club. Amending my 2012 tax return Tax treatment of donations. Amending my 2012 tax return   Donations to exempt social and recreation clubs are not deductible as charitable contributions on the donor's federal income tax return. Amending my 2012 tax return 501(c)(8) and 501(c)(10) - Fraternal Beneficiary Societies and Domestic Fraternal Societies This section describes the information to be provided upon application for recognition of exemption by two types of fraternal societies: beneficiary and domestic. Amending my 2012 tax return The major distinction is that fraternal beneficiary societies provide for the payment of life, sick, accident, or other benefits to their members or their dependents, while domestic fraternal societies do not provide these benefits but rather devote their earnings to fraternal, religious, charitable, etc. Amending my 2012 tax return , purposes. Amending my 2012 tax return The procedures to follow in applying for recognition of exemption are described in chapter 1. Amending my 2012 tax return If your organization is controlled by a central organization, you should check with your controlling organization to determine whether your unit has been included in a group exemption letter or can be added. Amending my 2012 tax return If so, your organization need not apply for individual recognition of exemption. Amending my 2012 tax return For more information, see Group Exemption Letter in chapter 1 of this publication. Amending my 2012 tax return Tax treatment of donations. Amending my 2012 tax return   Donations by an individual to a domestic fraternal beneficiary society or a domestic fraternal society operating under the lodge system are deductible as charitable contributions only if used exclusively for religious, charitable, scientific, literary, or educational purposes or for the prevention of cruelty to children or animals. Amending my 2012 tax return Fraternal Beneficiary Societies (501(c)(8)) A fraternal beneficiary society, order, or association must file an application for recognition of exemption from federal income tax on Form 1024. Amending my 2012 tax return The application and accompanying statements should establish that the organization: Is a fraternal organization, Operates under the lodge system or for the exclusive benefit of the members of a fraternal organization itself operating under the lodge system, and Provides for the payment of life, sick, accident, or other benefits to the members of the society, order, or association or their dependents. Amending my 2012 tax return Lodge system. Amending my 2012 tax return   Operating under the lodge system means carrying on activities under a form of organization that comprises local branches, chartered by a parent organization and largely self-governing, called lodges, chapters, or the like. Amending my 2012 tax return Payment of benefits. Amending my 2012 tax return   It is not essential that every member be covered by the society's program of sick, accident, or death benefits. Amending my 2012 tax return An organization can qualify for exemption if most of its members are eligible for benefits, and the benefits are paid from contributions or dues paid by those members. Amending my 2012 tax return   The benefits must be limited to members and their dependents. Amending my 2012 tax return If members will have the ability to confer benefits to other than themselves and their dependents, exemption will not be recognized. Amending my 2012 tax return Whole-life insurance. Amending my 2012 tax return   Whole-life insurance constitutes a life benefit under section 501(c)(8) even though the policy may contain investment features such as a cash surrender value or a policy loan. Amending my 2012 tax return Reinsurance pool. Amending my 2012 tax return   Payments by a fraternal beneficiary society into a state-sponsored reinsurance pool that protects participating insurers against excessive losses on major medical health and accident insurance will not preclude exemption as a fraternal beneficiary society. Amending my 2012 tax return Domestic Fraternal Societies (501(c)(10)) A domestic fraternal society, order, or association must file an application for recognition of exemption from federal income tax on Form 1024. Amending my 2012 tax return The application and accompanying statements should establish that the organization: Is a domestic fraternal organization organized in the U. Amending my 2012 tax return S. Amending my 2012 tax return , Operates under the lodge system, Devotes its net earnings exclusively to religious, charitable, scientific, literary, educational, and fraternal purposes, and Does not provide for the payment of life, sick, accident, or other benefits to its members. Amending my 2012 tax return The organization can arrange with insurance companies to provide optional insurance to its members without jeopardizing its exempt status. Amending my 2012 tax return 501(c)(4), 501(c)(9), and 501(c)(17) - Employees' Associations This section describes the information to be provided upon application for recognition of exemption by the following types of employees' associations: A voluntary employees' beneficiary association (including federal employees' associations) organized to pay life, sick, accident, and similar benefits to members or their dependents, or designated beneficiaries, if no part of the net earnings of the association inures to the benefit of any private shareholder or individual, and A supplemental unemployment benefit trust whose primary purpose is providing for payment of supplemental unemployment benefits. Amending my 2012 tax return Both the application form to file and the information to provide are discussed later under the section that describes your employee association. Amending my 2012 tax return Chapter 1 describes the procedures to follow in applying for exemption. Amending my 2012 tax return Tax treatment of donations. Amending my 2012 tax return   Donations to these organizations are not deductible as charitable contributions on the donor's federal income tax return. Amending my 2012 tax return Local Employees' Associations (501(c)(4)) A local association of employees whose membership is limited to employees of a designated person or persons in a particular municipality, and whose income will be devoted exclusively to charitable, educational, or recreational purposes. Amending my 2012 tax return A local employees' association must apply for recognition of exemption by filing Form 1024. Amending my 2012 tax return The organization must submit evidence that: It is of a purely local character, Its membership is limited to employees of a designated person or persons in a particular locality, and Its net earnings will be devoted exclusively to charitable, educational, or recreational purposes. Amending my 2012 tax return A local association of employees that has established a system of paying retirement or death benefits, or both, to its members will not qualify for exemption since the payment of these benefits is not considered as being for charitable, educational, or recreational purposes. Amending my 2012 tax return Similarly, a local association of employees that is operated primarily as a cooperative buying service for its members in order to obtain discount prices on merchandise, services, and activities does not qualify for exemption. Amending my 2012 tax return Voluntary Employees' Beneficiary Associations (501(c)(9)) An application for recognition of exemption as a voluntary employees' beneficiary association must be filed on Form 1024. Amending my 2012 tax return The material submitted with the application must show that your organization: Is a voluntary association of employees, Will provide for payment of life, sick, accident, or other benefits to members or their dependents or designated beneficiaries and substantially all of its operations are for this purpose, and Will not allow any of its net earnings to inure to the benefit of any private individual or shareholder except in the form of scheduled benefit payments. Amending my 2012 tax return To be complete, an application must include a copy of the document (such as the trust instrument) by which the organization was created; a full description of the benefits available to participants and the terms and conditions of eligibility for benefits (usually contained in a plan document); and, if providing benefits pursuant to a collective bargaining agreement, a copy of that agreement. Amending my 2012 tax return Note. Amending my 2012 tax return Under section 4976, the reversion of funds from a section 501(c)(9) organization to the employer who created the beneficiary association may subject the employer to a 100% penalty excise tax on the amount of the reversion. Amending my 2012 tax return Notice requirement. Amending my 2012 tax return   An organization will not be considered tax exempt under this section unless the organization gives notice to the IRS that it is applying for recognition of exempt status. Amending my 2012 tax return The organization gives notice by filing Form 1024. Amending my 2012 tax return If the notice is not given by 15 months after the end of the month in which the organization was created, the organization will not be exempt for any period before notice is given. Amending my 2012 tax return An extension of time for filing the notice can be granted under the same procedures as those described for section 501(c)(3) organizations in chapter 3 under Application for Recognition of Exemption . Amending my 2012 tax return Membership. Amending my 2012 tax return   Membership of a section 501(c)(9) organization must consist of individuals who are employees and have an employment-related common bond. Amending my 2012 tax return This common bond can be a common employer (or affiliated employers), coverage under one or more collective bargaining agreements, membership in a labor union, or membership in one or more locals of a national or international labor union. Amending my 2012 tax return   The membership of an association can include some individuals who are not employees, provided they have an employment-related bond with the employee-members. Amending my 2012 tax return For example, the owner of a business whose employees are members of the association can be a member. Amending my 2012 tax return An association will be considered composed of employees if 90% of its total membership on one day of each quarter of its tax year consists of employees. Amending my 2012 tax return Employees. Amending my 2012 tax return   Employees include individuals who became entitled to membership because they are or were employees. Amending my 2012 tax return For example, an individual will qualify as an employee even though the individual is on a leave of absence or has been terminated due to retirement, disability, or layoff. Amending my 2012 tax return   Generally, membership is voluntary if an affirmative act is required on the part of an employee to become a member. Amending my 2012 tax return Conversely, membership is involuntary if the designation as a member is due to employee status. Amending my 2012 tax return However, an association will be considered voluntary if employees are required to be members of the organization as a condition of their employment and they do not incur a detriment (such as a payroll deduction) as a result of their membership. Amending my 2012 tax return An employer has not imposed involuntary membership on the employee if membership is required as the result of a collective bargaining agreement or as an incident of membership in a labor organization. Amending my 2012 tax return Payment of benefits. Amending my 2012 tax return   The information submitted with your application must show that your organization will pay life, sick, accident, supplemental unemployment, or other similar benefits. Amending my 2012 tax return The benefits can be provided directly by your association or indirectly by your association through the payments of premiums to an insurance company (or fees to a medical clinic). Amending my 2012 tax return Benefits can be in the form of medical, clinical, or hospital services, transportation furnished for medical care, or money payments. Amending my 2012 tax return Nondiscrimination requirements. Amending my 2012 tax return   An organization that is part of a plan will not be exempt unless the plan meets certain nondiscrimination requirements. Amending my 2012 tax return However, if the organization is part of a plan that is a collective bargaining agreement that was the subject of good faith bargaining between employee organizations and employers, the plan need not meet these requirements for the organization to qualify as tax exempt. Amending my 2012 tax return   A plan meets the nondiscrimination requirements only if both of the following statements are true. Amending my 2012 tax return Each class of benefits under the plan is provided under a classification of employees that is set forth in the plan and does not discriminate in favor of employees who are highly compensated individuals. Amending my 2012 tax return The benefits provided under each class of benefits do not discriminate in favor of highly compensated individuals. Amending my 2012 tax return A life insurance, disability, severance pay, or supplemental unemployment compensation benefit does not discriminate in favor of highly compensated individuals merely because the benefits available bear a uniform relationship to the total compensation, or the basic or regular rate of compensation, of employees covered by the plan. Amending my 2012 tax return   For purposes of determining whether a plan meets the nondiscrimination requirements, the employer can elect to exclude all disability or severance payments payable to individuals who are in pay status as of January 1, 1985. Amending my 2012 tax return This will not apply to any increase in such payment by any plan amendment adopted after June 22, 1984. Amending my 2012 tax return   If a plan provides a benefit for which there is a nondiscrimination provision provided under Chapter 1 of the Internal Revenue Code as a condition of that benefit being excluded from gross income, these nondiscrimination requirements do not apply. Amending my 2012 tax return The benefit will be considered nondiscriminatory only if it meets the nondiscrimination provision of the applicable Code section. Amending my 2012 tax return For example, benefits provided under a medical reimbursement plan would meet the nondiscrimination requirements for an association, if the benefits meet the nondiscrimination requirements of section 105(h)(3) and 105(h)(4). Amending my 2012 tax return Excluded employees. Amending my 2012 tax return   Certain employees who are not covered by a plan can be excluded from consideration in applying these requirements. Amending my 2012 tax return These include employees: Who have not completed 3 years of service, Who have not attained age 21, Who are seasonal or less than half-time employees, Who are not in the plan and who are included in a unit of employees covered by a collective bargaining agreement if the class of benefits involved was the subject of good faith bargaining, or Who are nonresident aliens and who receive no earned income from the employer that has United States source income. Amending my 2012 tax return Highly compensated individual. Amending my 2012 tax return   A highly compensated individual is one who: Owned 5 percent or more of the employer at any time during the current year or the preceding year, Received more than $115,000 in compensation from the employer for the preceding year (the amount is annualized for inflation. Amending my 2012 tax return Go to IRS. Amending my 2012 tax return gov, and search “Pension Plan Limitation” for the year), and Was among the top 20% of employees by compensation for the preceding year. Amending my 2012 tax return However, the employer can choose not to have (3) apply. Amending my 2012 tax return Aggregation rules. Amending my 2012 tax return   The employer can choose to treat two or more plans as one plan for purposes of meeting the nondiscrimination requirements. Amending my 2012 tax return Employees of controlled groups of corporations, trades, or businesses under common control, or members of an affiliated service group, are treated as employees of a single employer. Amending my 2012 tax return Leased employees are treated as employees of the recipient. Amending my 2012 tax return One employee. Amending my 2012 tax return   A trust created to provide benefits to one employee will not qualify as a voluntary employees' beneficiary association under section 501(c)(9). Amending my 2012 tax return Supplemental Unemployment Benefit Trusts (501(c)(17)) A trust or trusts forming part of a written plan (established and maintained by an employer, his or her employees, or both) providing solely for the payment of supplemental unemployment compensation benefits must file the application for recognition of exemption on Form 1024. Amending my 2012 tax return The trust must be a valid, existing trust under local law and must be evidenced by an executed document. Amending my 2012 tax return A conformed copy of the plan of which the trust is a part should be attached to the application. Amending my 2012 tax return To be complete, an application must include a copy of the document (such as the trust instrument) by which the organization was created; a full description of the benefits available to participants and the terms and conditions of eligibility for benefits (usually contained in a plan document); and, if providing benefits pursuant to a collective bargaining agreement, a copy of that agreement. Amending my 2012 tax return Note. Amending my 2012 tax return Under section 4976, the reversion of funds from a section 501(c)(17) organization to the employer who created the supplemental unemployment benefit trust may subject the employer to a 100% penalty excise tax on the amount of the reversion. Amending my 2012 tax return Notice requirement. Amending my 2012 tax return   An organization will not be considered tax exempt under this section unless the organization gives notice to the IRS that it is applying for recognition of exempt status. Amending my 2012 tax return The organization gives notice by filing Form 1024. Amending my 2012 tax return If the notice is not given by 15 months after the end of the month in which the organization was created, the organization will not be exempt for any period before such notice is given. Amending my 2012 tax return An extension of time for filing the notice is granted under the same procedures as those described for section 501(c)(3) organizations in chapter 3 under Application for Recognition of Exemption . Amending my 2012 tax return Types of payments. Amending my 2012 tax return   You must show that the supplemental unemployment compensation benefits will be benefits paid to an employee because of the employee's involuntary separation from employment (whether or not the separation is temporary) resulting directly from a reduction-in-force, discontinuance of a plant or operation, or other similar conditions. Amending my 2012 tax return In addition, sickness and accident benefits (but not vacation, retirement, or death benefits) may be included in the plan if these are subordinate to the unemployment compensation benefits. Amending my 2012 tax return Diversion of funds. Amending my 2012 tax return   It must be impossible under the plan (at any time before the satisfaction of all liabilities with respect to employees under the plan) to use or to divert any of the corpus or income of the trust to any purpose other than the payment of supplemental unemployment compensation benefits (or sickness or accident benefits to the extent just explained). Amending my 2012 tax return Discrimination in benefits. Amending my 2012 tax return   Neither the terms of the plan nor the actual payment of benefits can be discriminatory in favor of the company's officers, stockholders, supervisors, or highly paid employees. Amending my 2012 tax return However, a plan is not discriminatory merely because benefits bear a uniform relationship to compensation or the rate of compensation. Amending my 2012 tax return Prohibited transactions and exemption. Amending my 2012 tax return   If your organization is a supplemental unemployment benefit trust and has received a denial of exemption because it engaged in a prohibited transaction, as defined by section 503(b), it can file a claim for exemption in any tax year following the tax year in which the notice of denial was issued. Amending my 2012 tax return It must file the claim on Form 1024. Amending my 2012 tax return The organization must include a written declaration that it will not knowingly again engage in a prohibited transaction. Amending my 2012 tax return An authorized principal officer of your organization must make this declaration under the penalties of perjury. Amending my 2012 tax return   If your organization has satisfied all requirements as a supplemental unemployment benefit trust described in section 501(c)(17), it will be notified in writing that it has been recognized as exempt. Amending my 2012 tax return However, the organization will be exempt only for those tax years after the tax year in which the claim for exemption (Form 1024) is filed. Amending my 2012 tax return Tax year in this case means the established annual accounting period of the organization or, if the organization has not established an annual accounting period, the calendar year. Amending my 2012 tax return For more information about the requirements for reestablishing an exemption previously denied, contact the IRS. Amending my 2012 tax return 501(c)(12) - Local Benevolent Life Insurance Associations, Mutual Irrigation and Telephone Companies, and Like Organizations Each of the following organizations apply for recognition of exemption from federal income tax by filing Form 1024. Amending my 2012 tax return Benevolent life insurance associations of a purely local character and like organizations. Amending my 2012 tax return Mutual ditch or irrigation companies and like organizations. Amending my 2012 tax return Mutual or cooperative telephone companies and like organizations. Amending my 2012 tax return A like organization is an organization that performs a service comparable to that performed by any one of the above organizations. Amending my 2012 tax return The information to be provided upon application by each of these organizations is described in this section. Amending my 2012 tax return For information as to the procedures to follow in applying for exemption, see chapter 1. Amending my 2012 tax return General requirements. Amending my 2012 tax return   These organizations must use their income solely to cover losses and expenses, with any excess being returned to members or retained to cover future losses and expenses. Amending my 2012 tax return They must collect at least 85% of their income from members for the sole purpose of meeting losses and expenses. Amending my 2012 tax return Mutual character. Amending my 2012 tax return   These organizations, other than benevolent life insurance associations, must be organized and operated on a mutual or cooperative basis. Amending my 2012 tax return They are associations of persons or organizations, or both, banded together to provide themselves a mutually desirable service approximately at cost and on a mutual basis. Amending my 2012 tax return To maintain the mutual characteristic of democratic ownership and control, they must be so organized and operated that their members have the right to choose the management, to receive services at cost, to receive a return of any excess of payments over losses and expenses, and to share in any assets upon dissolution. Amending my 2012 tax return   The rights and interests of members in the annual savings of the organization must be determined in proportion to their business with the organization. Amending my 2012 tax return Upon dissolution, gains from the sale of appreciated assets must be distributed to all persons who were members during the period the assets were owned by the organization in proportion to the amount of business done during that period. Amending my 2012 tax return The bylaws must not provide for forfeiture of a member's rights and interest upon withdrawal or termination. Amending my 2012 tax return Membership. Amending my 2012 tax return   Membership of a mutual organization consists of those who join the organization to obtain its services, and have a voice in its management. Amending my 2012 tax return In a stock company, the stockholders are members. Amending my 2012 tax return However, a mutual life insurance organization cannot have policyholders other than its members. Amending my 2012 tax return Losses and expenses. Amending my 2012 tax return   In furnishing services substantially at cost, an organization must use its income solely for paying losses and expenses. Amending my 2012 tax return Any excess income not retained in reasonable reserves for future losses and expenses belongs to members in proportion to their patronage or business done with the organization. Amending my 2012 tax return If such patronage refunds are retained in reasonable amounts for purposes of expanding and improving facilities, retiring capital indebtedness, acquiring other assets, and unexpected expenses, the organization must maintain records sufficient to reflect the equity of each member in the assets acquired with the funds. Amending my 2012 tax return Distributions of proceeds. Amending my 2012 tax return   The cooperative may distribute the unexpended balance of collections or assessments remaining on hand at the end of the year to members or patrons prorated on the basis of their patronage or business done with the cooperative. Amending my 2012 tax return Such distribution represents a refund in the costs of services rendered to the member. Amending my 2012 tax return The 85% Requirement All of the organizations listed above must submit evidence with their application that they receive 85% or more of their gross income from their members for the sole purpose of meeting losses and expenses. Amending my 2012 tax return Nevertheless, certain items of income are excluded from the computation of the 85% requirement if the organization is a mutual or cooperative telephone or electric company. Amending my 2012 tax return Mutual or cooperative telephone company. Amending my 2012 tax return   A mutual or cooperative telephone company will exclude from the computation of the 85% requirement any income received or accrued from: A nonmember telephone company for the performance of communication services involving the completion of long distance calls to, from, or between members of the mutual or cooperative telephone company, Qualified pole rentals, The sale of display listings in a directory furnished to its members, or The prepayment of a loan created in 1987, 1988, or 1989, under section 306A, 306B, or 311 of the Rural Electrification Act of 1936. Amending my 2012 tax return Mutual or cooperative electric company. Amending my 2012 tax return   A mutual or cooperative electric company will exclude from the computation of the 85% requirement any income received or accrued from: Qualified pole rentals, Any provision or sale of electric energy transmission services or ancillary service if the services are provided on a nondiscriminatory open access basis under an open access transmission tariff approved or accepted by the Federal Energy Regulatory Commission (FERC) or under an independent transmission provider agreement approved or accepted by FERC (other than income received or accrued directly or indirectly from a member), The provision or sale of electric energy distribution services or ancillary services if the services are provided on a nondiscriminatory open-access basis to distribute electric energy not owned by the mutual or electric cooperative company: To end-users who are served by distribution facilities not owned by the company or any of its members (other than income received or accrued directly or indirectly from a member), or Generated by a generation facility not owned or leased by the company or any of its members and which is directly connected to distribution facilities owned by the company or any of its members (other than income received or accrued directly or indirectly from a member), Any nuclear decommissioning transaction, or Any asset exchange or conversion transaction. Amending my 2012 tax return   An electric cooperative's sale of excess fuel at cost in the year of purchase is not income for purposes of determining compliance with the 85% requirement. Amending my 2012 tax return Qualified pole rental. Amending my 2012 tax return   The term qualified pole rental means any rental of a pole (or other structure used to support wires) if the pole (or other structure) is used: By the telephone or electric company to support one or more wires that are used by the company in providing telephone or electric services to its members, and Pursuant to the rental to support one or more wires (in addition to wires described in (1)) for use in connection with the transmission by wire of electricity or of telephone or other communications. Amending my 2012 tax return   The term rental, for this purpose, includes any sale of the right to use the pole (or other structure). Amending my 2012 tax return The 85% requirement is applied on the basis of an annual accounting period. Amending my 2012 tax return Failure of an organization to meet the requirement in a particular year precludes exemption for that year, but has no effect upon exemption for years in which the 85% requirement is met. Amending my 2012 tax return Gain from the sale or conversion of the organization's property is not considered an amount received from members in determining whether the organization's income consists of amounts collected from members. Amending my 2012 tax return Because the 85% income test is based on gross income, capital losses cannot be used to reduce capital gains for purposes of this test. Amending my 2012 tax return Example. Amending my 2012 tax return   The books of an organization reflect the following for the calendar year. Amending my 2012 tax return Collections from members $2,400 Short-term capital gains 600 Short-term capital losses 400 Other income None Gross income ($2,400 + $600 =$3000) 100% Collected from members ($2,400) 80%   Since amounts collected from members do not constitute at least 85% of gross income, the organization is not entitled to exemption from federal income tax for the year. Amending my 2012 tax return   Voluntary contributions in the nature of gifts are not taken into account for purposes of the 85% computation. Amending my 2012 tax return   Other tax-exempt income besides gifts is considered as income received from other than members in applying the 85% test. Amending my 2012 tax return   If the 85% test is not met, your organization, if classifiable under this section, will not qualify for exemption as any other type of organization described in this publication. Amending my 2012 tax return Tax treatment of donations. Amending my 2012 tax return   Donations to an organization described in this section are not deductible as charitable contributions on the donor's federal income tax return. Amending my 2012 tax return Local Life Insurance Associations A benevolent life insurance association or an organization seeking recognition of exemption on grounds of similarity to a benevolent life insurance association must submit evidence upon applying for recognition of exemption that it will be of a purely local character, that its excess funds will be refunded to members or retained in reasonable reserves to meet future losses and expenses, and that it meets the 85% income requirement. Amending my 2012 tax return If an organization issues policies for stipulated cash premiums, or if it requires advance deposits to cover the cost of the insurance and maintains investments from which more than 15% of its income is derived, it will not be entitled to exemption. Amending my 2012 tax return To establish that your organization is of a purely local character, it should show that its activities will be confined to a particular community, place, or district irrespective of political subdivisions. Amending my 2012 tax return If the activities of an organization are limited only by the borders of a state, it cannot be purely local in character. Amending my 2012 tax return A benevolent life insurance association that does not terminate membership when a member moves from the local area in which the association operates will qualify for exemption if it meets the other requirements. Amending my 2012 tax return A copy of each type of policy issued by your organization should be included with the application for recognition of exemption. Amending my 2012 tax return Organizations similar to local benevolent life insurance companies. Amending my 2012 tax return   These organizations include those that in addition to paying death benefits also provide for the payment of sick, accident, or health benefits. Amending my 2012 tax return However, an organization that pays only sick, accident, or health benefits, but not life insurance benefits, is not an organization similar to a benevolent life insurance association and should not apply for recognition of exemption as described in this section. Amending my 2012 tax return Burial and funeral benefit insurance organization. Amending my 2012 tax return   This type of organization can apply for recognition of exemption as an organization similar to a benevolent life insurance company if it establishes that the benefits are paid in cash and if it is not engaged directly in the manufacture of funeral supplies or the performance of funeral services. Amending my 2012 tax return An organization that provides its benefits in the form of supplies and service is not a life insurance company. Amending my 2012 tax return Such an organization can seek recognition of exemption from federal income tax, however, as a mutual insurance company other than life. Amending my 2012 tax return Mutual or Cooperative Associations Mutual ditch or irrigation companies, mutual or cooperative telephone companies, and like organizations need not establish that they are of a purely local character. Amending my 2012 tax return They can serve noncontiguous areas. Amending my 2012 tax return Like organization. Amending my 2012 tax return   A like organization is a cooperative or mutual organization that performs a service similar to mutual ditch, irrigation, telephone, or electric companies. Amending my 2012 tax return Examples include the following: cooperatives that provide protection of river banks to prevent erosion, water and sewer services, cable television, satellite, television, cellular phone services, two-way radio service, or natural gas services. Amending my 2012 tax return 501(c)(13) - Cemetery Companies If your organization wishes to obtain recognition of exemption from federal income tax as a cemetery company or a corporation chartered solely for the purpose of the disposal of human bodies by burial or cremation, it must file an application on Form 1024. Amending my 2012 tax return For the procedure to follow to file an application, see Application, Approval, and Appeal Procedures in chapter 1. Amending my 2012 tax return A nonprofit mutual cemetery company that seeks recognition of exemption should submit evidence with its application that it is owned and operated exclusively for the benefit of its lot owners who hold lots for bona fide burial purposes and not for purposes of resale. Amending my 2012 tax return A mutual cemetery company that also engages in charitable activities, such as the burial of paupers, will be regarded as operating within this standard. Amending my 2012 tax return The fact that a mutual cemetery company limits its membership to a particular class of individuals, such as members of a family, will not affect its status as mutual so long as all the other requirements of section 501(c)(13) are met. Amending my 2012 tax return If your organization is a nonprofit corporation chartered solely for the purpose of the disposal of human bodies by burial or cremation, you should show that it is not permitted by its charter to engage in any business not necessarily incident to that purpose. Amending my 2012 tax return Operating a mortuary is not permitted. Amending my 2012 tax return However, selling monuments, markers, vaults, and flowers solely for use in the cemetery is permitted if the profits from these sales are used to maintain the cemetery as a whole. Amending my 2012 tax return How income can be used. Amending my 2012 tax return   You should show that your organization's earnings are or will be used only in one or more of the following ways. Amending my 2012 tax return To pay the ordinary and necessary expenses of operating, maintaining, and improving the cemetery or crematorium. Amending my 2012 tax return To buy cemetery property. Amending my 2012 tax return To create a fund that will provide a source of income for the perpetual care of the cemetery or a reasonable reserve for any ordinary or necessary purpose. Amending my 2012 tax return No part of the net earnings of your organization can inure to the benefit of any private shareholder or individual. Amending my 2012 tax return Ordinary and necessary expenses in connection with the operation, management, maintenance, and improvement of the cemetery are permitted, as are reasonable fees for the services of a manager. Amending my 2012 tax return Buying cemetery property. Amending my 2012 tax return   Payments can be made to amortize debt incurred to buy land, but cannot be in the nature of profit distributions. Amending my 2012 tax return You must show the method used to finance the purchase of the cemetery property and that the purchase price of the land at the time of its sale to the cemetery was not unreasonable. Amending my 2012 tax return   Except for holders of preferred stock (discussed later), no person can have any interest in the net earnings of a tax-exempt cemetery company or crematorium. Amending my 2012 tax return Therefore, if property is transferred to the organization in exchange for an interest in the organization's net earnings, the organization will not