IRS Classification Of Nonprofit Organizations
There are many types of nonprofits that are registered by the IRS, and they all have different designations. For instance, a child care nonprofit is a 501(k) and a Chamber of Commerce is a 501(c)(6). Here is a list of the types of nonprofits that the IRS recognizes. This information comes from IRS Publication 557:
These are corporations organized under Act of Congress. Federal Credit Unions are a good example of this type of nonprofit. These nonprofits do not have to file an annual return. Tax-exempt contributions are allowed if they are made for exclusively public purposes.
These are holding corporations for exempt organizations. That is, they can hold title to property of an exempt group. They apply for nonprofit status using IRS form 1024. They annually file forms 990 or 990EZ.
This is the most common type of nonprofit. It includes organizations that are religious, educational, charitable, scientific, and literary; groups that test for public safety, that foster national or international amateur sports competition; or organizations engaged in the prevention of cruelty to children or animals.
This type of nonprofit applies for its status using IRS form 1023 and files annually form 990, 990EZ, or 990-PF. Contributions are usually tax-exempt.
All 501(c)(3) organizations are considered either:
A private foundation. These are nonprofits that don’t qualify as public charities. Foundations may be sub-classified as private operating foundations or private non-operating foundations, and receive some of the advantages of public charities.
Or a public charity.
These are civic leagues, social welfare organizations, and local associations of employees. They promote community welfare, charitable, education or recreational goals. They apply using IRS Form 1024. They file annually 990 or 990EZ.
Labor, agricultural, and horticultural organizations fit under this classification. They are educational or instructive, with the goal of improving conditions of work, and to improve products and efficiency. They apply by using IRS Form 1024, and file annually form 990 or 990EZ.
These organizations are business leagues, chambers of commerce, real estate boards, etc. They seek to improve business conditions. They apply using IRS form 1024 and file annually the 990 or 990EZ.
Social and recreation clubs fall into this category. They promote pleasure, recreation, and social activities. They apply using IRS form 1024 and file annually the 990 or 990EZ.
This category includes fraternal beneficiary societies and associations. They provide for the payment of life, sickness, accident, or other benefits to members. They apply using IRS form 1024 and file annually the 990 or 990EZ.
These are voluntary employees’ beneficiary associations. They provide for the payment of life, sickness, accident, or other benefits to members. They apply using IRS form 1024 and file annually the 990 or 990EZ.
Domestic Fraternal Societies and Associations. A lodge devoting its net earnings to charitable, fraternal, and other specified purposes. No life, sickness, or accident benefits to members. Apply using IRS form 1024 and file annually the 990 or 990EZ.
Teacher’s Retirement fund Associations. Associations for payment of retirement benefits. Apply using IRS form 1024 and file annually the 990 or 990EZ.
Cemetery Companies. Loans to members. Uses Form 1024 for application. Files annually the 990 or 990EZ.
501(c)(14) State Chartered Credit Unions, Mutual Reserve Funds. Loans to members. No application form. Files annually the 990 or 990EZ.
Mutual Insurance Companies of Association. Provide insurance to members, mostly at cost. Applies using Form 1024. Files annually the 990 or 990EZ.
Cooperative Organizations to Finance Crop Operations. Finance crop operations in conjunction with activities of a marketing or purchasing association. No form to apply. Files annually the 990 or 990EZ.
Supplemental Unemployment Benefit Trusts. Provides for payment of supplemental unemployment compensation benefits. Applies using Form 1024. Files annually the 990 or 990EZ.
Employee Funded Pension Trust (created before June 25, 1959). Payment of benefits under a pension plan funded by employees. No form. Applies using Form 1024. Files annually the 990 or 990EZ.
Post or Organization of Past or Present Members of the Armed Forces. Activities according to the nature of an organization. Applies using Form 1024. Files annually the 990 or 990EZ.
Group Legal Services Plan Organizations.
Black Lung Benefit Trusts. Funded by coal mine operators to satisfy their liability for disability or death due to black lung diseases. No form for filing. Reports on tax form 990-BL.
Withdrawal Liability Payment Fund. Provides funds to meet the liability of employers withdrawing from a multi-employer pension fund. No form to file. Tax forms 990 or 990EZ.
Veterans Organization (created before 1880). Provides insurance and other benefits to veterans. No form to apply. Uses tax forms 990 or 990EZ.
Title Holding Corporations or Trusts with Multiple Parents. Holding title and paying over income from a property to 35 or fewer parents or beneficiaries. Applies with the form 1024. Files tax forms 990 or 990EZ.
State-Sponsored Organization Providing Health Coverage for High-Risk Individuals. Provides health care coverage to high-risk individuals. No form for applying. Files tax forms 990 or 990EZ.
State-Sponsored Workers’ Compensation Reinsurance Organization Reimburses members for losses under workers’ compensation acts. No form for applying. Files tax forms 990 or 990EZ.
Religious and Apostolic Associations. Regular business activities. Communal religious community. No application form. Files tax form 1065.
Cooperative Hospital Service Organizations. Performs cooperative services for hospitals. Use 1023 to apply. Files tax forms 990 or 990EZ.
Cooperative Service Organizations of Operating Educational Organizations. Performs collective investment services for educational organizations. Applies with form 1023. Files tax forms 990 or 990EZ.
Child Care Organizations. Provides care for children. Apply with 1023. Files tax forms 990 or 990EZ.
Charitable Risk Pools. Pools certain insurance risks of 501(c)(3). Apply with form 1023. Use tax forms 990 or 990EZ.
Farmers’ Cooperative Associations. Cooperative marketing and purchasing for agricultural producers. Applies using Form 1028. Tax form 990-C.
Readers should note that this article is only intended to convey general information on these issues and that FAS CPA & Consultants (FAS) in no way intends for the contents of this article to be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. This article cannot serve as a substitute for such professional services or advice. Any decision or action that may affect the reader’s business should not rely solely on the contents of this article, but should rather be consulted on with a qualified professional adviser. FAS shall not be responsible for any loss sustained by any person who relies on this presentation. This article is subject to change at any time and for any reason.
At FAS CPA & Consultants we have helped both religious and lay organizations to receive their 501(c)3 exemption status. For a clarification on all requirements and procedures give us a call or mail us and we will help you to choose the most convenient nonprofit structure according to your plan and objectives.
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