IRS Filing Rules for 501(C)(5)

Section 501(c)(5) of the Internal Revenue Code provides tax-exempt status for nonprofit organizations in the fields of agricultural, horticulture and labor. With tax-exempt status, a nonprofit organization does not owe any tax on income used to further an Internal Revenue Service-approved agenda or purpose. 501(c)(5) organizations need to meet guidelines set by the IRS to prevent their application from being rejected and must file an annual tax return in order to maintain their nonprofit status.

Labor

Labor organizations allow employees and their collective bargaining agents to bargain for higher pay and improved working conditions with an employer. To file for 501(c)(5) status, the IRS allows any organization formed to improve the condition of its members, improve the quality of products or develop more efficient techniques. The IRS will reject any application where the labor organization controls a business or offers savings plans.

Agricultural

According to the IRS, an agricultural or horticulture organization must provide for the betterment of farmers and ranchers through aid, improvement of agricultural products and improvement through efficiency. These activities can include testing soil, pest control, improving the production of a plant or animal, maintaining the purity of a breed and rodeos. The IRS will reject a 501(c)(5) application if the filer's organization engages in horse racing, provides insurance to agriculturalists, forms labor pools of farm laborers or engages in any promotion or advertising of a manufacturer's product.

Application

If a filer believes his labor, agricultural or horticulture organization fits into the criteria listed by the IRS, he must fill out Form 1024 for apply for 501(c)(5) classification. On Part I of Form 1024, the filer will check the 501(c)(5) box and enter the name, address, employer identification number and other identifying information of the proposed organization. In Part II, the applicant will write a detailed history and activities of the organization and will write down the names, addresses and compensation of all trustees, officers and directors. In Part III of Form 1024, filers must list detailed information about the assets, liabilities, cash flow and expenses of the organization.

Filing

If the organization is a corporation, organizers must attach a copy of their articles of incorporation to their completed Form 1024. Trusts must attach a copy of the Trust Agreement, and associations must attach their Articles of Association. All filers must include a copy of the organization's financial statements when submitting an 501(c)(5) to the IRS and can include court decisions or rulings that support their request for tax-exempt status. Filers can submit their completed 501(c)(5) application to the Internal Revenue Service, P.O. Box 12192, Covington, KY 41012-0192.

Returns

According to GuideStar, organizations approved for 501(c)(5) status must file a Form 990 return by the 15th day of the fifth month after the organization's fiscal year ends. Tax-exempt corporations do not normally have to file a return if they have less than $50,000 in gross receipts for the fiscal year. The IRS allows 501(c)(5) organizations to receive a three-month filing extension by filing Form 8868.

References

• Internal Revenue Service: What Are My Filing Responsibilities Once I Receive/Apply for My Tax-exempt Status?
• Internal Revenue Service: Tax-Exempt Status for Your Organization
• Internal Revenue Service: IRC 501(c)(5) Organizations
• Internal Revenue Service: Labor and Agricultural Organizations
• GuideStar: Internal Revenue Service Subsection Codes for Tax-Exempt Organizations

Resources

• Internal Revenue Service: Application for Recognition of Exemption Under Section 501(a)