By Dean ‘Mac’ Nichols, Attorney
This is the second of a four-part series on nonprofit business entities.
501(c)(4) political organizations are tax–exempt organizations granted exemption for a variety of reasons. They can be:
• Civic leagues,
• Organizations not organized for profit, but operated exclusively for promoting social welfare,
• Local associations of employees in which membership is limited to the employees of a designated person or persons, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes.
501(c)(4) organizations are allowed to engage in lobbying and other political activities as long as that is not its primary purpose.
These organizations are operated primarily for the purposes of enacting civic betterments and social improvements. As such, they cannot inure net earnings to the benefit of any private shareholder or individual, and are subject to intermediate sanctions legislation.
Like 501(c)(3) organizations, if 501(c)(4) organizations have the provision of credit counseling services as a substantial purpose, then the organization will not be tax exempt unless it satisfies some additional requirements.
If you or your organization is interested in applying for 501(c)(4) status, contact the law offices of Layman & Nichols today.
