The Internal Revenue Service (IRS) recently released a new technical guide for 501(c)(6) tax-exempt business associations, trade leagues, chambers of commerce, real estate boards, and other tax-exempt organizations. federal tax under IRC 501(c)(6). The new guide is part of an ongoing effort by the IRS and the Government Accountability Office (GAO) to consolidate the techniques, methods, and technical information used to guide IRS staff in their compliance review of organizations. tax exempt to IRS requirements.

While there are few new or surprises in the new guide, it helpfully consolidates decades of IRS advice and creates a resource to educate and refresh management of 501(c)(6) organizations on the rules. governing their tax exemption.

Summary of the new technical guide

The IRS has already issued updated technical guides regarding private operating foundations, religious and apostolic associations, and foreign organizations, among others. Like these, the new 501(c)(6) Technical Guide replaces previous IRS Auditing Technical Guides and Technical Resource Guides. The new guide is much more detailed than its predecessors and was designed by the IRS to ensure uniformity and consistency in guidance issued by the IRS.

The technical guide begins with an overview of the history of the IRC 501(c)(6), including the history of commercial league tax exemption, as well as brief descriptions of the relevant Internal Revenue sections. Treasury Code and Regulations.

The technical guide then goes into an in-depth look at the specific tax-exempt requirements under IRC 501(c)(6) and outlines common considerations and issues that arise, such as the difference between 501(c)(6 ) and 501(c)(3) organizations, the non-deductibility of contributions to 501(c)(6) organizations, and the taxation of non-business related taxable income.

One of the main differences from previous guides is the emphasis on technical information and references to primary source advice. The new technical guide reads like a treatise on the subject, instead of an auditor’s checklist, making it more explanatory and informative.

Main uses of the new technical guide

Whether forming a new trade association or joining an established one for the first time, many 501(c)(6) organization leaders and board members may be unfamiliar. with the requirements and nuances of federal tax exemption. The new technical guide is a useful tool to provide association management with a comprehensive, plain-English description of what a 501(c)(6) organization must do (and not do) to maintain exemption. tax, with general information and descriptions of common problems that arise.

The new directives may be more useful in a few use cases:

  • As an introductory guide for groups seeking to establish a 501(c)(6) organization or determining the best tax-exempt status for a new organization.
  • As a resource for new officers and board members to help them understand the requirements when overseeing the governance of the organization.
  • As an informal checklist to assess compliance of new activities and programs with the Internal Tax Code and Treasury regulations.

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