What are IRS 501(c)(4) Organizations?

By | March 3, 2015

Nonprofit status is a state law concept. An organization usually becomes a nonprofit under state law by filing organizing documents with the state, such as Articles of Incorporation, which indicate the organization is formed under the state’s Nonprofit Corporation Act. Nonprofit status may make an organization eligible for certain benefits, such as exemption from property, income and state sales tax. This is on the State level and filing requirements and benefits vary state by state.


What are IRS 501(c)(4) Organizations?

Section 501(c)(4) organizations include civic leagues, social welfare organizations and local associations of employees. A social welfare organization, under 501(c)(4), must be organized exclusively for the promotion of social welfare. A 501(c)(4) organization operates primarily to further the common good and general welfare of people of the community, such as by bringing about civic betterment and social improvements. In this group — this includes groups formed to educate and inform the public about particular issues. Some more examples of section 501(c)(4)s include volunteer fire companies, civic leagues and community associations. And we also do want to point out that option 501(c)(4)s conduct activities that are very similar to those of 501(c)(3) organizations, however, 501(c)(4)s are not constrained by many of the restrictions and prohibitions placed on (c)(3)s


Applying for 501(c)(4) Status

Organizations applying for exemption under 501(c)(4) use Form 1024, called Application for Recognition of Exemption under section 501(a). Form 1024 is also used to apply for recognition of exemption under 501(c)(5), (c)(6), and the rest of the sections we discussed today.


More IRS Information on 501(c)(4) Organizations

The promotion of 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. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity. However, any expenditure it makes for political activities may be subject to tax under section 527(f). For further information regarding political and lobbying activities of section 501(c) organizations, see Election Year IssuesPolitical Campaign and Lobbying Activities of IRC 501(c)(4), (c)(5), and (c)(6) Organizations, and Revenue Ruling 2004-6.


Examples of exempt as social welfare organizations

Homeowners associations and volunteer fire companies may be recognized as exempt as social welfare organizations if they meet the requirements for exemption. Organizations that engage in substantial lobbying activities sometimes also are classified as social welfare organizations.