You might have heard of a corporation or organization being referred to as a “501(c)(5)”. This reference refers to a specific Section in the Internal Revenue Code (“IRC”) and means it is a not for profit labor, agricultural, or horticultural organization recognized by the Internal Revenue Service (“IRS”). It will be exempt form federal income taxes. To qualify for 501(c)(5) status, the following criteria must be met:
1) No member of the organization may benefit from any earnings of the organization; and
2) The objective of the organization must be the the improvement for those engaged in labor, agriculture, or horticulture, and the enhancement of their products.
The organization can only achieve 501(c)(5) status by filing the appropriate IRS form and getting notification by the IRS that it is now exempt.
Section 501(g) of the Internal Revenue Code (IRC) defines “agricultural” (for 501(c)(5) purposes) as:
1) the art of science of cultivating land,
2) harvesting crops or aquatic resources, or
3) raising livestock (See https://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Agricultural-and-Horticultural-Organizations last visited November 24, 2015).
Thus, a 501(c)(5) agricultural organization refers to one which promote the interests of people raising livestock, harvesting crops or aquatic resources, cultivating useful or ornamental plants, or similar pursuits. Some examples of activities which promote agriculture include, but are not limited to:
1) conducting education programs to inform the public about agriculture or promote agricultural and farming issues;
2) recommending legislation favorable to agriculture;
3) being a farm bureau;
4) conducting testing of agricultural resources;
5) promoting interest in specific livestock or crops.
Rincker Law recently formed a 501(c)(5) for New York Agri-Women, Inc. We are excited to help other agricultural not-for-profit organizations.
Comments 1
Good Morning,
The language in the ICR Non-Profit 501 C 5 as to “member benefits” in a Labor Organization such as;
“Sick, Accident, Death, and other similar benefits” is allowed “if provided through A PLAN”.
My questions is; Is there a definition for the word “Plan” as used in the code?
and is the “General Fund” of a Labor Organization considered a Plan as defined in the code as to disperse welfare benefits to its members, Even if there is no set structure on the responsibilities of the General Fund except to pay the usual expenditures required to do normal business?
Thank You,,,,