Overview of 501(c)(3), 501(c)(5), and 501(c)(6) Status
A 501(c)(5) is an IRS tax exemption for nonprofit agricultural, horticultural or labor organizations. The objective must be to improve labor, agriculture, or horticulture.
Obtaining 501(c)(5) Status
To get 501(c)(5) status: no member can benefit from earnings; the objective must be to improve labor, agriculture, or horticulture.
Differences Between 501(c)(3) and 501(c)(5)
A 501(c)(3) allows tax deductible donations. A 501(c)(5) promotes agricultural interests.
Additional Information
501(c)(6)s are business leagues. If promoting common agricultural interests, it may properly be a business league. If promoting suppliers to agriculture, it may not.
Specific Benefits of 501(c) Status
- Reducing financial burden of taxes
- Exemption from federal income tax
- Ability to receive tax deductible donations
- Exemption from employment taxes
Conclusion
Most entities prefer 501(c)(3) status since donations to them are tax exempt.