Life Cycle of a Business League (Trade Association) - Ongoing Compliance
In addition to annual return requirements, exempt organizations must file certain returns and reports and make certain disclosures. If an attorney or other representative will represent your organization in connection with these filings, see Power of Attorney.
A business league will jeopardize its exemption under Code section 501(c)(6) if it ceases to have as its purposes promoting the common business interest of persons engaged in a line of business. Specific activities that may jeopardize exemption include :
- Inurement of net earnings to members
Every employer, including an organization exempt from federal income tax, who pays wages to employees is responsible for withholding, depositing, paying, and reporting federal employment taxes (including federal income tax, social security and Medicare (FICA) taxes, and federal unemployment tax (FUTA)), unless that employer is specifically excepted by law from those requirements or if the taxes clearly do not apply. These taxes generally apply to payment of compensation to employees.
Donations to business leagues are generally not deductible as charitable contributions, but dues payments may be deductible as business expenses. An organization that solicits and receives dues payments or contributions may be required to make certain disclosures, however.
Getting Help from the IRS
Exempt Organizations (EO) offers specialized assistance to tax-exempt organizations. EO's programs help these customers understand and comply with the tax laws and regulations governing exempt organizations. Please see Help from the IRS for more information.