A voluntary employees' beneficiary association under Internal Revenue Code section 501(c)(9) is an organization organized to pay life, sick, accident, or similar benefits to members or their dependents, or designated beneficiaries. No part of the net earnings of the association may inure to the benefit of any private shareholder or individual. The organization must meet the following requirements:
- It must be a voluntary association of employees;
- The organization must provide for payment of life, sick, accident or other similar benefits to members or their dependents or designated beneficiaries and substantially all of its operations are for this purpose; and
- Its earnings may not inure to the benefit of any private individual or shareholder other than through the payment of benefits described in (2) above.
Membership of a section 501(c)(9) organization must consist of individuals who are employees who have an employment-related common bond. This common bond may be a common employer (or affiliated employers), coverage under one or more collective bargaining agreements, membership in a labor union, or membership in one or more locals of a national or international labor union. An organization that is part of a plan will not be exempt unless the plan meets certain nondiscrimination requirements. However, if the organization is part of a plan maintained under a collective bargaining agreement between employee representatives and employers, and such plan was the subject of good faith bargaining between such employee representatives and employers, the plan need not meet such nondiscrimination requirements for the organization to qualify as tax exempt. For more information, see Voluntary Employees' Beneficiary Associations.
Required notice to the IRS
An organization will not be treated as exempt under section 501(c)(9) unless it gives timely notice to the IRS that is it applying for recognition of such status. See When to File in the instructions to Form 1024 for more information.