Definitions

IRC 501(c)(4) provides, in part, for the exemption from federal income tax of civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare. No part of the net earnings of the entity may inure to the benefit of any private shareholder or individual.

IRC 501(c)(7) provides for the exemption from federal income tax of clubs organized for pleasure, recreation and other nonprofitable purposes, substantially all the activities of which are for these purposes and no part of the net earnings of which inures to the benefit of any private shareholder.

IRC 501(c)(8) provides for the exemption from federal income tax of fraternal beneficiary societies, orders or associations operating under the lodge system and providing for the payment of life, sick, accident or other benefits to the members and their dependents.

IRC 501(c)(10) provides for the exemption from federal income tax of domestic fraternal societies, orders or associations, operating under the lodge system, the net earnings of which are devoted exclusively to religious, charitable, scientific, literary, educational and fraternal purposes, and which do not provide for the payment of life, sick, accident or other benefits.

IRC 501(c)(19) provides for the exemption from federal income tax of a post or organization of past or present members of the Armed Forces of the United States, an auxiliary unit or society of, or a trust or foundation for any such post or organization meeting specific organizational requirements as stated in the IRC.

IRC 501(c)(23) provides for the exemption of any association organized before 1880, more than 75 percent of the members of which are present or past members of the Armed Forces, and a principal purpose of which is to provide insurance and other benefits to veterans or their dependents. The Army and Navy Mutual Aid Societies are the only organizations known to qualify under this section.

Auxiliary units or societies are corporations or associations formed to support the purposes and activities of a post or organization composed of veteran members. IRC 501(c)(19) provides for the exemption of auxiliary units composed of spouses of members of a 501(c)(19) organization, or persons related to a member of such an organization within two degrees of consanguinity.

A “ bona fide guest ” is an individual invited to participate in an activity, accompanied by a member, and for whom all expenses are paid by the member. Whether an individual is a bona fide guest or a member of the general public is important for determining the source of income for 501(c)(7) exempt status and for determining amounts of UBIT for 501(c)(7), 501(c)(8), 501(c)(10) and 501(c)(19) organizations.

A “ member ” for purposes of IRC 501(c)(19) is an individual who is eligible for membership as described in the constitution and bylaws of the veterans’ organization. The organizing document of the veterans’ organization usually limits membership to past or present members of the United States Armed Forces when the post is controlled by a central organization in a group exemption. A member of the veterans’ organization is entitled to attend membership meetings, to vote at the meetings, to hold office or to participate in national and state conventions. Lastly, the post also remits a per-capita tax to the central organization for membership dues.

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A “ nonmember ” for purposes of IRC 501(c)(19) is an individual who is not a member of the organization but who participates in recreational activities sponsored by the organization or receives goods or services from the organization and pays for the services or goods received. This is a term that describes the social nonmember of the post. A nonmember of the veterans’ organization is not entitled to attend membership meetings, to vote at the meetings, to hold office or to participate in national and state conventions. The post does not remit a per-capita tax to the central organization for their social nonmember dues. A social nonmember is generally considered a member of the general public and a nonmember for Section 501(c)(19) purposes unless the membership category is established in the constitution of the central organization or post’s creating document.

A war veteran is a person who served in the Armed Forces of the United States during:

a. April 21, 1898, through July 4, 1902;

b. April 6, 1917, through November 11, 1918;

c. December 7, 1941, through December 31, 1946;

d. June 27, 1950, through January 31, 1955;

e. February 28, 1961, through May 7, 1975, in the case of a veteran who served in the Republic of

Vietnam during that period;

f. August 5, 1964, through May 7, 1975; or

g. August 2, 1990, and will end on the date prescribed by Presidential Proclamation or by law.

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