Nonprofit Law/Which Non Profit

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Question
QUESTION: I am researching what type of non-profit status I should apply for, initially I was considering a 501(c)7 but after reading the laws behind it I do not fit into that category.
Essentially my endeavor is a website called Geeks Under Grace. We are a Christian mission to educate and build a community of religious people who are fans of geek culture. We want to begin to do missions where we conduct outreach at various events and conventions as well as receiving donations to help us fund our missions.
We operate much like a church, but if that church was online.
I am unsure which application I should be pursuing in our non-profit status.
Eventually I would like to be able to pay the members of our team who help manage the website, so that may be a factor also.
Thanks in advance for any advice you can give.

Drew Koehler

ANSWER: I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations. Generally, if your primary purpose and activities are religious preaching and you do not have more than an insubstantial amount of activities of a social nature, then the organization would qualify as a 501(c)(3) organization, otherwise not.

I don't know why you concluded that your proposed organization would not qualify as a IRC 501(c)(7) organization, which exempts from federal income tax, clubs "organized for pleasure, recreation, and other nonprofitable purposes, substantially all of the activities of which are for such purposes and no part of the net earnings of which inures to the benefit of any private shareholder."
http://www.irs.gov/irm/part7/irm_07-025-007.html

For either organization reasonable salaries may be paid.

You are welcome.

Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather more information.

---------- FOLLOW-UP ----------

QUESTION: I suppose for the purpose of being able to accept donations and have them be tax deductible of the donor would be the main reason why I would want to go the route of a 501(c)3. Also a 501(c)7 appears to have membership bylaws and specific requirement on owning a property. As most of my business is conducted online with board members from various states I was under the impression that a 501(c) would lose its tax exempt status because of lack of physical property.

Answer
Well, you might fit in the 501(c)(7) category, but you want to have one of the benefits that the category does not provide, deductibility for donations.  That is not called a "purpose" under the tax law of exempt organizations.  Anyway, I have read the Revenue Rulings cited in that Internal Revenue Manual that I referred to you earlier at http://www.irs.gov/irm/part7/irm_07-025-007.html and they do provide that, to qualify for (c)(7) status there must be an established membership of individuals, personal contacts, and fellowship. However, all of those Revenue Rulings were before the internet and times have changed.

"[E]ach revenue ruling represents the conclusion of the Service as to the application of the law to the entire statement of facts involved, taxpayers, Service personnel, and others concerned are cautioned against reaching the same conclusion in other cases unless the facts and circumstances are substantially the same." www.unclefed.com/Tax-Bulls/RevProc89-14.html

--- Start of Excerpt ---
His reliance on the Revenue Ruling is misplaced, however, because in the first place it is not precedent. Stubbs, Overbeck & Associates v. United States [71-2 USTC 9520], 445 F.2d 1142,
1146-1147 (5th Cir. 1971); Twin Oaks Community, Inc. v. Commissioner [Dec. 43,524], 87 T.C. 1233, 1252 (1986). --- End of Excerpt ---
Seelbach v. Commissioner, 58 TCM (CCH) 613 - Tax Court 1989
https://goo.gl/tkZ6c4

--- Start of Excerpt ---
Revenue Rulings are not accorded the force of precedent in the Tax Court. Rather, they represent the
position of the Commissioner on a given issue, and we deal with Rev. Rul. 85-8 in that light.  Estate of Lang v. Commissioner, 64 T.C. 404, 406-407 (1975), affd. in part and revd. in part on other grounds 613 F.2d 770 (9th Cir. 1980).
--- End of Excerpt ---
Tax Court page 22 at http://goo.gl/W0qCxj

Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather more information.

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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