501(c)(5) Agricultural Organizations​

Labor, agricultural or horticultural organizations.
                                                                                                                                                                      - Internal Revenue Code Section 501(c)(5)

Exemption Application

• Form 1024, including Schedule C (current form is dated 9/98).
• $600 (as of 1/11/18, new Form 8718 not yet available)
  
• Submit fee using Form 8718.
  
• There is no filing deadline for a 501(c)(5) application. 
  
• In late 2015, 501(c)(5) organizations were given the right to go to court to seek a Declaratory Judgment when the IRS denies an exemption application.
  

Annual filing

• Gross receipts normally less than $50,000 - file Form 990-N
• Gross receipts normally less than $200,000 - file Form 990-EZ
  
• Gross receipts normally more than $200,000 - file Form 990
  
• Check instructions: an organization's assets can also affect which form must be filed
  

Caution: An organization that fails to file a required return for three years in a row will have its exempt status automatically revoked.

Basic Rules

• For purposes of 501(c)(5), the term "agricultural" includes cultivating land, harvesting crops or aquatic resources, or raising livestock.
  
• The primary purpose of the organization must be to better the conditions of those engaged in the listed pursuits, to improve their products, or to achieve a higher degree of efficiency in their operations.
  
• The term "aquatic resources" includes animal and vegetable life, but not mineral resources.
  
• Donations are not deductible as charitable contributions
  
• Larger organizations may be required to disclose that contributions are not deductible in their solicitation materials
  
• Check with your local postmaster to see if your 501(c)(5) can qualify for low-rate non-profit bulk mailing.
  
• Unlike (c)(3)s, 501(c)(5) organizations are permitted to have more than incidental amounts of social activity.
  

Lobbying

• 501(c)(5) organizations are permitted unlimited amounts of legislative activity as long as it is in furtherance of the exempt purpose.
• In some cases, (c)(5)s may be required to notify members that a portion of dues is not deductible because of lobbying carried on by the organization.  Organizations may elect to pay a proxy tax instead of making this notification.
  

Political Activity

• Political activity is permitted, but cannot be the organization's primary purpose, and will in most cases incur a penalty tax.
• In some cases, (c)(5)s may be required to notify members that a portion of dues is not deductible because of political activity carried on by the organization.  Organizations may elect to pay a proxy tax instead of making this notification.
  

Examples

• Farm bureaus 
  
• grange 
  
• organizations
  
• breeders' associations
  
• soil testing groups
  
• exhibitions featuring livestock or other farm products
  
• ​At the end of fiscal year 2015, there were 46,576 501(c)(5) organizations, about 3.01% of all 501(c) organizations
  

Links

• Information about points of intersection between agricultural organizations and the IRS.  Life Cycle of an Agricultural or Horticultural Organization
  
• IRS Publication 557, Tax Exempt Status for Your Organizations
  
• There are a few Exempt Organizations Continuing Professional Education articles on agricultural organizations.  The best way to access these is through the Exempt Organizations CPE Topical Index.
  
• IRC 501(c)(5) Organizations, 2003 Exempt Organizations Continuing Professional Education Technical Instruction Program, Topic I.  This is the most recent CPE article.
  
• Compliance Guide for Tax-Exempt Organizations (Other than 501(c)(3) Public Charities and Private Foundations) IRS Publication 4221-NC
  
• Section 7.25.5 of the Internal Revenue Manual​​

Return to Alternatives to 501(c)(3) Status