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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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Lev, I belong to a 501(c)19 organization and am trying to

Customer Question

Hi Lev, I belong to a 501(c)19 organization and am trying to find out the difference between the (c)3 and our designation
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.
So far there is no tax advantages of being 501c3 or a 501c19, but there are different rules and requirements. The organization may generally qualify for both statuses. 501(c)(3) - An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes: Religious, Charitable, Scientific, Testing for public safety, Literary, Educational.The organization must file its application for recognition of exemption on Form 1023.Contributions to domestic 501(c)(3) Organizations, except organizations testing for public safety, are deductible as charitable contributions on the donor's federal income tax return.501(c)(19) -Veterans' Organizations - A post or organization of past or present members of the Armed Forces of the United States may file Form 1024 to apply for recognition of exemption from federal income tax.Donations to war veterans' organizations are deductible as charitable contributions on the donor's federal income tax return. At least 90% of the organization's membership must consist of war veterans. The term war veterans means persons, whether or not present members of the U.S. Armed Forces, who have served in the U.S. Armed Forces during a period of war (including the Korean and Vietnam conflicts, the Persian Gulf war, and later declared wars).See more details in IRS publication 557 - www.irs.gov/pub/irs-pdf/p557.pdf
Expert:  Lev replied 1 year ago.
As long as the organization has either status - it is eligible to solicit and accept charitable contributions - so far having both statuses will not provide any additional advantage.
If you plan to drop 501c19 in future - and want the organization to be treated under 501c3 status - you might obtain both the second status - but tax wise - there is no any additional benefits
As I mentioned - the 501c19 organization has additional requirements for donations to be deductible as charitable contributions on the donor's federal income tax return - at least 90% of the organization's membership must consist of war veterans.
In case your organization doesn't met this test or will not met in future - having 501c3 status will protect your donors.
However - as long as the organization has either status and donations are deductible for donors - having both statuses instead on either one - will not give any additional benefits.
For specific details - see Internal Revenue Manual
7.25 Exempt Organizations Determinations Manual
http://www.irs.gov/irm/part7/irm_07-025-003.html
http://www.irs.gov/irm/part7/irm_07-025-019.html
Let me know if you need any help.

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