12 April 2012.
Question:
I have a concern about one of the conditions and hope I am misinterpreting it. Specifically that, in order for contributions to be tax deductible, at least 90% of our membership must have served during wartime. We have managed to have at least one period of non-combat for over 20 years(1920 - 1940) and we should hope that after 2014 we may again have a period of peace at least for the U.S. If so it could mean the demise of our organization at some future date if we make that a requirement for membership.
There are several organizations that I do or have been a member of that do not have this requirement, such as the AUSA, ROA and the American Legion.
From the Editors:
When we looked at the various sections of the law we could organize under 501(c)(19) [Veteran's Organizations] was the most appropriate. AUSA, ROA and American Legion are all 501(c)(3) [educational] organizations (or at least contributions are made to that part of the organization, like the Institute for Land Warfare here in AUSA]. Since the DIGEST wouldn't qualify as a professional development publication we did not see an opportunity to register under that section.
Under section 501(c)(19) we are not limited to members from those periods of wartime service, anyone can join and we would never have a problem meeting the 75% requirement for exemption regardless of any member's period of service. The 90% wartime service requirement applies to donors being able to deduct contributions. If we slip below that threshold we can continue to operate but could no longer claim that contributions are deductible. The space in the Editorial was a bit limited to go into too much detail so we'll post something on the web to provide the gory details.
Below is the section from the IRS web dealing with 501(c)(19)'s:
"To qualify for recognition of exemption, your application should show:
1.
That the post or organization is organized in the United States or any of its possessions,
That the post or organization is organized in the United States or any of its possessions,2.That at least 75% of the members are past or present members of the U.S. Armed Forces and that at least 97.5% of all members of the organization are past or present members of the U.S. Armed Forces, cadets (including only students in college or university ROTC programs or at armed services academies) or spouses, widows, widowers, ancestors, or lineal descendants of any of those listed here, and
That at least 75% of the members are past or present members of the U.S. Armed Forces and that at least 97.5% of all members of the organization are past or present members of the U.S. Armed Forces, cadets (including only students in college or university ROTC programs or at armed services academies) or spouses, widows, widowers, ancestors, or lineal descendants of any of those listed here, and3.That no part of net earnings inure to the benefit of any private shareholder or individual.
That no part of net earnings inure to the benefit of any private shareholder or individual.In addition to these requirements, a veterans' organization also must be operated exclusively for one or more of the following purposes.
1.To promote the social welfare of the community (that is, to promote in some way the common good and general welfare of the people of the community).
To promote the social welfare of the community (that is, to promote in some way the common good and general welfare of the people of the community).2.To assist disabled and needy war veterans and members of the U.S. Armed Forces and their dependents and the widows and orphans of deceased veterans.
To assist disabled and needy war veterans and members of the U.S. Armed Forces and their dependents and the widows and orphans of deceased veterans.3.To provide entertainment, care, and assistance to hospitalized veterans or members of the U.S. Armed Forces.
To provide entertainment, care, and assistance to hospitalized veterans or members of the U.S. Armed Forces.4.To carry on programs to perpetuate the memory of deceased veterans and members of the Armed Forces and to comfort their survivors.
To carry on programs to perpetuate the memory of deceased veterans and members of the Armed Forces and to comfort their survivors.5.To conduct programs for religious, charitable, scientific, literary, or educational purposes.
To conduct programs for religious, charitable, scientific, literary, or educational purposes.6.To sponsor or participate in activities of a patriotic nature.
To sponsor or participate in activities of a patriotic nature.7.To provide insurance benefits for its members or dependents of its members or both.
To provide insurance benefits for its members or dependents of its members or both.8.To provide social and recreational activities for its members.
To provide social and recreational activities for its members."Tax treatment of donations. 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)."
