Publication 557 |
2001 Tax Year |
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. You should follow
the general procedures outlined in chapter 1. The organization must
also meet the qualifications described in this section.
Examples of groups that would qualify for exemption are posts or
auxiliaries of the American Legion, Veterans of Foreign Wars, and
similar organizations.
To qualify for recognition of exemption, your application should
show:
- That the post or organization is organized in the United
States or any of its possessions,
- 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, or widowers of any
of those listed here, and
- That no part of the net earnings benefit 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.
- 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 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 provide entertainment, care, and assistance to
hospitalized veterans or members of the U.S. Armed Forces.
- To carry on programs to perpetuate the memory of deceased
veterans and members of the Armed Forces and to comfort their
survivors.
- To conduct programs for religious, charitable, scientific,
literary, or educational purposes.
- To sponsor or participate in activities of a patriotic
nature.
- To provide insurance benefits for its members or dependents
of its members or both.
- To provide social and recreational activities for its
members.
Auxiliary unit.
An auxiliary unit or society of a veterans' organization may apply
for recognition of exemption provided that the veterans' organization
(parent organization) meets the requirements explained earlier in this
section. The auxiliary unit or society must also meet all the
following additional requirements.
- It is affiliated with, and organized in accordance with, the
bylaws and regulations formulated by the parent organization.
- At least 75% of its members are either past or present
members of the U.S. Armed Forces, spouses of those members, or related
to those members within two degrees of kinship (grandparent, brother,
sister, and grandchild represent the most distant allowable
relationship).
- All of its members either are members of the parent
organization, spouses of a member of the parent organization, or
related to a member of such organization within two degrees of
kinship.
- No part of its net earnings benefit any private shareholder
or individual.
Trusts or foundations.
Trusts or foundations for a veterans' organization also may apply
for recognition of exemption provided that the parent organization
meets the requirements explained earlier. The trust or foundation must
also meet all the following qualifications.
- The trust or foundation is in existence under local law and,
if it is organized for charitable purposes, has a dissolution
provision similar to charitable organizations. (See Articles of
Organization in chapter 3 of this publication.)
- The corpus or income cannot be diverted or used other than
for:
- The funding of a veterans' organization, described in this
section,
- Religious, charitable, scientific, literary, or educational
purposes or for the prevention of cruelty to children or animals,
or
- An insurance set aside.
- The trust income is not unreasonably accumulated and, if the
trust or foundation is not an insurance set aside, a substantial
portion of the income is in fact distributed to the parent
organization or for the purposes described in item (2)(b).
- It is organized exclusively for one or more of the purposes
listed earlier in this section that are specifically applicable to the
parent organization.
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).
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