Business Leagues and Trade Organizations

In order to qualify for tax-exempt status under Internal Revenue Code Section 501(c)(6), an association must show that it is devoted to the improvement of business conditions of one or more lines of business as distinguished from the performance of particular services for individual persons. The organization seeking tax-exempt status as a nonprofit business league, chamber of commerce, real estate board, or professional football league must do more than indicate the name of the organization or the object of the local statute under which it is created.

An organization seeking tax-exempt status as a business league or trade association must prove a common business interest among all the members of the group. Activities that fulfill the common-interest requirement include:

The promotion of higher standards for better business methods and the encouragement of uniformity and cooperation by a retail merchants association.
A program that educates the public in the use of credit.
The establishment of uniform casualty rates and the compilation of statistical information by an insurance rating bureau operated by casualty insurance companies.
The establishment and maintenance of the integrity of a local commercial market.
The operation of a trade publication that seeks to benefit an entire industry.
The encouragement of the use of goods and services of an entire industry.

An organization that is exempt as a business league or trade organization under Section 501(c)(6) may lobby for the enactment of laws to advance the common interests of its members. However, an individual is not entitled to deduct any portion of dues paid to a tax-exempt organization used for activities such as influencing legislation, participating or intervening in a political campaign either in favor of or in opposition to a candidate for public office, trying to influence the general public with regards to elections or legislative matters, or communicating directly with certain executive branch officials to influence their actions. Members may deduct dues paid to business league or other trade association used for the expenses of appearing before or communicating with members of a local council or similar governing body on the issue of legislation of direct interest to the members.