Nonprofit Tax Filing for Corporations Organized under Act of Congress (Including Credit Unions)
An overview of applying for tax-exempt status.
- Updated August 14, 2023 - 2.00 PM - Admin, Tax990
Table of Contents
What Should Corporations Organized under the Act of Congress Know About Form 990 Filing?
The IRS has established different IRC sections, and each of those sections provides a federal tax exemption for specific types of nonprofit organizations, provided that they meet the requirements mentioned.
This article discusses the IRC section under which the Corporations Organized under the Act of Congress can obtain tax exemption and explains their tax filing requirements.
How Does the IRS Define Corporations Organized under the Act of Congress?
Per the IRC section 501(c)(1), the IRS defines a Corporation Organized Under the Act of Congress as one of the following:
Instrumentalities of the U.S
The primary purpose of instrumentality is the performance of governmental functions.
These organizations do not have the complete powers and authority of a government body or extension (police authority, tax collection, etc.).
Government Corporations
Established and operated on or after July 18, 1984, and listed under IRC Section 501(l).
Federal Credit Unions
Organizations established and operated under the Federal Credit Union Act.
What are the Tax-Exemption Requirements for Corporations Organized under Congress Acts?
In order to be treated as tax-exempt organizations, Corporations Organized Under the Act of Congress must meet the following requirements:
The organization must act as an instrumentality of the United States. However, State and municipal instrumentalities aren’t exempt under Section 501(c)(1).
The exemption must be authorized by the Congress.
If the organization is a government corporation created on or after July 18, 1984, the organization should be listed in Section 501(c)(1). This may include:
- The Central Liquidity Facility under Title III of the Federal Credit Union Act 12 U.S.C. 1795 et seq.
- The Resolution Trust Corporation under section 21A of the Federal Home Loan Bank Act.
- The Resolution Funding Corporation under section 21B of the Federal Home Loan Bank Act.
- The Patient-Centered Outcomes Research Institute under section 1181(b) of the Social Security Act.
If the organization is a Federal Credit Union, it must be operating under the supervision of the National Credit Union Administration (NCUA).
Note:
These organizations aren’t required to file any application form for requesting tax exemption. However, if the organization was previously a State Credit Union and is now a Federal Credit Union, it must notify this to the IRS in order to be tax-exempt.
Do Corporations Organized under Congress Acts
file Form 990?
No! Any organizations (including Federal Credit Unions) that obtained tax-exempt status under the IRC section 501(c)(1) are not required to file their annual information returns, i,e., 990 Series Forms.
