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§ 501. Exemption from tax on corporations, certain
trusts, etc.
(a) Exemption from taxation
An organization described in subsection (c) or (d) or section 401 (a) shall be exempt from
taxation under this subtitle unless such exemption is denied under section 502 or 503.
(b) Tax on unrelated business income and certain other activities
An organization exempt from taxation under subsection (a) shall be subject to tax to the extent
provided in parts II, III, and VI of this subchapter, but (notwithstanding parts II, III, and VI of
this subchapter) shall be considered an organization exempt from income taxes for the purpose
of any la w which refers to organizations exempt from income taxes.
(c) List of exempt organizations
The following organizations are referred to in subsection (a):
(1) Any corporation organized under Act of Congress which is an instrumentality of the United
States b ut only if such corporation —
(A) is exempt from Federal income taxes —
(i) under such Act as amended and supplemented before July 18, 1984, or
(ii) under this title without regard to any provision of law which is not contained in this title and
which is not contained in a revenue Act, or
(B) is described in subsection (l).
(2) Corporations organized for the exclusive purpose of holding title to property, collecting
income therefrom, and turning over the entire amount thereof, less expenses, to an organizatio n
which itself is exempt under this section. Rules similar to the rules of subparagraph (G) of
paragraph (25) shall apply for purposes of this paragraph.
(3) Corporations, and any community chest, fund, or foundation, organized and operated
exclusively for religious, charitable, scientific, testing for public safety, literary, or educational
purposes, or to foster national or international amateur sports competition (but only if no part of
its activities involve the provision of athletic facilities or equip ment), or for the prevention of
cruelty to children or animals, no part of the net earnings of which inures to the benefit of any
private shareholder or individual, no substantial part of the activities of which is carrying on
propaganda, or otherwise atte mpting, to influence legislation (except as otherwise provided in
subsection (h)), and which does not participate in, or intervene in (including the publishing or
distributing of statements), any political campaign on behalf of (or in opposition to) any
ca ndidate for public office.
(4)
(A) Civic leagues or organizations not organized for profit but operated exclusively for the
promotion of social welfare, or local associations of employees, the membership of which is
limited to the employees of a designated person or persons in a particular municipality, and the
net earnings of which are devoted exclusively to charitable, educational, or recreational
purposes.
(B) Subparagraph (A) shall not apply to an entity unless no part of the net earnings of such
entity inures to the benefit of any private shareholder or individual.
(5) Labor, agricultural, or horticultural organizations.
(6) Business leagues, chambers of commerce, real -estate boards, boards of trade, or
professional football leagues (whether or not admi nistering a pension fund for football players),
not organized for profit and no part of the net earnings of which inures to the benefit of any
private shareholder or individual.
(7) Clubs organized for pleasure, recreation, and other nonprofitable purposes, substantially all
of the activities of which are for such purposes and no part of the net earnings of which inures to
the benefit of any private shareholder.
(8) Fraternal beneficiary societies, orders, or associations—
(A) operating under the lo dge system or for the exclusive benefit of the members of a fraternity
itself operating under the lodge system, and

(B) providing for the payment of life, sick, accident, or other benefits to the members of such
society, order, or association or their depe ndents.
(9) Voluntary employees’ beneficiary associations providing for the payment of life, sick,
accident, or other benefits to the members of such association or their dependents or designated
beneficiaries, if no part of the net earnings of such associ ation inures (other than through such
payments) to the benefit of any private shareholder or individual.
(10) Domestic fraternal societies, orders, or associations, operating under the lodge system —
(A) the net earnings of which are devoted exclusively to religious, charitable, scientific, literary,
educational, and fraternal purposes, and
(B) which do not provide for the payment of life, sick, accident, or other benefits.
(11) Teachers’ retirement fund associations of a purely local character, if —
(A) no part of their net earnings inures (other than through payment of retirement benefits) to
the benefit of any private shareholder or individual, and
(B) the income consists solely of amounts received from public taxation, amounts received from
assessments on the teaching salaries of members, and income in respect of investments.
(12)
(A) Benevolent life insurance associations of a purely local character, mutual ditch or irrigation
companies, mutual or cooperative telephone companies, or like organizations; bu t only if 85
percent or more of the income consists of amounts collected from members for the sole purpose
of meeting losses and expenses.
(B) In the case of a mutual or cooperative telephone company, subparagraph (A) shall be
applied without taking into a ccount any income received or accrued —
(i) from a nonmember telephone company for the performance of communication services which
involve members of the mutual or cooperative telephone company,
(ii) from qualified pole rentals,
(iii) from the sale of displ ay listings in a directory furnished to the members of the mutual or
cooperative telephone company, or
(iv) from the prepayment of a loan under section 306A, 306B, or 311
[1] of the Rural
Electrification Act of 1936 (as in effect on January 1, 1987).
(C) In the case of a mutual or cooperative electric company, subparagraph (A) shall be applied
without taking into account any income received or accrued —
(i) from qualified pole rentals, or
(ii) from any provision or sale of electric energy transmission services or ancillary services if
such services are provided on a nondiscriminatory open access basis under an open access
transmission tariff approved or accepted by FERC or under an independent transmission provider
agreement approved or accepted by FERC (other than income received or accrued directly or
indirectly from a member),
(iii) from the provision or sale of electric energy distribution services o r ancillary services if such
services are provided on a nondiscriminatory open access basis to distribute electric energy not
owned by the mutual or electric cooperative company —
(I) to end -users who are served by distribution facilities not owned by such company or any of
its members (other than income received or accrued directly or indirectly from a member), or
(II) generated by a generation facility not owned or leased by such company or any of its
members and which is directly connected to distribution facilities owned by such company or any
of its members (other than income received or accrued directly or indirectly from a member),
(iv) from any nuclear decommissioning transaction, or
(v) from any asset exchange or conversion transaction.
(D) For purpo ses of this paragraph, the term “qualified pole rental” means any rental of a pole
(or other structure used to support wires) if such pole (or other structure) —
(i) is used by the telephone or electric company to support one or more wires which are used by
such company in providing telephone or electric services to its members, and
(ii) is used pursuant to the rental to support one or more wires (in addition to the wires
described in clause (i)) for use in connection with the transmission by wire of electri city or of
telephone or other communications.

For purposes of the preceding sentence, the term “rental” includes any sale of the right to use
the pole (or other structure).
(E) For purposes of subparagraph (C)(ii), the term “FERC” means the Federal Energy Regulatory
Commission and references to such term shall be treated as including the Public Utility
Commission of Texas with respect to any ERCOT utility (as defined in section 212(k)(2)(B) of the
Federal Power Act ( 16 U.S.C. 824k (k)(2)(B))).
(F) For purposes of subparagraph (C)(iv), the term “nuclear decommissioning transaction”
means —
(i) any transfer into a trust, fund, or instrument established to pay any nuclear decommissioning
costs if the transfer is in connection with the transfer of the mutual or cooperative electric
company’s interest in a nuclear power plant or nuclear power plant unit,
(ii) any distribution from any trust, fund, or instrument established to pay any nuclear
decommissioning costs, or
(iii) any earnings fro m any trust, fund, or instrument established to pay any nuclear
decommissioning costs.
(G) For purposes of subparagraph (C)(v), the term “asset exchange or conversion transaction”
means any voluntary exchange or involuntary conversion of any property relat ed to generating,
transmitting, distributing, or selling electric energy by a mutual or cooperative electric company,
the gain from which qualifies for deferred recognition under section 1031 or 1033, but only if the
replacement property acquired by such company pursuant to such section constitutes property
which is used , or to be used, for —
(i) generating, transmitting, distributing, or selling electric energy, or
(ii) producing, transmitting, distributing, or selling natural gas.
(H)
(i) In the case of a mutual or cooperative electric company described in this paragraph or an
organization described in section 1381 (a)(2)(C), income received or accrued from a load loss
transaction shall be treated as an amount collected from members for the sole purpose of
meeting losses and expenses.
(ii) For purposes of clause (i), the term “load loss transaction” means any wholesale or retail
sale of electric energy (other than to members) to the extent that the aggregate sales during the
recovery period do not exceed the load loss mitigation sales limit for such period.
(iii) For purposes of clause (ii), the load loss mitigation sales limi t for the recovery period is the
sum of the annual load losses for each year of such period.
(iv) For purposes of clause (iii), a mutual or cooperative electric company’s annual load loss for
each year of the recovery period is the amount (if any) by which —
(I) the megawatt hours of electric energy sold during such year to members of such electric
company are less than
(II) the megawatt hours of electric energy sold during the base year to such members.
(v) For purposes of clause (iv)(II), the term “base ye ar” means—
(I) the calendar year preceding the start- up year, or
(II) at the election of the mutual or cooperative electric company, the second or third calendar
years preceding the start -up year.
(vi) For purposes of this subparagraph, the recovery period is the 7 -year period beginning with
the start- up year.
(vii) For purposes of this subparagraph, the start -up year is the first year that the mutual or
cooperative electric company offers nondiscriminatory open access or the calendar year which
includes th e date of the enactment of this subparagraph, if later, at the election of such
company.
(viii) A company shall not fail to be treated as a mutual or cooperative electric company for
purposes of this paragraph or as a corporation operating on a cooperative basis for purposes of
section 1381 (a)(2)(C) by reason of the treatment under clause (i).
(ix) For purposes of subparagraph (A), in the case of a mutual or cooperative electric company,
income received, or accrued, indirectly from a member shall be treated as an amount collected
from members for the sole purp ose of meeting losses and expenses.

(13) Cemetery companies owned and operated exclusively for the benefit of their members or
which are not operated for profit; and any corporation chartered solely for the purpose of the
disposal of bodies by burial or cr emation which is not permitted by its charter to engage in any
business not necessarily incident to that purpose and no part of the net earnings of which inures
to the benefit of any private shareholder or individual.
(14)
(A) Credit unions without capital stock organized and operated for mutual purposes and without
profit.
(B) Corporations or associations without capital stock organized before September 1, 1957, and
operated for mutual purposes and without profit for the purpose of providing reserve funds for,
and insurance of shares or deposits in —
(i) domestic building and loan associations,
(ii) cooperative banks without capital stock organized and operated for mutual purposes and
without profit,
(iii) mutual savings banks not having capital stock represented by shares, or
(iv) mutual savings banks described in section 591 (b)
[2] (C) Corporations or associations organized before September 1, 1957, and operated for mutual
purposes and without profit for the purpose of providing reserve funds for associations or banks
described in clause (i), (ii), or (iii) of subparagraph (B); but only if 85 percent or more of the
income is attributable to providing such reserve funds and to investments. This subparagraph
sh all not apply to any corporation or association entitled to exemption under subparagraph (B).
(15)
(A) Insurance companies (as defined in section 816 (a) ) other than life (including interinsurers
and reciprocal underwriters) if —
(i)
(I) the gross receipts for the taxable year do not exceed $600,000, and
(II) more than 50 percent of such gross receipts consist of premiums, or
(ii) in the case of a mutual insurance company —
(I) the gross receipts of which for the taxable year do not exceed $150,000, and
(II) more than 35 percent of such gross receipts consist of prem iums.
Clause (ii) shall not apply to a company if any employee of the company, or a member of the
employee’s family (as defined in section 2032A (e)(2)), is an employee of another company
exempt from taxation by reason of this paragraph (or would be so exempt but for this sentence).
(B) For purposes of subparagr aph (A), in determining whether any company or association is
described in subparagraph (A), such company or association shall be treated as receiving during
the taxable year amounts described in subparagraph (A) which are received during such year by
all other companies or associations which are members of the same controlled group as the
insurance company or association for which the determination is being made.
(C) For purposes of subparagraph (B), the term “controlled group” has the meaning given such
t erm by section 831 (b)(2)(B)(ii), except that in app lying section 831 (b)(2)(B)(ii) for purposes
of this subparagraph, subparagraphs (B) and (C) of section 1563 (b)(2) shall be disregarded.
(16) Corporations organized by an association subject to part IV of this subchapter or members
thereof, for the purpose of financing the ordinary crop operations of such members or other
producers, and operated in conjunction w ith such association. Exemption shall not be denied any
such corporation because it has capital stock, if the dividend rate of such stock is fixed at not to
exceed the legal rate of interest in the State of incorporation or 8 percent per annum, whichever
i s greater, on the value of the consideration for which the stock was issued, and if substantially
all such stock (other than nonvoting preferred stock, the owners of which are not entitled or
permitted to participate, directly or indirectly, in the profits of the corporation, on dissolution or
otherwise, beyond the fixed dividends) is owned by such association, or members thereof; nor
shall exemption be denied any such corporation because there is accumulated and maintained by
it a reserve required by State law or a reasonable reserve for any necessary purpose.
(17)

(A) A trust or trusts forming part of a plan providing for the payment of supplemental
unemployment compensation benefits, if —
(i) under the plan, it is impossible, at any time prior to the satisfaction of all liabilities, with
respect to employees under the plan, for any part of the corpus or income to be (within the
taxable year or thereafter) used for, or diverted to, any purpose other than the providing of
supplemental unemployment compensatio n benefits,
(ii) such benefits are payable to employees under a classification which is set forth in the plan
and which is found by the Secretary not to be discriminatory in favor of employees who are
highly compensated employees (within the meaning of section 414 (q)), and
(iii) such benefits do not discriminate in favor of employees who are highly compensated
employees (within the meaning of section 414 (q)). A plan shall not be considered discriminatory
within the meaning of this clause merely because the benefits received under the plan bear a
uniform relationship to the total compensation, or the basic or regular rate of compensation, of
the employees covered by the plan.
(B) In determining whether a plan meets the requirements of subparagraph (A), any benefits
provided under any other plan shall not be taken into consideration, except that a plan shall not
be considere d discriminatory —
(i) merely because the benefits under the plan which are first determined in a nondiscriminatory
manner within the meaning of subparagraph (A) are then reduced by any sick, accident, or
unemployment compensation benefits received under St ate or Federal law (or reduced by a
portion of such benefits if determined in a nondiscriminatory manner), or
(ii) merely because the plan provides only for employees who are not eligible to receive sick,
accident, or unemployment compensation benefits und er State or Federal law the same benefits
(or a portion of such benefits if determined in a nondiscriminatory manner) which such
employees would receive under such laws if such employees were eligible for such benefits, or
(iii) merely because the plan pro vides only for employees who are not eligible under another
plan (which meets the requirements of subparagraph (A)) of supplemental unemployment
compensation benefits provided wholly by the employer the same benefits (or a portion of such
benefits if deter mined in a nondiscriminatory manner) which such employees would receive
under such other plan if such employees were eligible under such other plan, but only if the
employees eligible under both plans would make a classification which would be
nondiscrimin atory within the meaning of subparagraph (A).
(C) A plan shall be considered to meet the requirements of subparagraph (A) during the whole
of any year of the plan if on one day in each quarter it satisfies such requirements.
(D) The term “supplemental unem ployment compensation benefits” means only —
(i) benefits which are paid to an employee because of his involuntary separation from the
employment of the employer (whether or not such separation is temporary) resulting directly
from a reduction in force, the discontinuance of a plant or operation, or other similar conditions,
and
(ii) sick and accident benefits subordinate to the benefits described in clause (i).
(E) Exemption shall not be denied under subsection (a) to any organization entitled to such
exemp tion as an association described in paragraph (9) of this subsection merely because such
organization provides for the payment of supplemental unemployment benefits (as defined in
subparagraph (D)(i)).
(18) A trust or trusts created before June 25, 1959, forming part of a plan providing for the
payment of benefits under a pension plan funded only by contributions of employees, if —
(A) under the plan, it is impossible, at any time prior to the satisfaction of all liabilities with
respect to employees under the plan, for any part of the corpus or income to be (within the
taxable year or thereafter) used for, or diverted to, any purpose other than the providing of
benefits under the plan,
(B) such benefits are payable to employees under a classification which is set forth in the plan
and which is found by the Secretary not to be discriminatory in favor of employees who are
highly compensated employees (within the meaning of section 414 (q)),

(C) such benefits do not discriminate in favor of employees who are highly compensated
employees (within the meaning of section 414(q) ). A plan shall not be considered discriminatory
withi n the meaning of this subparagraph merely because the benefits received under the plan
bear a uniform relationship to the total compensation, or the basic or regular rate of
compensation, of the employees covered by the plan, and
(D) in the case of a plan under which an employee may designate certain contributions as
deductible —
(i) such contributions do not exceed the amount with respect to which a deduction is allowable
under section 219 (b)(3),
(ii) requirements similar to the requirements o f section 401 (k)(3)(A)(ii) are met with respect to
such elective contributions,
(iii) such contributions are treated as elective deferrals for purposes of section 402 (g), and
(iv) the requirements of section 401 (a)(30) are met.
For purposes of subparagraph (D)(ii), rules similar to the rules of section 401 (k)(8) shall apply.
For purposes of section 4979, any excess contribution under clause (ii) shall be treated as an
excess contribution under a cash or deferred arrangement.
(19) A post or organization of past or present members of the Armed Forces of the United
States, or a n auxiliary unit or society of, or a trust or foundation for, any such post or
organization —
(A) organized in the United States or any of its possessions,
(B) at least 75 percent of the members of which are past or present members of the Armed
Forces of th e United States and substantially all of the other members of which are individuals
who are cadets or are spouses, widows,,
[3] widowers, ancestors, o r lineal descendants of past or
present members of the Armed Forces of the United States or of cadets, and
(C) no part of the net earnings of which inures to the benefit of any private shareholder or
individual.
(20) an
[4] organization or trust created or organized in the United States, the exclusive function
of which is to form part of a qualified group legal services plan or plans, within the meani ng of
section 120. An organization or trust which receives contributions because of
section 120(c)(5)(C) shall not be prevented from qualifying as an organization described in this
paragraph merely because it provides legal services or indemnification against the cost of legal
services unassociated with a qualified group legal services plan.
(21)
(A) A trust or trusts established in writing, created o r organized in the United States, and
contributed to by any person (except an insurance company) if —
(i) the purpose of such trust or trusts is exclusively —
(I) to satisfy, in whole or in part, the liability of such person for, or with respect to, claims f or
compensation for disability or death due to pneumoconiosis under Black Lung Acts,
(II) to pay premiums for insurance exclusively covering such liability,
(III) to pay administrative and other incidental expenses of such trust in connection with the
oper ation of the trust and the processing of claims against such person under Black Lung Acts,
and
(IV) to pay accident or health benefits for retired miners and their spouses and dependents
(including administrative and other incidental expenses of such trust in connection therewith) or
premiums for insurance exclusively covering such benefits; and
(ii) no part of the assets of the trust may be used for, or diverted to, any purpose other than —
(I) the purposes described in clause (i),
(II) investment (but only to the extent that the trustee determines that a portion of the assets
is not currently needed for the purposes described in clause (i)) in qualified investments, or
(III) payment into the Black Lung Disability Trust Fund established under section 9501, or into
the general fund of the United States Treasury (other than in satisfaction of any tax or other civil
or criminal liability of the person who established o r contributed to the trust).
(B) No deduction shall be allowed under this chapter for any payment described in subparagraph
(A)(i)(IV) from such trust.

(C) Payments described in subparagraph (A)(i)(IV) may be made from such trust during a
taxable year only to the extent that the aggregate amount of such payments during such taxable
year does not exceed the excess (if any), as of the close of the preceding taxable year, of —
(i) the fair market value of the assets of the trust, over
(ii) 110 percent of the pr esent value of the liability described in subparagraph (A)(i)(I) of such
person.
The determinations under the preceding sentence shall be made by an independent actuary
using actuarial methods and assumptions (not inconsistent with the regulations prescrib ed under
section 192 (c)(1)(A)) each of which is reason able and which are reasonable in the aggregate.
(D) For purposes of this paragraph:
(i) The term “Black Lung Acts” means part C of title IV of the Federal Mine Safety and Health Act
of 1977, and any State law providing compensation for disability or death due to that
pneumoconiosis.
(ii) The term “qualified investments” means —
(I) public debt securities of the United States,
(II) obligations of a State or local government which are not in default as to principal or
interest, and
(III) time or demand deposits in a bank (as defined in section 581) or an insured credit union
(within the meaning of section 101(7) of the Federal Credit Union Act, 12 U.S.C. 1752(7) )
located in the United States.
(iii) The term “miner” has the same meaning as such term has when used in section 402(d) of
the Black Lung Benefits Act ( 30U.S.C. 902 (d)).
(iv) The term “incidental expenses” includes legal, accounting, actuarial, and trustee expenses.
(22) A trust created or organized in the United States and established in writing by the plan
sponsors of multiemployer plans if —
(A) the purpose of such trust is exclu sively—
(i) to pay any amount described in section 4223(c) or (h) of the Employee Retirement Income
Security Act of 1974, and
(ii) to pay reasonable and necessary administrative expenses in connection with the
establishment and operation of the trust and the processing o f claims against the trust,
(B) no part of the assets of the trust may be used for, or diverted to, any purpose other than —
(i) the purposes described in subparagraph (A), or
(ii) the investment in securities, obligations, or time or demand deposits descri bed in clause (ii)
of paragraph (21)(D),
(C) such trust meets the requirements of paragraphs (2), (3), and (4) of
section 4223 (b), 4223 (h), or, if applicable, section 4223(c) of the Employee Retirement Income
Security Act of 1974, and
(D) the trust instrument provides that, on dissolution o f the trust, assets of the trust may not be
paid other than to plans which have participated in the plan or, in the case of a trust established
under section 4223(h) of such Act, to plans with respect to which employers have participated in
the fund.
(23) Any association organized before 1880 more than 75 percent of the members of which are
present or past members of the Armed Forces and a principal purpose of which is to provide
insurance and other benefits to veterans or their dependents.
(24) A trust described in section 4049 of the Employee Retirement Income Security Act of 1974
(as in effect on the date of the enactment of the Single -Employer Pension Plan Amendments Act
of 1986).
(25)
(A) Any corporation or trust which —
(i) has no more than 35 sharehold ers or beneficiaries,
(ii) has only 1 class of stock or beneficial interest, and
(iii) is organized for the exclusive purposes of —
(I) acquiring real property and holding title to, and collecting income from, such property, and

(II) remitting the entire am ount of income from such property (less expenses) to 1 or more
organizations described in subparagraph (C) which are shareholders of such corporation or
beneficiaries of such trust.
For purposes of clause (iii), the term “real property” shall not include a ny interest as a tenant in
common (or similar interest) and shall not include any indirect interest.
(B) A corporation or trust shall be described in subparagraph (A) without regard to whether the
corporation or trust is organized by 1 or more organization s described in subparagraph (C).
(C) An organization is described in this subparagraph if such organization is —
(i) a qualified pension, profit sharing, or stock bonus plan that meets the requirements of
section 401 (a),
(ii) a governmental plan (within the meaning of section 414 (d)),
(iii) the United States, any State or political sub division thereof, or any agency or
instrumentality of any of the foregoing, or
(iv) any organization described in paragraph (3).
(D) A corporation or trust shall in no event be treated as described in subparagraph (A) unless
such corporation or trust permi ts its shareholders or beneficiaries —
(i) to dismiss the corporation’s or trust’s investment adviser, following reasonable notice, upon a
vote of the shareholders or beneficiaries holding a majority of interest in the corporation or trust,
and
(ii) to term inate their interest in the corporation or trust by either, or both, of the following
alternatives, as determined by the corporation or trust:
(I) by selling or exchanging their stock in the corporation or interest in the trust (subject to any
Federal or State securities law) to any organization described in subparagraph (C) so long as the
sale or exchange does not increase the number of shareholders or beneficiaries in such
corporation or trust above 35, or
(II) by having their stock or interest redeemed by the corporation or trust after the shareholder
or beneficiary has provided 90 days notice to such corporation or trust.
(E)
(i) For purposes of this title —
(I) a corporation which is a qualified subsidiary shall not be treated as a separate corporation,
and
(II) all assets, liabilities, and items of income, deduction, and credit of a qualified subsidiary
shall be treated as assets, liabilities, and such items (as the case may be) of the corporation or
trust described in subparagraph (A).
(ii) For purpose s of this subparagraph, the term “qualified subsidiary” means any corporation if,
at all times during the period such corporation was in existence, 100 percent of the stock of such
corporation is held by the corporation or trust described in subparagraph ( A).
(iii) For purposes of this subtitle, if any corporation which was a qualified subsidiary ceases to
meet the requirements of clause (ii), such corporation shall be treated as a new corporation
acquiring all of its assets (and assuming all of its liabili ties) immediately before such cessation
from the corporation or trust described in subparagraph (A) in exchange for its stock.
(F) For purposes of subparagraph (A), the term “real property” includes any personal property
which is leased under, or in connec tion with, a lease of real property, but only if the rent
attributable to such personal property (determined under the rules of section 856 (d)(1)) for the
taxable year does not exceed 15 percent of the total rent for the taxable year attributable to
both the real and personal property leased under, or in connec tion with, such lease.
(G)
(i) An organization shall not be treated as failing to be described in this paragraph merely by
reason of the receipt of any otherwise disqualifying income which is incidentally derived from the
holding of real property.
(ii) Cla use (i) shall not apply if the amount of gross income described in such clause exceeds 10
percent of the organization’s gross income for the taxable year unless the organization
establishes to the satisfaction of the Secretary that the receipt of gross income described in

clause (i) in excess of such limitation was inadvertent and reasonable steps are being taken to
correct the circumstances giving rise to such income.
(26) Any membership organization if —
(A) such organization is established by a State excl usively to provide coverage for medical care
(as defined in section 213 (d)) on a not -for -profit basis to individuals described in subparagraph
(B) through —
(i) insurance issued by the organization, or
(ii) a health maintenance organization under an arrangement with the organization,
(B) the only individuals recei ving such coverage through the organization are individuals —
(i) who are residents of such State, and
(ii) who, by reason of the existence or history of a medical condition —
(I) are unable to acquire medical care coverage for such condition through insuran ce or from a
health maintenance organization, or
(II) are able to acquire such coverage only at a rate which is substantially in excess of the rate
for such coverage through the membership organization,
(C) the composition of the membership in such organiz ation is specified by such State, and
(D) no part of the net earnings of the organization inures to the benefit of any private
shareholder or individual.
A spouse and any qualifying child (as defined in section 24(c)) of an individual described in
subparagraph (B) (without regard to this sentence) shall be treated as described in
subparagraph (B).
(27)
(A) Any membership organization if —
(i) such organization is established before June 1, 1996, by a State exclusively to reimburse its
members for losses arising under workmen’s compensation acts,
(ii) such State requires that the membership of such organization consist of —
(I) all persons who issue insurance covering workmen’s compensation losses in such State, and
(II) all persons and governmental entities who self-insure against such losses, and
(iii) such organization operates as a non -profit organization by —
(I) returning surplus income to its members or workmen’s compensation policyholders on a
periodic basis, and
(II) reducing initial premiums in anticipation of investment income.
(B) Any organization (including a mutual insurance company) if —
(i) such organization is created by State law and is organized and operated under State law
exclusively to —
(I) provide workmen’s compensation insurance w hich is required by State law or with respect to
which State law provides significant disincentives if such insurance is not purchased by an
employer, and
(II) provide related coverage which is incidental to workmen’s compensation insurance,
(ii) such orga nization must provide workmen’s compensation insurance to any employer in the
State (for employees in the State or temporarily assigned out- of-State) which seeks such
insurance and meets other reasonable requirements relating thereto,
(iii)
(I) the State m akes a financial commitment with respect to such organization either by
extending the full faith and credit of the State to the initial debt of such organization or by
providing the initial operating capital of such organization, and
(II) in the case of pe riods after the date of enactment of this subparagraph, the assets of such
organization revert to the State upon dissolution or State law does not permit the dissolution of
such organization, and
(iv) the majority of the board of directors or oversight bod y of such organization are appointed
by the chief executive officer or other executive branch official of the State, by the State
legislature, or by both.
(28) The National Railroad Retirement Investment Trust established under section 15(j) of the
Railroa d Retirement Act of 1974.

(d) Religious and apostolic organizations
The following organizations are referred to in subsection (a): Religious or apostolic associations
or corporations, if such associations or corporations have a common treasury or community
treasury, even if such associations or corporations engage in business for the common benefit of
the members, but only if the members thereof include (at the time of filing their returns) in their
gross income their entire pro rata shares, whether distrib uted or not, of the taxable income of
the association or corporation for such year. Any amount so included in the gross income of a
member shall be treated as a dividend received.
(e) Cooperative hospital service organizations
For purposes of this title, a n organization shall be treated as an organization organized and
operated exclusively for charitable purposes, if —
(1) such organization is organized and operated solely —
(A) to perform, on a centralized basis, one or more of the following services which, if performed
on its own behalf by a hospital which is an organization described in subsection (c)(3) and
exempt from taxation under subsection (a), would constitute activities in exercising or
performing the purpose or function constituting the basis for i ts exemption: data processing,
purchasing (including the purchasing of insurance on a group basis), warehousing, billing and
collection (including the purchase of patron accounts receivable on a recourse basis), food,
clinical, industrial engineering, labo ratory, printing, communications, record center, and
personnel (including selection, testing, training, and education of personnel) services; and
(B) to perform such services solely for two or more hospitals each of which is—
(i) an organization described in subsection (c)(3) which is exempt from taxation under
subsection (a),
(ii) a constituent part of an organization described in subsection (c)(3) which is exempt from
taxation under subsection (a) and which, if organized and operated as a separate entity, would
constitute an organization described in subsection (c)(3), or
(iii) owned and operated by the United States, a State, the District of Columbia, or a possession
of the United States, or a political subdivision or an agency or instrumentality of any o f the
foregoing;
(2) such organization is organized and operated on a cooperative basis and allocates or pays,
within 81/2 months after the close of its taxable year, all net earnings to patrons on the basis of
services performed for them; and
(3) if such organization has capital stock, all of such stock outstanding is owned by its patrons.
For purposes of this title, any organization which, by reason of the preceding sentence, is an
organization described in subsection (c)(3) and exempt from taxation under subsection (a), shall
be treated as a hospital and as an organization referred to in section 170 (b)(1)(A)(iii).
(f) Cooperative service organizations of operating educational organizations
For purposes of this title, if an organization is —
(1) organized and operated solely to hold, commingle, and collectively invest and reinvest
(including arranging for and supervising the performance by independent contractors of
investment services related thereto) in stocks and securities, the moneys contribu ted thereto by
each of the members of such organization, and to collect income therefrom and turn over the
entire amount thereof, less expenses, to such members,
(2) organized and controlled by one or more such members, and
(3) comprised solely of members that are organizations described in clause (ii) or (iv) of
section 170 (b)(1)(A)—
(A) which are exempt from taxation under subsection (a), or
(B) the income of which is excluded from taxation under section 115(a) ,
then such organization shall be treated as an organization organized and operated exclusively for
charitable purposes.
(g) Definition of agricultural
For pu rposes of subsection (c)(5), the term “agricultural” includes the art or science of
cultivating land, harvesting crops or aquatic resources, or raising livestock.
(h) Expenditures by public charities to influence legislation

(1) General rule
In the case of an organization to which this subsection applies, exemption from taxation under
subsection (a) shall be denied because a substantial part of the activities of such organization
consists of carrying on propaganda, or otherwise attempting, to influence legi slation, but only if
such organization normally —
(A) makes lobbying expenditures in excess of the lobbying ceiling amount for such organization
for each taxable year, or
(B) makes grass roots expenditures in excess of the grass roots ceiling amount for such
organization for each taxable year.
(2) Definitions
For purposes of this subsection —
(A) Lobbying expenditures
The term “lobbying expenditures” means expenditures for the purpose of influencing legislation
(as defined in section 4911 (d)).
(B) Lobbying ceiling amount
The lobbying ceiling amount for any organization for any taxable year is 150 percent of the
lobbying nontaxable amount for such organization for such taxable year, determined under
section 4911.
(C ) Grass roots expenditures
The term “grass roots expenditures” means expenditures for the purpose of influencing
legislation (as defined in section 4911 (d)without regard to paragraph (1)(B) thereof).
(D) Grass roots ceiling amount
The grass roots ceiling amount for any organization for any taxable year is 1 50 percent of the
grass roots nontaxable amount for such organization for such taxable year, determined under
section 4911.
(3) Organizations to which this subse ction applies
This subsection shall apply to any organization which has elected (in such manner and at such
time as the Secretary may prescribe) to have the provisions of this subsection apply to such
organization and which, for the taxable year which incl udes the date the election is made, is
described in subsection (c)(3) and —
(A) is described in paragraph (4), and
(B) is not a disqualified organization under paragraph (5).
(4) Organizations permitted to elect to have this subsection apply
An organization is described in this paragraph if it is described in —
(A) section 170 (b)(1)(A)(ii) (relating to educational institutions),
(B) section 170 (b)(1)(A)(iii) (relating to hospitals and medical research organizations),
(C) section 170 (b)(1)(A)(iv) (relating to organizations supporting government schools),
(D) section 170 (b)(1)(A)(vi) (relating to organizations publicly supported by charitabl e
contributions),
(E) section 509 (a)(2) (relating to org anizations publicly supported by admissions, sales, etc.),
or
(F) section 509 (a)(3) (relating to organizations supporting certain types of public charities)
except that for purposes of this subparagraph, section 509 (a)(3) shall be applied without regard
to the last sentence of section 509 (a).
(5) Disqualified organizations
For purposes of paragraph (3) an organization is a disqualified organization if it is —
(A) described in section 170 (b)(1)(A)(i) (relating to churches),
( B) an integrated auxiliary of a church or of a convention or association of churches, or
(C) a member of an affiliated group of organizations (within the meaning of section 4911 (f)(2))
if one or more members of such group is described in subparagraph (A) or (B).
(6) Years for which election is effective
An elec tion by an organization under this subsection shall be effective for all taxable years of
such organization which —
(A) end after the date the election is made, and

(B) begin before the date the election is revoked by such organization (under regulations
pr escribed by the Secretary).
(7) No effect on certain organizations
With respect to any organization for a taxable year for which —
(A) such organization is a disqualified organization (within the meaning of paragraph (5)), or
(B) an election under this subs ection is not in effect for such organization,
nothing in this subsection or in section 4911 shall be construed to affect the interpretation of the
phrase, “no substantial part of the activities of which is carrying on propaganda, or otherwise
attempting, to influence legislation,” under subsection (c)(3).
(8) Affiliated organizations
For rules regarding affiliated organizations, see section 4911 (f).
(i) Prohibition of discrimination by certain social clubs
Notwithstanding subsection (a), an organization which is described in subsection (c)(7) shall not
be exempt from taxation under subsection (a) for any taxable year if, at any time during such
taxable year, the charter, bylaws, or other governing instrument , of such organization or any
written policy statement of such organization contains a provision which provides for
discrimination against any person on the basis of race, color, or religion. The preceding sentence
to the extent it relates to discriminatio n on the basis of religion shall not apply to —
(1) an auxiliary of a fraternal beneficiary society if such society —
(A) is described in subsection (c)(8) and exempt from tax under subsection (a), and
(B) limits its membership to the members of a particular religion, or
(2) a club which in good faith limits its membership to the members of a particular religion in
order to further the teachings or principles of that religion, and not to exclude individuals of a
particular race or color.
(j) Special rules for certain amateur sports organizations
(1) In general
In the case of a qualified amateur sports organization —
(A) the requirement of subsection (c)(3) that no part of its activities involve the provision of
athletic facilities or equipment shall not apply, and
(B) such organization shall not fail to meet the requirements of subsection (c)(3) merely
because its membership is local or regional in nature.
(2) Qualified amateur sports organization defined
For purposes of this subsection, the term “qualified amat eur sports organization” means any
organization organized and operated exclusively to foster national or international amateur
sports competition if such organization is also organized and operated primarily to conduct
national or international competition in sports or to support and develop amateur athletes for
national or international competition in sports.
(k) Treatment of certain organizations providing child care
For purposes of subsection (c)(3) of this section and sections 170 (c)(2), 2055 (a)(2),
and 2522 (a)(2), the term “educational purposes” includes the providing of care of children away
from their homes if —
(1) substantially all of the care provided by the organization is for purposes of enabling
individuals to be gainfully employed, and
(2) the services provided by the organization are available to the general public.
(l) Government corporations exempt under subsection (c)(1)
For purposes of subsection (c)( 1), the following organizations are described in this subsection:
(1) The Central Liquidity Facility established under title III of the Federal Credit Union Act
( 12 U.S.C. 1795 et seq.).
(2) The Resolution Trust Corporation established under section 21A of the Federal Home Loan
Bank Act.
(3) The Resolution Funding Corporation establis hed under section 21B of the Federal Home Loan
Bank Act.
(m) Certain organizations providing commercial -type insurance not exempt from tax

(1) Denial of tax exemption where providing commercial -type insurance is substantial
part of activities
An organizati on described in paragraph (3) or (4) of subsection (c) shall be exempt from tax
under subsection (a) only if no substantial part of its activities consists of providing commercial –
type insurance.
(2) Other organizations taxed as insurance companies on insurance business
In the case of an organization described in paragraph (3) or (4) of subsection (c) which is
exempt from tax under subsection (a) after the application of paragraph (1) of this subsection —
(A) the activity of providing commercial -type ins urance shall be treated as an unrelated trade or
business (as defined in section 513), and
(B) in lieu of the tax imposed by section 511 with respect to such activity, such organization
shall be treated as an insurance company for purposes of applying subchapter L with respect to
such activity.
(3) Commercial -type insura nce
For purposes of this subsection, the term “commercial -type insurance” shall not include —
(A) insurance provided at substantially below cost to a class of charitable recipients,
(B) incidental health insurance provided by a health maintenance organizati on of a kind
customarily provided by such organizations,
(C) property or casualty insurance provided (directly or through an organization described in
section 41 4 (e)(3)(B)(ii)) by a church or convention or association of churches for such church or
convention or association of churches,
(D) providing retirement or welfare benefits (or both) by a church or a convention or association
of churches (directly or through an organization described in
section 414 (e)(3)(A) or 414 (e)(3)(B)(ii)) for the employees (including employees described in
section 414(e)(3)(B)) of such church or convention or association of churches or the beneficiaries
of such employees, and
(E) charitable gift annuities.
(4) Insurance includes annuities
For purposes of this subsection, the issuance of annuity contracts shall be treated as providing
insurance.
(5) Charitable gift annuity
For purposes of paragraph (3)(E), the term “charitable gift annuity” means an annuity if—
(A) a portion of the amount paid in connection with the issuance of the annuity is allowable as a
deduction under section 170 or 2055, and
(B) the annuity is described in section 514 (c)(5) (determined as if any amount paid in cash in
connection with such issuance were property).
(n) Charitable risk pools
(1) In general
For purposes of this t itle—
(A) a qualified charitable risk pool shall be treated as an organization organized and operated
exclusively for charitable purposes, and
(B) subsection (m) shall not apply to a qualified charitable risk pool.
(2) Qualified charitable risk pool
For purposes of this subsection, the term “qualified charitable risk pool” means any
organization —
(A) which is organized and operated solely to pool insurable risks of its members (other than
risks related to medical malpractice) and to provide information to its members with respect to
loss control and risk management,
(B) which is comprised solely of members that are organizations described in subsection (c)(3)
and exempt from tax under subsection (a), and
(C) which meets the organizational requirements of p aragraph (3).
(3) Organizational requirements
An organization (hereinafter in this subsection referred to as the “risk pool”) meets the
organizational requirements of this paragraph if —

(A) such risk pool is organized as a nonprofit organization under State law provisions authorizing
risk pooling arrangements for charitable organizations,
(B) such risk pool is exempt from any income tax imposed by the State (or will be so exempt
after such pool qualifies as an organization exempt from tax under this tit le),
(C) such risk pool has obtained at least $1,000,000 in startup capital from nonmember
charitable organizations,
(D) such risk pool is controlled by a board of directors elected by its members, and
(E) the organizational documents of such risk pool req uire that—
(i) each member of such pool shall at all times be an organization described in subsection (c)(3)
and exempt from tax under subsection (a),
(ii) any member which receives a final determination that it no longer qualifies as an
organization descr ibed in subsection (c)(3) shall immediately notify the pool of such
determination and the effective date of such determination, and
(iii) each policy of insurance issued by the risk pool shall provide that such policy will not cover
the insured with respec t to events occurring after the date such final determination was issued to
the insured.
An organization shall not cease to qualify as a qualified charitable risk pool solely by reason of
the failure of any of its members to continue to be an organization described in subsection (c)(3)
if, within a reasonable period of time after such pool is notified as required under subparagraph
(E)(ii), such pool takes such action as may be reasonably necessary to remove such member
from such pool.
(4) Other definitions
For purposes of this subsection —
(A) Startup capital
The term “startup capital” means any capital contributed to, and any program -related
investments (within the meaning of section 4944(c) ) made in, the risk pool before such pool
commences operations.
(B) Nonmember charitable organization
The term “nonmember char itable organization” means any organization which is described in
subsection (c)(3) and exempt from tax under subsection (a) and which is not a member of the
risk pool and does not benefit (directly or indirectly) from the insurance coverage provided by
th e pool to its members.
(o) Treatment of hospitals participating in provider- sponsored organizations
An organization shall not fail to be treated as organized and operated exclusively for a charitable
purpose for purposes of subsection (c)(3) solely because a hospital which is owned and operated
by such organization participates in a provider -sponsored organization (as defined in section
1855(d) of the Social Security Act), whether or not the provider -sponsored organization is
exempt from tax. For purposes o f subsection (c)(3), any person with a material financial interest
in such a provider -sponsored organization shall be treated as a private shareholder or individual
with respect to the hospital.
(p) Suspension of tax -exempt status of terrorist organizations
(1) In general
The exemption from tax under subsection (a) with respect to any organization described in
paragraph (2), and the eligibility of any organization described in paragraph (2) to apply for
recognition of exemption under subsection (a), shall b e suspended during the period described in
paragraph (3).
(2) Terrorist organizations
An organization is described in this paragraph if such organization is designated or otherwise
individually identified —
(A) under section 212(a)(3)(B)(vi)(II) or 219 of the Immigration and Nationality Act as a
terrorist organization or foreign terrorist organization,
(B) in or pursuant to an Executive order which is related to terrorism and issued under the
authority of the International Emergency Economic Powers Act or section 5 of the United Nations

Participation Act of 1945 for the purpose of imposing on such organization an economic or other
sanction, or
(C) in or pursuant to an Executive order issued under the authority of any Federal law if —
(i) the organization is d esignated or otherwise individually identified in or pursuant to such
Executive order as supporting or engaging in terrorist activity (as defined in section 212(a)(3)(B)
of the Immigration and Nationality Act) or supporting terrorism (as defined in section 140(d)(2)
of the Foreign Relations Authorization Act, Fiscal Years 1988 and 1989); and
(ii) such Executive order refers to this subsection.
(3) Period of suspension
With respect to any organization described in paragraph (2), the period of suspension —
(A) begins on the later of —
(i) the date of the first publication of a designation or identification described in paragraph (2)
with respect to such organization, or
(ii) the date of the enactment of this subsection, and
(B) ends on the first date that all de signations and identifications described in paragraph (2)
with respect to such organization are rescinded pursuant to the law or Executive order under
which such designation or identification was made.
(4) Denial of deduction
No deduction shall be allowed under any provision of this title, including
sections 170, 545 (b)(2) , 556 (b)(2),
[5] 642 (c), 2055, 2106 (a)(2) , and 2522, with respect to any
contribution to an organization described in paragraph (2) during the period described in
paragraph (3).
(5) Denial of administ rative or judicial challenge of suspension or denial of deduction
Notwithstanding section 7428 or any other provision of law, no organization or other person may
challenge a suspension under paragraph (1), a designation or identification described in
paragraph (2), the period of suspension described in paragraph (3), or a denial of a deduction
under paragraph (4) in any administrative or judicial proceeding relati ng to the Federal tax
liability of such organization or other person.
(6) Erroneous designation
(A) In general
If —
(i) the tax exemption of any organization described in paragraph (2) is suspended under
paragraph (1),
(ii) each designation and identificati on described in paragraph (2) which has been made with
respect to such organization is determined to be erroneous pursuant to the law or Executive
order under which such designation or identification was made, and
(iii) the erroneous designations and ident ifications result in an overpayment of income tax for
any taxable year by such organization,
credit or refund (with interest) with respect to such overpayment shall be made.
(B) Waiver of limitations
If the credit or refund of any overpayment of tax described in subparagraph (A)(iii) is prevented
at any time by the operation of any law or rule of law (including res judicata), such credit or
refund may nevertheless be allowed or made if the claim therefor is filed before the close of the
1 -year period beginning on the date of the last determination described in subparagraph (A)(ii).
(7) Notice of suspensions
If the tax exemption of any organization is suspended under this subsection, the Internal
Revenue Service shall update the listings of tax -exempt o rganizations and shall publish
appropriate notice to taxpayers of such suspension and of the fact that contributions to such
organization are not deductible during the period of such suspension.
(q) Special rules for credit counseling organizations
(1) In general
An organization with respect to which the provision of credit counseling services is a substantial
purpose shall not be exempt from tax under subsection (a) unless such organization is described

in paragraph (3) or (4) of subsection (c) and such organization is organized and operated in
accordance with the following requirements:
(A) The organization —
(i) provides credit counseling services tailored to the specific needs and circumstances of
consumers,
(ii) makes no loans to debtors (other than loan s with no fees or interest) and does not negotiate
the making of loans on behalf of debtors,
(iii) provides services for the purpose of improving a consumer’s credit record, credit history, or
credit rating only to the extent that such services are inciden tal to providing credit counseling
services, and
(iv) does not charge any separately stated fee for services for the purpose of improving any
consumer’s credit record, credit history, or credit rating.
(B) The organization does not refuse to provide credit counseling services to a consumer due to
the inability of the consumer to pay, the ineligibility of the consumer for debt management plan
enrollment, or the unwillingness of the consumer to enroll in a debt management plan.
(C) The organization establishe s and implements a fee policy which —
(i) requires that any fees charged to a consumer for services are reasonable,
(ii) allows for the waiver of fees if the consumer is unable to pay, and
(iii) except to the extent allowed by State law, prohibits charging any fee based in whole or in
part on a percentage of the consumer’s debt, the consumer’s payments to be made pursuant to
a debt management plan, or the projected or actual savings to the consumer resulting from
enrolling in a debt management plan.
(D) At all times the organization has a board of directors or other governing body —
(i) which is controlled by persons who represent the broad interests of the public, such as public
officials acting in their capacities as such, persons having special knowledge or expertise in credit
or financial education, and community leaders,
(ii) not more than 20 percent of the voting power of which is vested in persons who are
employed by the organization or who will benefit financially, directly or indirectly, from the
organ ization’s activities (other than through the receipt of reasonable directors’ fees or the
repayment of consumer debt to creditors other than the credit counseling organization or its
affiliates), and
(iii) not more than 49 percent of the voting power of wh ich is vested in persons who are
employed by the organization or who will benefit financially, directly or indirectly, from the
organization’s activities (other than through the receipt of reasonable directors’ fees).
(E) The organization does not own more than 35 percent of —
(i) the total combined voting power of any corporation (other than a corporation which is an
organization described in subsection (c)(3) and exempt from tax under subsection (a)) which is
in the trade or business of lending money, repa iring credit, or providing debt management plan
services, payment processing, or similar services,
(ii) the profits interest of any partnership (other than a partnership which is an organization
described in subsection (c)(3) and exempt from tax under subsection (a)) which is in the trade
or business of lending money, repairing credit, or providing debt management plan services,
payment processing, or similar services, and
(iii) the beneficial interest of any trust or estate (other than a trust which is an organization
described in subsection (c)(3) and exempt from tax under subsection (a)) which is in the trade
or business of lending money, repairing credit, or providing debt management plan services,
payment processing, or similar services.
(F) The organiz ation receives no amount for providing referrals to others for debt management
plan services, and pays no amount to others for obtaining referrals of consumers.
(2) Additional requirements for organizations described in subsection (c)(3)
(A) In general
In addition to the requirements under paragraph (1), an organization with respect to which the
provision of credit counseling services is a substantial purpose and which is described in

paragraph (3) of subsection (c) shall not be exempt from tax under subsection (a) unless such
organization is organized and operated in accordance with the following requirements:
(i) The organization does not solicit contributions from consumers during the initial counseling
process or while the consumer is receiving services from the organization.
(ii) The aggregate revenues of the organization which are from payments of creditors of
consumers of the organization and which are attributable to debt management plan services do
not exceed the applicable percentage of the total revenues of the organization.
(B) Applicable percentage
(i) In general For purposes of subparagraph (A)(ii), the applicable percentage is 50 percent.
(ii) Transition rule Notwithstanding clause (i), in the case of an organization with respect to
which the pr ovision of credit counseling services is a substantial purpose and which is described
in paragraph (3) of subsection (c) and exempt from tax under subsection (a) on the date of the
enactment of this subsection, the applicable percentage is—
(I) 80 percent for the first taxable year of such organization beginning after the date which is 1
year after the date of the enactment of this subsection, and
(II) 70 percent for the second such taxable year beginning after such date, and
(III) 60 percent for the third such taxable year beginning after such date.
(3) Additional requirement for organizations described in subsection (c)(4)
In addition to the requirements under paragraph (1), an organization with respect to which the
provision of credit counseling services is a substantial purpose and which is described in
paragraph (4) of subsection (c) shall not be exempt from tax under subsection (a) unless such
organization notifies the Secretary, in such manner as the Secretary may by regulations
prescribe, that it is a pplying for recognition as a credit counseling organization.
(4) Credit counseling services; debt management plan services
For purposes of this subsection —
(A) Credit counseling services
The term “credit counseling services” means—
(i) the providing of educational information to the general public on budgeting, personal finance,
financial literacy, saving and spending practices, and the sound use of consumer credit,
(ii) the assisting of individuals and families with financial problems by providing them with
counseling, or
(iii) a combination of the activities described in clauses (i) and (ii).
(B) Debt management plan services
The term “debt management plan services” means services related to the repayment,
consolidation, or restructuring of a consumer’s debt, and includes the negotiation with creditors
of lower interest rates, the waiver or reduction of fees, and the marketing and processing of debt
management plans.
(r) Cross reference
For nonexemption of Communist -controlled organizations, see section 11(b) of the Internal
Security Act of 1950 ( 64 Stat. 997; 50 U.S.C. 790(b)).