[Code of Federal Regulations]
[Title 26, Volume 7]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.501(a)-1]

[Page 9-10]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.501(a)-1  Exemption from taxation.

    (a) In general; proof of exemption. (1) Section 501(a) provides an 
exemption from income taxes for organizations which are described in 
section 501 (c) or (d) and section 401(a), unless such organization is a 
feeder organization (see section 502), or unless it engages in a 
transaction described in section 503. However, the exemption does not 
extend to unrelated business taxable income of such an organization (see 
part III (Section 511 and following), subchapter F, chapter 1 of the 
Code).
    (2) An organization, other than an employees' trust described in 
section 401(a), is not exempt from tax merely because it is not 
organized and operated for profit. In order to establish its exemption, 
it is necessary that every such organization claiming exemption file an 
application form as set forth below with the district director for the 
internal revenue district in which is located the principal place of 
business or principal office of the organization. Subject only to the 
Commissioner's inherent power to revoke rulings because of a change in 
the law or regulations or for other good cause, an organization that has 
been determined by the Commissioner or the district director to be 
exempt under section 501(a) or the corresponding provision of prior law 
may rely upon such determination so long as there are no substantial 
changes in the organization's character, purposes, or methods of 
operation. An organization which has been determined to be exempt under 
the provisions of the Internal Revenue Code of 1939 or prior law is not 
required to secure a new determination of exemption merely because of 
the enactment of the Internal Revenue Code of 1954 unless affected by 
substantive changes in law made by such Code.
    (3) An organization claiming exemption under section 501(a) and 
described

[[Page 10]]

in any paragraph of section 501(c) (other than section 501(c)(1) shall 
file the form of application prescribed by the Commissioner and shall 
include thereon such information as required by such form and the 
instructions issued with respect thereto. For rules relating to the 
obtaining of a determination of exempt status by an employees' trust 
described in section 401(a), see the regulations under section 401.
    (b) Additional proof by particular classes of organizations. (1) 
Organizations mentioned below shall submit with and as a part of their 
applications the following information:
    (i) Mutual insurance companies shall submit copies of the policies 
or certificates of membership issued by them.
    (ii) In the case of title holding companies described in section 
501(c)(2), if the organization for which title is held has not been 
specifically notified in writing by the Internal Revenue Service that it 
is held to be exempt under section 501(a), the title holding company 
shall submit the information indicated herein as necessary for a 
determination of the status of the organization for which title is held.
    (iii) An organization described in section 501(c)(3) shall submit 
with, and as a part of, an application filed after July 26, 1959, a 
detailed statement of its proposed activities.
    (2) In addition to the information specifically called for by this 
section, the Commissioner may require any additional information deemed 
necessary for a proper determination of whether a particular 
organization is exempt under section 501(a), and when deemed advisable 
in the interest of an efficient administration of the internal revenue 
laws, he may in the cases of particular types of organizations prescribe 
the form in which the proof of exemption shall be furnished.
    (3) An organization claiming to be specifically exempted by section 
6033(a) from filing annual returns shall submit with and as a part of 
its application a statement of all the facts on which it bases its 
claim.
    (c) Private shareholder or individual defined. The words private 
shareholder or individual in section 501 refer to persons having a 
personal and private interest in the activities of the organization.
    (d) Requirement of annual returns. For the annual return 
requirements of organizations exempt under section 501(a), see section 
6033 and Sec. 1.6033-1.
    (e) Certain Puerto Rican pension, etc., trusts. Effective for 
taxable years beginning after December 31, 1973, section 1022(i)(1) of 
the Employee Retirement Income Security Act of 1974 (ERISA) (88 Stat. 
942) provides that trusts under certain Puerto Rican pension, etc., 
plans (as defined under P.R. Laws Ann. tit. 13, section 3165, and the 
articles thereunder), all of the participants of which are residents of 
the Commonwealth of Puerto Rico, are to be treated only for purposes of 
section 501(a) as trusts described in section 401(a). The practical 
effect of section 1022(i)(1) is to exempt these trusts from U.S. income 
tax on income from their U.S. investments. For purposes of section 
1022(i)(1), the term residents of the Commonwealth of Puerto Rico means 
bona fide residents of Puerto Rico, and persons who perform labor or 
services primarily within the Commonwealth of Puerto Rico, regardless of 
residence for other purposes, and the term participants is restricted to 
current employees who are not excluded under the eligibility provisions 
of the plan.

[T.D. 6500, 25 FR 11737, Nov. 26, 1960, as amended by T.D. 7428, 41 FR 
34619, Aug. 16, 1976; T.D. 7859, 47 FR 54298, Dec. 2, 1982]