Hi, we are creating a homeschool pod. I was wondering if you think 501c3 or 508 is better for us. We would like to be a PMA.
Hello, I am interested in a conference call. We are looking at getting a 508(c)(1)(a). Have you experience with these?
I have been hearing from homeschool leaders like the two above about PMAs (Private Membership Associations) and 508 status for a few months.
I am familiar with Internal Revenue Code 508(c)(1)(a) . It is not a tax status by itself. For example I never hear, “I want to be a 508c1a” like I hear “I want to be a 501c3”. 501(c)(3) is a part of the IRS code that offers tax exempt status to qualified nonprofits including churches, charities, and educational organizations including most homeschool groups.
Instead, IRC 508, and specifically 508 (c)(1)(A), is a section of the IRS Code explains when a 501(c)(3) nonprofit organization does not have to officially apply for 501(c)(3) status.
The IRS gives “self declared” tax exempt status ability to two groups:
- churches
- tiny nonprofit organizations with less than $5,000/year in revenues
So when someone says they want to be a “508”, I have to ask:
“Do you plan to form a church?” I do not support the view that homeschool groups qualify to be churches (although some churches operate homeschool groups). But many homeschool groups have a religious purpose without being a church.
“Will your homeschool group be that tiny?” It’s pretty hard to operate with less than $5,000 in revenues per year unless everyone is a volunteer and fees (especially rent) are minimal.
If the homeschool group will have revenues of less that $5,000/year then section 508 (c)(1)(A) allows them to self declare 501(c)(3) tax exempt status. How to self declare your 501c3 tax exempt status. They should not call themselves a “508.” 508 is not a tax status. It is a clarification of the tax code that applies to qualified 501c3 organizations (churches and tiny organizations). There is no such thing as a “508” nonprofit organization. They are a 501c3 organizations (churches and tiny nonprofits) that self declared their tax exempt status.
There seem to be several blogs, websites and YouTube videos that promote IRC 508(c)(1)(a) as a status offering some hard-to-believe advantages such as :
- no government intrusion
- “true” separation of church and state
- Not “signing away the rights of a organization or church to the IRS bureaucracy”
- Free to serve God as a recognized minister of the Gospel of Jesus Christ
These advantages are not mentioned in IRC 508(c)(1)(a). Read it for yourself. It is actually quite narrow in scope and does not offer lofty, vague promises like freedom from government intrusion.
I find a lot of incomplete and even somewhat misleading information about IRC 508(c)(1)(a) on websites and videos about Private Membership Associations (PMAs) that I have been reading and watching.
Please read the IRS code yourself and maintain healthy skepticism when something sounds too good to be true.
It usually is.
I’ll post a separate blog post about PMAs Private Membership Associations and the research of three court cases where claiming to be a PMA did not allow the business owner to operate outside the law.
