Requirement for a Registration Statement

28.1. Unless exempt, every charitable or public service organization that obtains a raffle license shall file an annual registration statement with the Secretary of State's Office, under the Solicitation of Charitable Funds Act.

28.2. These registration statements shall be filed on forms provided by the Secretary of State before any raffle occasions are held.

§110-16-29. Additional Remedies for the Tax Commissioner, Administrative Procedures; Deposit of Money Penalties.

29.1. For any material violation of W. Va. Code §47-21-1 et seq. or this rule, the Tax Commissioner may:

29.1.1. Revoke or refuse to renew any charitable raffle license;

29.1.2. Suspend the charitable raffle license of any licensee for the period of time the Tax commissioner considers appropriate. A suspension may not be for less than one week nor more than twelve months for each material violation;

29.1.3. Place a charitable raffle licensee on probation for a period of not less than six months nor for more than five years for each material violation;

29.1.3.1. In the event a licensee is placed on probation, then, as a condition of the probation, the licensee shall pay to the Tax Commissioner a Probation Supervision Fee in an amount equal to two thousand dollars or two percent of the gross proceeds derived by the licensee from the conduct of raffle occasions during the period of the probation, whichever is greater.

29.1.3.2. No Probation Supervision Fee paid in accordance with this section may be claimed by the licensee as a reasonable, necessary or actual expense incurred in connection with the conduct of a raffle occasion under the authority of W. Va. Code §47-21-15.

29.1.3.3. The imposition of probation shall be used, when warranted, to insure the charitable raffle licensee's continued adherence to the applicable statutes and legislative rules. After due consideration of the severity of the violation, probationary terms and conditions shall be determined by the Tax Commissioner;

29.1.4. Require a charitable raffle licensee to replace any officer who knew or because of the officer=s responsibilities within the licensee organization should have known of a material violation.

29.1.4.1. The Tax Commissioner shall suspend for a period of not less than one month nor more than twenty-four months the license or licenses of a licensee that refuses to replace any officer as directed by the Tax Commissioner. The Tax Commissioner shall consider the severity of the violation and whether the violation was a one-time or repeated occurrence when implementing this disciplinary action;

29.1.5. Require a charitable raffle licensee to prohibit one or more members, supporters, volunteers or employees of the licensee involved in material violations from participating in, or being present at or on the premises of all future raffle occasions held under the charitable raffle license, or for the period of time specified by the Tax Commissioner.

29.1.5.1. The Tax Commissioner shall suspend for a period of not less than one month nor more than twelve months the license of a licensee that refuses to prohibit the participation of identified members, supporters, volunteers or employees as directed by the Tax Commissioner. The Tax Commissioner shall consider the severity of the violation and whether the violation was a one-time or repeated occurrence when applying this disciplinary action; and

29.1.6. Impose a civil money penalty of not less than one hundred dollars nor more than two times the annual gross proceeds derived by the charitable raffle licensee from the conduct of raffle, for each material violation:

29.1.6.1. In setting any monetary penalty for a first violation, the Tax Commissioner shall take into consideration the ability of the licensee to continue to exist and operate.

29.1.6.2. No money penalty paid in accordance with this section may be claimed by the licensee as a reasonable, necessary or actual expense incurred in connection with the conduct of a raffle occasion.

29.1.6.3. For each material violation that is a second or succeeding violation, the amount of the civil penalty that may be imposed may not be less than five hundred dollars and may not exceed the greater of one hundred thousand dollars or two times the annual gross proceeds of the licensee from the conduct of raffle.

29.1.6.4. Any charitable raffle licensee aggrieved by the amount of the civil penalty may in lieu of paying the penalty surrender its charitable raffle license for a minimum period of twelve consecutive months.

29.1.6.5. The license shall be revoked If the licensee refuses to pay the penalty or surrender its license,

29.1.6.6. After the licensee has exhausted all administrative remedies provided in subsection 29.4 of this rule, the licensee may have the issue of whether a material violation was committed by the licensee reviewed in the circuit court of the county where the violation giving rise to the civil penalty occurred.

29.1.6.7. The imposition of civil penalties shall be implemented in accordance with the criteria set forth in subsection 29.2 of this rule.

29.1.6.8. For purposes of this rule, surrender of the charitable raffle license or surrender of the license means and includes surrender of all regular and limited occasion raffle licenses held by the licensee, unless specifically otherwise directed by the Tax Commissioner.

29.2. The imposition of civil money penalties shall be in accordance with the following criteria:

29.2.1. For conducting charitable raffle occasions at times or at a location inconsistent with the license application, the money penalty is:

First violation $100
Second or succeeding violation $500 but not more than $3,000

29.2.2. For failure to timely amend or modify the charitable raffle license in accordance with section 9 of this rule, the money penalty is:

First violation $100

Second or succeeding violation $500 but not more than $3,000

29.2.3. For not having the raffle license posted at the occasion; and allowing charitable raffle workers to play raffle, the money penalty is:

First violation $100

Second or succeeding violation $500 but not more than $3,000

29.2.4. For utilizing charitable raffle workers who fail to qualify under W. Va. Code §47-21-1 et seq. and this rule, the money penalty is:

First violation $100 but not more than $500

Second or succeeding violation $500 but not more than $2500

29.2.5. For expending or using charitable raffle proceeds for unauthorized expenses, the money penalty is:

First violation $500 but not more than 2 x Gross Proceeds

Second or succeeding violation $500 but not more than 2 x Gross Proceeds

29.2.6. For distributing charitable raffle net proceeds for purposes other than qualified charitable or public service purposes or for unauthorized purposes, the money penalty is:

First violation $500 but not more than 2 x Gross Proceeds

Second or succeeding violation $500 but not more than 2 x Gross Proceeds

29.2.7. For continuing failure to maintain accurate records, the money penalty is:

First violation $500 but not more than 2 x Gross Proceeds

Second or succeeding violation $500 but not more than 2 x Gross Proceeds

29.2.8. For continuing violations of any nature, subsequent to the licensee having been notified in writing of a violation, the monetary penalty is:

First violation $500 but not more than 2 x Gross Proceeds

Second or succeeding violation $500 but not more than 2 x Gross Proceeds

29.2.8.1 The penalty for violations occurring subsequent to written notice shall be in addition to the penalty that may be applied for a second or succeeding violation under any other provision of this rule.

29.2.9. For conducting fraudulent charitable raffle occasions, or obtaining a charitable raffle license under false pretenses or deceptive or fraudulent circumstances, the monetary penalty is:

First violation $500 but not more than 2 x Gross Proceeds

Second or succeeding violation $500 but not more than 2 x Gross Proceeds

29.2.10. The Tax Commissioner may impose any one or more, or any combination, of the penalties provided for in this subsection 29.2.

29.3. No sanctions or other penalty shall be imposed under subdivision 29.2.4 on a charitable raffle licensee for failure to operate charitable raffle occasions with members when:

29.3.1. The licensee is exempt from federal income taxation under Internal Revenue Code §501 (c)(3) or 501 (c)(4);

29.3.2. The licensee is a non-membership organization that does not have bona fide members; and

29.3.3. The raffle occasions are operated by residents of this State who have been employed by the licensee or who have been meaningfully associated with the licensee for one or more years before the date of the licensee's application for a license under the Act, or for one or more years before the date of the licensee=s most recent application for renewal of a license under the Act, whichever is later.

29.4. Administrative procedures.

29.4.1. An order issued under this section shall be served by certified mail or in the manner provided in rule 4(d) of the West Virginia Rules of Civil Procedures

29.4.2. A charitable raffle licensee may appeal an order of the Tax Commissioner issued under this section by filing a written protest with the Tax Commissioner, either in person or by certified mail, properly addressed and postage prepaid, within twenty days after the licensee is served with a copy of the order. Appeals shall be filed in the form or forms as the Tax Commissioner furnishes with the order.

29.4.3. When a timely written protest is filed, the procedures for contested cases set forth in W. Va. Code §29A-5-1 et seq. apply.

29.4.4. The burden of proof in any administrative or court proceeding is on the charitable raffle licensee to show cause why the order of the Tax Commissioner under this section should be modified, in whole or in part, or set aside.

29.5. Nothing contained in this rule shall be construed to prohibit, limit, alter or amend the Tax Commissioner=s power under W. Va. Code §47-21-23 to issue an emergency order suspending a raffle licensee.
APPENDIX A

UNITED STATES TREASURY REGULATIONS
(Reg. Section 1.501(c)(3)-1)

The regulation below is intended to provide guidance to the public in the determination of what a charitable or public service activity or endeavor is.

' 1.501(c)(3)-1. Organizations organized and operated for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or for the prevention of cruelty to children or animals.

(a) Organization and operational tests.

(1) In order to be exempt as an organization described in section 501(c)(3), an organization must be both organized and operated exclusively for one or more of the purposes specified in such section. If an organization fails to meet either the organizational test or the operational test, it is not exempt.

(2) The term "Exempt Purpose or Purposes", as used in this section, means any purpose or purposes specified in section 501(c)(3), as defined and elaborated in paragraph (d) of this section.

(b) Organizational test.

(1) In general.

(A) An organization is organized exclusively for one or more exempt purposes only if its articles of organization (referred to in this section as its "articles") as defined in subparagraph (2) of this paragraph:

(i) Limit the purposes of such organization to one or more exempt purposes; and

(ii) Do not expressly empower the organization to engage, otherwise, than as an insubstantial part of its activities, in activities which in themselves are not in furtherance of one or more exempt purposes.

(B) In meeting the organizational test, the organization's purpose, as stated in its articles, may be as broad as, or more specific than, the purposes stated in section 501(c)(3). Therefore, an organization which, by the terms of its articles, is formed "for literary and scientific purposes within the meaning of section 501(c)(3) of the Code shall, if it otherwise meets the requirements in this paragraph, be considered to have met the organizational test. Similarly, articles stating that the organization is created solely "to receive contributions and pay them over to organizations which are described in section 501(c)(3) and exempt from taxation under section 501(a)" are sufficient for purposes of the organizational test. Moreover, it is sufficient if the articles set forth the purpose of the organization to be the operation of a school for adult education and describe in detail the manner of the operation of such school. In addition, if the articles state that the organization is formed for "Charitable Purposes", such articles ordinarily shall be sufficient for purposes of the organizational test (See subparagraph (5) of this paragraph for rules relating to construction of terms).

(C) An organization is not organized exclusively for one or more exempt purposes if its articles expressly empower it to carry on, otherwise than as an insubstantial part of its activities, activities which are not in furtherance of one or more exempt purposes, even though such organization is, by the terms of such articles, created for a purpose that is no broader than the purposes specified in section 501(c)(3). Thus, an organization that is empowered by its articles "to engage in a manufacturing business," or "to engage in the operation of a social club" does not meet the organizational test regardless of the fact that its articles may state that such organization is created "for charitable purposes within the meaning of Section 501(c)(3) of the Code."
(D) In no case shall an organization be considered to be organized exclusively for one or more exempt purposes, if by the terms of its articles, the purposes for which such organization is created are broader than the purposes specified in section 501(c)(3). The fact that the actual operations of such an organization have been exclusively in furtherance of one or more exempt purposes shall not be sufficient to permit the organization to meet the organizational test. Similarly, such an organization will not meet the organizational test as a result of statements or other evidence that the members thereof intend to operate only in furtherance of one or more exempt purposes.

(E) An organization must, in order to establish its exemption, submit a detailed statement of its proposed activities with and as a part of its application for exemption (See paragraph (b) of ' 1.501(a)-1).

(2) Articles of organization. - For purposes of this section, the term "articles of organization" or "articles" includes the trust instrument, the corporate charter, the articles of association, or any other written instrument by which an organization is created.

(3) Authorization of legislative or political activities. - An organization is not organized exclusively for one or more exempt purposes if its articles expressly empower it:

(A) To devote more than an insubstantial part of its activities to attempting to influence legislation by propaganda or otherwise; or

(B) Directly or indirectly to participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of or in opposition to any candidate for public office; or

(C) To have objectives and to engage in activities which characterize it as an "action" organization as defined in paragraph (c)(3) of this section. The terms used in subdivisions (A), (B), and (C) of this subparagraph shall have the meanings provided in paragraph (c)(3) of this section.

(4) Distribution of assets on dissolution. - An organization is not organized exclusively for one or more exempt purposes unless its assets are dedicated to an exempt purpose. An organization's assets will be considered dedicated to an exempt purpose, for example, if upon dissolution, such assets would, by reason of a provision in the organization's articles or by operation of law, be distributed for one or more exempt purposes, or to the Federal government, or to a State or local government, for a public purpose, or would be distributed by a court to another organization to be used in such manner as in the judgment of the court will best accomplish the general purposes for which the dissolved organization was organized. However, an organization does not meet the organizational test if its articles or the law of the State in which it was created provide that its assets would, upon dissolution, be distributed to its members or shareholders.

(5) Construction of terms. - The law of the State in which an organization is created shall be controlling in construing the terms of its articles. However, any organization which contends that such terms have under State law a different meaning from their generally accepted meaning must establish such special meaning by clear and convincing reference to relevant court decisions, opinions of the State attorney general, or other evidence of applicable State law.
(6) Applicability of the organizational test. - A determination by the Commissioner or a district director that an organization is described in section 501(c)(3) and exempt under section 501(a) will not be granted after July 26, 1959 (regardless of when the application is filed), unless such organization meets the organizational test prescribed by this paragraph. If, before July 27, 1959, an organization has been determined by the Commissioner or district director to be exempt as an organization described in section 501(c)(3) or in corresponding provision of prior law and such determination has not been revoked before such date, the fact that such organization does not meet the organizational test prescribed by this paragraph shall not be a basis for revoking such determination. Accordingly, an organization which has been determined to be exempt before July 27, 1959, and which does not seek a new determination of exemption is not required to amend its articles of organization to conform to the rules of this paragraph, but any organization which seeks a determination of exemption after July 26, 1959, must have articles of organization which meet the rules of this paragraph. For the rules relating to whether an organization determined to be exempt before July 27, 1959, is organized exclusively for one or more exempt purposes, See 26 CFR (1939 39.101(5)-1 (Regulation 118) as made applicable to the Code by Treasury Decision 6091, approved August 16, 1954 (19 F.R. 5167; C.B. 1954-2, 47).

(c) Operational test.

(1) Primary activities. - An organization will be regarded as "operated exclusively" for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of such exempt purposes specified in section 501(c)(3). An organization will not be so regarded if more than an insubstantial part of its activities is not in furtherance of an exempt purpose.

(2) Distribution of earnings. - An organization is not operated exclusively for one or more exempt purposes if its net earnings inure in whole or in part to the benefit of private shareholders or individuals. For the definition of the words "private shareholders or individual", See paragraph (c) of ' 1.501(a)-1.

(3) "Action" organization.

(A) An organization is not operated exclusively for one or more exempt purposes if it is an "Action" organization as defined in subdivisions (B), (C), or (D) of this subparagraph.

(B) An organization is an "Action" organization if a substantial part of its activities is attempting to influence legislation by propaganda or otherwise. For this purpose, an organization will be regarded as attempting to influence legislation if the organization -

(i) Contacts, or urges the public to contact, members of a legislative body for the purpose of proposing, supporting, or opposing legislation; or

(ii) Advocates the adoption or rejection of legislation. The term "legislation", as used in this subdivision, includes action by the Congress, by any State legislature, by any local council or similar governing body, or by the public in a referendum, initiative, constitutional amendment, or similar procedure. An organization will not fail to meet the operational test merely because it advocates, as an insubstantial part of its activities, the adoption or rejection of legislation.

(C) An organization is an "Action" organization if it participates or intervenes, directly or indirectly, in any political campaign on behalf of or in opposition to any candidate for public office. The term "Candidate for Public Office" means an individual who offers himself, or is proposed by others, as a contestant for an elective public office, whether such office be national, State or local. Activities which constitute participation or intervention in a political campaign on behalf of or in opposition to a candidate include, but are not limited to, the publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to such a candidate.

(D) An organization is an "Action" organization if it has the following two characteristics:

(i) Its main or primary objective or objectives (as distinguished from its incidental or secondary objectives) may be attained only by legislation or a defeat of proposed legislation; and

(ii) It advocates, or campaigns for, the attainment of such main or primary objective or objectives as distinguished from engaging in nonpartisan analysis, study, or research and making the results thereof available to the public. In determining whether an organization has such characteristics, all the surrounding facts and circumstances, including the articles and all activities of the organization, are to be considered.

(E) An "Action" organization, described in subdivisions (ii) or (iv) of this subparagraph, though it cannot qualify under section 501(c)(3) may nevertheless qualify as a social welfare organization under section 501(c)(4) if it meets the requirements set out in paragraph (a) of ' 1.501(c)(4)-1.

(d) Exempt purposes.

(1) In general.

(A) An organization may be exempt as an organization described in section 501(c)(3) if it is organized and operated exclusively for one or more of the following purposes:

(i) Religious,

(ii) Charitable,

(iii) Scientific,

(iv) Testing for public safety,

(v) Literary,

(vi) Educational, or

(vii) Prevention of cruelty to children or animals.

(B) An organization is not organized or operated exclusively for one or more of the purposes specified in subdivision (A) of this subparagraph unless it serves a public rather than a private interest. Thus, to meet the requirement of this subdivision, it is necessary for an organization to establish that it is not organized or operated for the benefit of private interests such as designated individuals, the creator or his family, shareholders of the organizations, or persons controlled, directly or indirectly, by such private interest.

(C) Since each of the purposes specified in subdivision (A) of this subparagraph is an exempt purpose in itself, an organization may be exempt if it is organized and operated exclusively for any one or more of such purposes. If, in fact, an organization is organized and operated exclusively for exempt purpose or purposes, exemption will be granted to such an organization regardless of the purpose or purposes specified in its application for exemption. For example, if an organization claims exemption on the ground that it is "Educational", exemption will not be denied if, in fact, it is "Charitable".

(2) "Charitable" defined. - The term "Charitable" is used in section 501(c)(3) in its generally accepted legal sense and is, therefore, not to be construed as limited by the separate enumeration in section 501(c)(3) of other tax-exempt purposes which may fall within the broad outlines of "Charity" as developed by judicial decisions. Such term includes: Relief of the poor and distressed or of the underprivileged; advancement of religion; advancement of education or science; erection of maintenance of public buildings, monuments, or works; lessening of the burdens of Government; and promotion of social welfare by organizations designed to accomplish any of the above purposes, or

(A) to lessen neighborhood tensions;

(B) to eliminate prejudice and discrimination;

(C) to defend human and civil rights secured by law; or

(D) to combat community deterioration and juvenile delinquency.

The fact that an organization which is organized and operated for the relief of indigent persons may receive voluntary contributions from the persons intended to be relieved will not necessarily prevent such organization from being exempt as an organization organized and operated exclusively for charitable purposes. The fact that an organization, in carrying out its primary purpose, advocates social or civic changes or presents opinion on controversial issues with the intention of molding public opinion or creating public sentiment to an acceptance of its views does not preclude such organization from qualifying under section 501(c)(3) so long as it is not an "Action" organization of any one of the types described in paragraph (c)(3) of this section.

(3) "Educational" defined.

(A) In general. - The term "Educational", as used in section 501(c)(3), relates to -

(i) The instruction or training of the individual for the purpose of improving or developing his capabilities; or

(ii) The instruction of the public on subjects useful to the individual and beneficial to the community.

An organization may be educational even thought it advocates a particular position or viewpoint so long as it presents a sufficiently full and fair exposition of the pertinent facts as to permit an individual or the public to form an independent opinion or conclusion. On the other hand, an organization is not educational if its principal function is the mere presentation of unsupported opinion.

(B) Examples of educational organizations. - The following are examples of organizations which, if they otherwise meet the requirements of this section, are educational:

Example 1. - An organization, such as a primary or secondary school, a college, or a professional or trade school, which has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled body of students in attendance at a place where the educational activities are regularly carried on.

Example 2. - An organization whose activities consist of presenting public discussion groups, forums, panels, lectures, or other similar programs. Such programs may be on radio or television.

Example 3. - An organization which presents a course of instruction by means of correspondence or through the utilization of television or radio.

Example 4. - Museums, zoos, planetariums, symphony orchestras, and other similar organizations.

(4) "Testing for Public Safety" defined. - The term "Testing for Public Safety", as used in section 501(c)(3), includes the testing of consumer products, such as electrical products, to determine whether they are safe for use by the general public.

(5) "Scientific" defined.

(A) Since an organization may meet the requirements of section 501(c)(3) only if its serves a public rather than a private interest, a "Scientific" organization must be organized and operated in the public interest. Research when taken alone is a word with various meanings; it is not synonymous with "Scientific"; and the nature of particular research upon the purpose which it serves. For research to be "Scientific", within the meaning of section 501(c)(3), it must be carried on in furtherance of a "Scientific" purpose. The determination as to whether research is "Scientific" does not depend on whether such research is classified as "Fundamental" or "Basic" as contrasted with "Applied" or "Practical". On the other hand, for purposes of the exclusion from unrelated business taxable income provided by section 512(b)(9), it is necessary to determine whether the organization is operated primarily for purposes of carrying on "Fundamental", as contrasted with "Applied", research.

(B) Scientific research does not include activities of a type ordinarily carried on as an incident to commercial or industrial operations, as, for example, the ordinary testing or inspection of materials or products or the designing or construction of equipment, buildings, etc.

(C) Scientific research will be regarded as carried on in the public interest -

(i) If the results of such research (including any patents, copyrights, processes, or formula resulting from such research) are made available to the public on a nondiscriminatory basis;

(ii) If such research is performed for the United States, or any of its agencies or instrumentalities, or for a State or political subdivision thereof; or

(iii) If such research is directed toward benefiting the public. The following are examples of scientific research which will be considered as directed toward benefiting the public, and, therefore, which will be regarded as carried on in the public interest:

(a) Scientific research carried on for the purpose of aiding in the scientific education of college or university students;

(b) Scientific research carried on for the purpose of obtaining scientific information, which is published in a treatise, thesis, trade publication or in any other form that is available to the interested public;
(c) Scientific research carried on for the purpose of discovering a cure for a disease; or

(d) Scientific research carried on for the purpose of aiding a community or geographical area by attracting new industry to the community or area or by encouraging the development of, or retention of, an industry in the community or area. Scientific research described in this subdivision (c) will be regarded as carried on in the public interest even though such research is performed pursuant to a contract or agreement under which the sponsor or sponsors of the research have the right to obtain ownership or control of any patents, copyrights, processes, or formula resulting from such research.

(D) An organization will not be regarded as organized and operated for the purpose of carrying on scientific research in the public interest and, consequently, will not qualify under section 501(c)(3) as a "Scientific" organization, if -

(i) Such organization will perform research only for persons which are (directly or indirectly) its creators and which are not described in section 501(c)(3), or

(ii) Such organization retain (directly or indirectly) the ownership or control of more than an insubstantial portion of the patents, copyrights, processes, or formula resulting from its research and does not make patents, copyrights, processes, or formula available to the public. For purposes of this subdivision, a patent, copyright, process, or formula shall be considered as made available to the public if such patent, copyright, process, or formula is made available to the public on a nondiscriminatory basis. In addition, although one person is granted the exclusive right to the use of a patent, copy right, process, or formula, such patent, copyright, process, or formula shall be considered as made available to the public if the granting of such exclusive right is the only practicable manner in which the patent, copyright, process, or formula can be utilized to benefit the public. In such a case, however, the research from which the patent, copyright, process, or formula resulted will be regarded as carried on in the public interest (within the meaning of subdivision (C) of this subparagraph) only if it is carried on for a person described in subdivision (C)(ii) of this subparagraph of if it is scientific research described in subdivision (C)(iii) of this subparagraph.

(E) The fact that any organization (including a college, university, or hospital) carries on research which is not in furtherance of an exempt purpose described in section 501(c)(3) will not preclude such organization from meeting the requirements of section 501(c)(3) so long as the organization meets the organizational test and is not operated for the primary purpose of carrying on such research (See paragraph (e) of this section, relating to organizations carrying on a trade or business). See paragraphs (a)(5) of ' 1.513-2, with respect to research which constitutes an unrelated trade or business, and section 512(b)(7)(8), and (9), with respect to income derived from research which is excludable from the tax on unrelated business income.
(F) The regulations in this subparagraph are applicable with respect to taxable years beginning after December 31, 1960.

(e) Organizations carrying on trade or business.

(1) In general. - An organization may meet the requirements of section 501(c)(3) although it operates a trade or business as a substantial part of its activities, if the operation of such trade or business is in furtherance of the organization's exempt purpose or purposes and if the organization is not organized or operated for the primary purpose of carrying on an unrelated trade or business, as defined in section 513. In determining the existence or nonexistence of such primary purpose, all the circumstances must be considered, including the size and extent of the trade or business and the size and extent of the activities which are in furtherance of one or more exempt purposes. An organization which is organized and operated for the primary purpose of carrying on an unrelated trade or business is not exempt under section 501(c)(3) even though it has certain religious purposes, its property is held in common, and its profits do not inure to the benefit of individual members of the organization. See, however, section 501(d) and ' 1.501(d)-1, relating to religious and apostolic organizations.

(2) Taxation of unrelated business income. - For provisions relating to the taxation of unrelated business income of certain organizations described in section 501(c)(3), See sections 511 to 515, inclusive, and the regulations thereunder.

(f) Applicability of regulations in this section. - The regulations in this section are, except as otherwise expressly provided, applicable with respect to taxable years beginning after July 26, 1959. For the rules applicable with respect to taxable years beginning before July 27, 1959, See 26 CFR (1939) 39.101(6)-1 (Regulations 118) as made applicable to the Code by Treasury Decision 6091, approved August 16, 1954 (19 F.R. 5167; C. B. 1954-2, 47). Reg. Section 1.501(c)(3)-1.

APPENDIX B

This list of nonprofit charitable organizations which may be exempt from taxation under the Internal Revenue Code is intended to illustrate application of these terms and is not intended to be a comprehensive listing.

(a) 501(c)(3) Organizations.

(1) Religious
Churches
Church affiliated colleges
Sermon publishing organizations that apply proceeds to purchase of materials for theology school libraries.

(2) Educational, literary or scientific.
Primary and secondary schools Colleges or universities Professional or trade schools Private schools (Must have a racially nondiscriminatory admissions policy) Teachers travel study groups Historical exposition organizations Engineering societies engaged in scientific research Abortion counseling organizations Sterilization information organizations Credit union educational organizations School Accreditation organizations Organizations formed to provide work experience to students Anthropological research organizations Educational, cultural and public interest television programming organizations Training program product sales organizations Educational day care organizations Political educational organizations (must not solicit for or endorse candidates)

(3) Public safety.
Traffic safety organizations Organizations which inspect and test for public safety

(4) Prevention of cruelty to children or animals.

(5) Fostering national or international amateur sports competition.

(6) Charitable.
Nonprofit hospitals
Health care and maintenance organizations Drug Clinics Alcoholic treatment organizations Organizations that provide aid to the blind Public interest law firms Nonprofit legal aid societies Prisoner rehabilitation organizations Housing organizations which provide specially designed housing for the elderly or handicapped Honor Societies Volunteer fire company Disaster service organizations Racial discrimination prevention organizations Aid to senior citizen organizations Aid to immigrants organizations Organizations formed to promote civic pride

(b) 501(c)(4) Organizations.

(1) Civil leagues.
Homeowner's association
Garden clubs
Women's vacation and rest home Bus transportation organizations (providing relief for regular bus service) Environmental protection organizations Organization involved in processing of consumer complaints

(2) Nonprofit local employees' associations.

(c) 501(c)(8) Organizations. - Fraternal beneficiary societies (must operate) under the lodge system and have an established system for payment of benefits.

(d) 501(c)(10) Organization.

(1) Fraternal beneficiary societies (must operate) under the lodge system and give its net earnings solely for religious, charitable, scientific, literary, educational and fraternal purposes.

(e) 501(C)(19) Organizations. - Veteran's organizations (membership must consist of seventy-five (75%) war veterans and substantially all of the remainder must be veterans, cadets, or spouses, widows or widowers of war veterans. They must also be organized in the United States).

(f) 501(d) Organizations. - Religious and apostolic organizations.