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  • From: Marlin Burkholder <burkholders AT glenecofarm.com>
  • To: Market Farming <market-farming AT lists.ibiblio.org>
  • Subject: Re: [Market-farming] Market IRS classification?
  • Date: Tue, 04 Jan 2011 22:14:42 -0500

Title: Re: [Market-farming] Market IRS classification?
It seems like many folks think that the only tax exempt IRS classification for a nonprofit corporation is 501 © 3.
This is not true.  Other classifications do not require education and charity expenses for a market.
Christine Burkholder

[from a manuel from TX about starting a farmers market]  
A general guidance is found here:  http://www.texascbar.org/content/legal_library/pubs/downloads/farmermkt/StartingFM1.pdf  (tax exempt part starts on page labeled 14,
 The exemption offered by Section 501(c)(3) is the most
common exemption claimed by non-profits. Many farmers’ markets have also been declared tax exempt
under this section, while others have sought tax-exempt status as a “chamber of commerce/
business league” under Section 501(c)(6). Notably, donations to Section 501(c)(6) organizations
generally may not be deducted by the donor as a “charitable contribution.” To the extent that
the Section 501(c)(6) benefits the donor, such as a local business donating (or paying dues) to its local
chamber of commerce, the donation may be deducted as a business expense. While this deduction is
beneficial to certain specific groups, it makes it difficult for Section 501(c)(6) organizations to raise
money from the community at large.

Your readers might be interested in the actual breakdown (past and present) of IRS recognized  organizations with the word “farmers market” in their names.
501(c)(3):
2010 – 45%;  2005 – 27% (increase)

501(c)(4):
2010 – 15%; 2005 – 18% (decrease)

501(c)(5):
2010 – 11%; 2005 – 14% (decrease)

501(c)(6):
2010 – 41%; 2005 – 29% (increase)


Sandy Deja



On 1/4/11 8:37 PM, "Jack Moffitt" <jackmoffitt AT gmail.com> wrote:

One of our markets got audited (or otherwise brought to the attention of the IRS) and was denied 501(c)3 status because it allowed vendors to be board members. They fired those board members. I was glad, I didn't like one of them anyway. Kinda hard for a non-farmer board to do very well, it seems. But that is the way the tail wagged the dog down here on the TexMex border.

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