Systems & Structures
Federation Tax Information Package

Over the years the Federation Communities have gained considerable knowledge about dealing with the IRS. In particular, U.S. Member communities have been recognized as tax exempt under Section 501(d) of the Internal Revenue Code. It is information about obtaining this status that we have to share.

Section 501(d) is a relatively obscure portion of the tax code that was created in 1936 to help income sharing communal groups such as the Shakers. It allows exemption from paying corporate income tax and self employment tax. For purposes of taxation, all the community's income is passed on to its members on a pro rata basis as individual dividend income. Individual income taxes are paid accordingly.

Several of the Federation communities have obtained exempt status under this code. The information we have to share consists of letters and supporting documents from these communities' applications to the IRS.

This information is likely to be valuable only if you are seriously interested in applying for exemption under 501(d). This category is only available to groups with a common treasury (i.e., groups that practice total income sharing), and is generally denied to groups which earn a majority of their income from activities outside the community.
 
Catalog # Item Price  

EW-TXP

 East Wind Package $1.70  
East Wind was the first of the Federation communities to become exempt under 501(d) (1978). The documents we have are incomplete but do include some correspondence, bylaws, articles of incorporation, and the letter from the IRS that recognized the community as being exempt.
EW-TXP1 East Wind Government Proposal    
EW-TXP2 East Wind Democracy Proposal    
EW-TXP3 Change in By-Laws Proposed    
EW-TXP4 IRS Correspondence - 501d Status Granted    
EW-TXP5 IRS Correspondence re: 501d Status    
EW-TXP6 Statement of Religious Beliefs, Theory and Practice    
EW-TXP8 Articles of Incorporation    

 

SH-TXP

 Sandhill Package $1.90  
Sandhill's application was the most recent of the three. Using the experience of its sister communities, Sandhill successfully negotiated the application process without a lawyer. The package consists of: the application letter, supporting documents, the IRS response asking for more information, the community's reply to this, and the letter from the IRS approving the application.
 

SH-TXP1

 Employer Identification Number Assigned    
SH-TXP2 IRS Correspondence - Answer IRS questions    
SH-TXP3 Application Letter to IRS for 501d Status    
SH-TXP4 IRS Grants 501d Status    
SH-TXP5 IRS Correspondence - Answer more IRS questions    
SH-TXP6 IRS Correspondence - "Need more information"    
SH-TXP7 Assets & Liabilities    
SH-TXP8 Receipts & Expenses 1980-82    
SH-TXP9 Income Allocations    
SH-TXP10 Community Members Attachment B    
SH-TXP11 Receipts & Expenses 1983 - Attachment C    
 
 

TO-TXP

 Twin Oaks Package $25.00  
The package of information relating to Twin Oaks' application is lengthy. The community had been in existence for 12 years when it applied to the IRS. The initial application was denied, as well as the appeal that followed. The case eventually went to tax court where Twin Oaks prevailed. This package consists of letters of application, lots of supporting documents, correspondence, and the court ruling.
 
TO-TXP1 IRS Correspondence    
Other documents from this package not yet available online.
 
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