To be exempt under Internal Revenue Code section 501(c)(19), an organization must meet the following requirements:

1. It must be a post or organization organized in the United States.
2. At least 75% of its members must be past or present members of the United States Armed Forces, and at least 97.5% of its members must be past or present members of the United States Armed Forces, cadets (including only students in college or university ROTC programs or at armed services academies) or spouses, widows, or widowers of any of these.
3. No part of the organization's net earnings inure to the benefit of any private shareholder or individual.

Section 105 of the Military Family Tax Relief Act of 2003 modifies the membership requirements for veterans organizations under section 501(c)(19). For taxable years beginning after November 11, 2003, an organization must meet the following membership requirements to be exempt under this section:

1. At least 75% of the organization's members must be past or present members of the United States Armed Forces (veterans).
   
   
2. Of the remaining members, substantially all (90%) must be:
   
   
   • Cadets or
   • Spouses, widows, widowers, ancestors, or lineal descendants of veterans or cadets.
     
     
3. No more than 2.5% of the organization's total membership may consist of individuals who are not veterans or cadets, or spouses, widow/widowers, ancestors, or lineal descendants of veterans or cadets.

In addition, the organization must be operated exclusively for one or more of the following purposes:

1. To promote the social welfare of the community (that is, to promote in some way, the common good and general welfare of the people of the community);
2. To assist disabled and needy war veterans and members of the U. S. Armed Forces and their dependents and the widows and orphans of deceased veterans;
3. To provide entertainment, care, and assistance to hospitalized veterans or members of the U.S. Armed Forces;
4. To carry on programs to perpetuate the memory of deceased veterans and members of the Armed Forces and to comfort their survivors;
5. To conduct programs for religious, charitable, scientific, literary, or educational purposes;
6. To sponsor or participate in activities of a patriotic nature;
7. To provide insurance benefits for its members or dependents of its members or both; or
8. To provide social and recreational activities for its members.

To be exempt under Internal Revenue Code section 501(c)(23), an organization must meet the following requirements:

1. It must be an association organized before 1880;
2. At least 75% of its members must be past or present members of the U.S. Armed Forces; and
3. It must have a principal purpose of providing insurance and other benefits to veterans or their dependents.

For more information, download Veterans' Organizations.

Depending on their organization and purposes, Veterans' Organizations may be recognized as tax-exempt under the following sections of the Internal Revenue Code:

• 501(c)(4) - social welfare organizations
• 501(c)(7) - social clubs
• 501(c)(8) - fraternal beneficiary societies
• 501(c)(10) - domestic fraternal societies
• 501(c)(2) - title holding corporations

For additional information on the requirements for exemption under the code sections listed above, click on the appropriate Contents Link (see left column, this page) or see Publication 3386, Tax Guide for Veterans' Organizations.