A local association of employees under Internal Revenue Code section 501(c)(4) is an organization whose membership is limited to employees of a designated person or persons in a particular municipality, and whose income will be devoted exclusively to charitable, educational, or recreational purposes. The organization must meet the following requirements:

1. It must be of a purely local character;
2. I must limit its membership to employees of a designated person or persons in a particular locality; and
3. Its articles of organization, constitution, or bylaws must devote its net earnings exclusively to charitable, educational, or recreational purposes.

A local association of employees that has established a system of paying retirement and/or death benefits to its members will not qualify for exemption, since paying these benefits is not considered as being for charitable, educational, or recreational purposes. Similarly, a local association of employees that is operated primarily as a cooperative buying service for its members in order to obtain discount prices on merchandise, services, and activities does not qualify for exemption.

A voluntary employees' beneficiary association (VEBA) under section 501(c)(9) is an organization organized to pay life, sick, accident, and similar benefits to members or their dependents, or designated beneficiaries if no part of the net earnings of the association inures to the benefit of any private shareholder or individual. The organization must meet the following requirements:

1. It must be a voluntary association of employees;
2. The organization must provide for payment of life, sick, accident, or other benefits to members or their dependents or designated beneficiaries and substantially all of its operations are for this purpose; and
3. Its earnings may not inure to the benefit of any private individual or shareholder except in the form of scheduled benefit payments.

An organization will not be considered tax exempt under this section unless the organization gives notice to the IRS that it is applying for recognition of exempt status. Membership of a section 501(c)(9) organization must consist of individuals who are employees who have an employment-related common bond. This common bond may be a common employer (or affiliated employers), coverage under one or more collective bargaining agreements, membership in a labor union, or membership in one or more locals of a national or international labor union. An organization that is part of a plan will not be exempt unless the plan meets certain nondiscrimination requirements. However, if the organization is part of a plan maintained under a collective bargaining agreement between employee organizations and employers, the plan need not meet these requirements for the organization to qualify as tax exempt. For more information, see Voluntary Employees' Beneficiary Associations.

A supplemental unemployment benefit trust under section 501(c)(17) is a trust or trusts forming part of a written plan (established and maintained by an employer, his or her employees, or both) providing solely for the payment of supplemental unemployment compensation benefits. An organization is not tax exempt under section 501(c)(17) unless it gives notice to the IRS that it is applying for recognition of exempt status. Benefits must be paid to an employee because of the employee's involuntary separation from employment (whether or not such separation is temporary) resulting directly from a reduction-in-force, discontinuance of a plant or operation, or other similar conditions. In addition, sickness and accident benefits (but not vacation, retirement, or death benefits) may be included in the plan if these are subordinate to the unemployment compensation benefits.

It must be impossible under the plan (at any time before satisfying all liabilities with respect to employees under the plan) to use or to divert any of the corpus or income of the trust to any purpose other than paying supplemental unemployment compensation benefits (or sickness or accident benefits to the extent just explained). Neither the terms of the plan nor the actual payment of benefits may discriminate in favor of the company's officers, stockholders, supervisors, or highly paid employees. However, a plan is not discriminatory merely because benefits bear a uniform relationship to compensation or the rate of compensation.