Data issues in the 501(c) "other" Core files (Technical Note)

The 1996 Core 501(c)other file has more than one hundred and ninety-eight thousand organizations; the 1997 file has only ninety-five thousand records. Why the dramatic drop?

Prior to 1997 NCCS included the so-called "zero filer" organizations in these files. These are organizations that filed returns with less than $25,000 in gross receipts and that are, therefore, not required to file. The IRS includes the EINs for these organizations in the database but includes no financial information. Thus, for a filing organization with, say, $10,000 in gross receipts and $5,000 in public support, the IRS would include it's EIN in the database but would leave the amounts for those financial variables as zeroes.

The 1996 file has 59,912 zero filers while 1997 has none. All zero filers have these have a POPCD field value of zero. All but two of the records with positive financial values (total expenses, gross receipts or total assets must be non-null or non-zero) have a POPCD value of 1.

Explaining the remaining differences is more difficult. Furthermore, in addition to the drop in the overall number of organizations, the total expenses of these organizations fell from more than $193 billion to $152 billion. We can see two likely causes:

- Nonprofit Health Maintenance Organizations (HMOs) were given exempt status under section 501(c)(4) by the IRS. Over the past decade, a significant number of these organizations were sold or converted to for-profit status.

- We are able to identify fifty-seven Blue Cross or Blue Shield organizations in the NCCS Master List of organizations. Of these, fifty-six are identified as 501(c)(4) organizations. None of the 501(c)(4) organizations appear to be filing in the circa 2000 period (Core 2001 file). Like the nonprofit HMOs, this is consistent with our understanding of the conversions of many of these organizations to for-profit status.

- Another major group showing substantial declines are the 501(c)(9) "voluntary employees' beneficiary associations that "provide for the payment of life, sick, accident, or other benefits to its members ..." (IRC sec. 1.501(c)(9)-1) In the Core 1996 file, this category included organizations such as Wal Mart Stores Associate Health & Welfare Trust and the United Parcel Service Health & Welfare Plan Trust with hundreds of millions in gross receipts. Thirty-one of these organizations with gross receipts of more than $100 million were not found in the 1997 file. These organizations alone accounted for more than $5 billion of the drop in expenses and nearly $10 billion of the drop in gross receipts. At this time, we do not know if their disappearance is the result of changes in tax laws or due to some other cause.

KEY WORDS: 501(c)(4), 501(c)(9), other exempt organizations, core files, "other", 501c other

Added 08/23/2002 by tpollak, Modified 11/05/2009 by kuttkeUI


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