43-1201

43-1201. Organizations exempt from tax

Organizations that are exempt from federal income tax under section 501 of the
internal revenue code are exempt from the tax imposed under this title. In addition, the
following organizations are exempt from the taxes imposed under this title, except as
otherwise provided in this chapter:

1. Labor, agricultural or horticultural organizations, other than cooperative
organizations.

2. Fraternal beneficiary societies, orders or organizations both:

(a) Operating under the lodge system or for the exclusive benefit of the members of
a fraternity itself operating under the lodge system.

(b) Providing for the payment of life, sick, accident or other benefits to the
members of such society, order or organization or their dependents.

3. Cemetery companies owned and operated exclusively for the benefit of their
members or which are not operated for profit or any corporation chartered for burial
purposes and not permitted by its charter to engage in any business not necessarily
related to that purpose, no part of the net earnings of which inures to the benefit of
any private shareholder or individual member thereof.

4. Corporations organized and operated exclusively for religious, charitable,
scientific, literary or educational purposes or for the prevention of cruelty to children
or animals, no part of the net earnings of which inures to the benefit of any private
shareholder or individual, and no substantial part of the activities of which is carrying
on propaganda or otherwise attempting to influence legislation.

5. Business leagues, chambers of commerce, real estate boards or boards of trade,
not organized for profit, no part of the net earnings of which inures to the benefit of
any private shareholder or individual.

6. Civic leagues or organizations not organized for profit but operated exclusively
for the promotion of social welfare or local organizations of employees, the membership
of which is limited to the employees of a designated person or persons in a particular
municipality, the net earnings of which are devoted exclusively to charitable,
educational or recreational purposes.

7. Clubs organized and operated exclusively for pleasure, recreation and other
non-profitable purposes, no part of the net earnings of which inures to the benefit of
any private shareholder.

8. Corporations organized for the exclusive purpose of holding title to property,
collecting income therefrom and turning over the entire amount of such income, less
expenses, to an organization which itself is exempt from the tax imposed by this title.

9. Voluntary employees' beneficiary organizations providing for the payment of
life, sick, accident or other benefits to the members of such organizations or their
dependents, if both of the following apply:

(a) No part of their net earnings inures, other than through such payments, to the
benefit of any private shareholder or individual.

(b) Eighty-five per cent or more of the income consists of amounts collected from
members and amounts contributed to the organization by the employer of the members for
the sole purpose of making such payments and meeting expenses.

10. Teachers' or public employees' retirement fund organizations of a purely local
character, if both of the following apply:

(a) No part of their net earnings inures to the benefit of any private shareholder
or individual, other than through payment of retirement benefits.

(b) The income consists solely of amounts received from public taxation, amounts
received from assessments upon the salaries of members and income in respect of
investments. For the purposes of this paragraph, "public employees" means employees of
the state and its political subdivisions.

11. Religious or apostolic organizations or corporations, if such organizations or
corporations have a common treasury or community treasury, even if such corporations or
organizations engage in business for the common benefit of the members, but only if the
members thereof include, at the time of filing their returns, in their Arizona gross
income their pro rata shares, whether distributed or not, of the net income of the
organizations or corporations for such year. Any amount so included in the Arizona gross
income of a member shall be treated as a dividend received.

12. Voluntary employees' beneficiary organizations providing for the payment of
life, sick, accident or other benefits to the members of such organization, their
dependents or their designated beneficiaries, if both of the following apply:

(a) Admission to membership in such organization is limited to individuals who are
officers or employees of the United States government.

(b) No part of the net earnings of such organization inures, other than through
such payments, to the benefit of any private shareholder or individual.

13. Corporations classified as diversified management companies under section 5 of
the federal investment company act of 1940 and registered as provided in that act.

14. Insurance companies paying to the state tax upon premium income derived from
sources within this state.

15. Mutual ditch, irrigation or water companies or similar nonprofit organizations
if eighty-five per cent or more of the income consists of amounts collected from members
for the sole purpose of meeting losses and expenses.

16. Workers' compensation pools established pursuant to section 23-961.01.