Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 57-61

1957-1 C.B. 197

Caution: Obsoleted by Rev. Rul. 82-148

IRS Headnote

An organization which furnishes transportation for medical care and services for its members and their families qualifies for exemption from Federal income tax as an organization (voluntary employees' beneficiary association) described in section 501(c)(9) of the Internal Revenue Code of 1954, provided no part of its net earnings inures to the benefit of any private shareholder or individual and 85 percent or more of its income consists of amounts collected from members and amounts contributed to the association by the employer of the members for the sole purpose of making payments for transportation for medical care and meeting expenses.

Full Text

Rev. Rul. 57-61

Advice has been requested whether an organization which furnishes transportation for medical care and services for the members of a designated labor union and their families qualifies for exemption from Federal income tax under section 501(c)(9) of the Internal Revenue Code of 1954 as a voluntary employees' beneficiary association.

The instant organization was formed by employees or as a result of collective bargaining for the purpose of furnishing transportation for medical care and services for the members of a designated labor union and their families. Receipts are derived from contributions and collections by drivers from members. Funds are expended for wages, car expenses, taxes, office supplies, interest, insurance and miscellaneous supplies. No part of the net income inures to the benefit of any private shareholder or individual and 85 percent or more of its income is received from members and contributions by their employer.

Section 501(c) of the Internal Revenue Code of 1954 describes certain organizations exempt from Federal income tax under section 501(a) and provides as follows:

(9) Voluntary employees' beneficiary associations providing for the payment of life, sick, accident, or other benefits to the members of such association or their dependents, if

(A) no part of their net earnings inures (other than through such payments) to the benefit of any private shareholder or individual, and

(B) 85 percent or more of the income consists of amounts collected from members and amounts contributed to the association by the employer of the members for the sole purpose of making such payments and meeting expenses.

The transportation of members of the union and their families for medical care and services may reasonably be considered as such "other benefits" within the contemplation of section 501(c)(9) of the Internal Revenue Code of 1954. Accordingly, it is held that an organization which furnishes such services for its members and their families qualifies for exemption from Federal income tax as an organization (voluntary employees' beneficiary association) described in section 501(c)(9) of the 1954 Code, provided no part of its net earnings inures to the benefit of any private shareholder or individual and 85 percent or more of its income consists of amounts collected from members and amounts contributed to the association by the employer of the members for the sole purpose of making payments for transportation for medical care and meeting expenses.