Is Your Trade Associations prepared for IRS audit? IRS Issues Technical Guidance for 501(c)(6) Organizations

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Cory D. Halliburton

Cory D. Halliburton



Cory Halliburton serves as general counsel and business adviser to a nationwide nonprofit / tax-exempt client base, as well as for multi-state professional service companies. He is a results-oriented attorney, with executive-level strategy and an understanding of the intersection of law and business judgment. With a practical upbringing, he pushes for process-driven results in internal governance, strategy and compliance with employment law, and complex or unique contracts and business relationships.

He dedicated the first ten years of his practice to mainly commercial litigation matters in West Texas and the Dallas-Fort Worth Metroplex. During that experience, Mr. Halliburton transitioned his practice to a more general counsel role, with an emphasis on nonprofit and tax-exempt organizations, advising those organizations through formation, dissolution, litigation, governance, leadership succession, employment law, contracts, intellectual property, tax exemption issues, policy creation, mergers and other. He has served as borrower’s counsel for tax-exempt bond and loan transactions near $100 million aggregate; some with complex pre-issue construction, debt payoff and other debt financing challenges.

Mr. Halliburton also serves as outside legal and business advisor for executive professionals in multi-state engineering firms, with a focus on drafting and counsel on significant service agreements, employment law matters, and protection of trade secrets.

Is Your Trade Associations prepared for IRS audit? IRS Issues Technical Guidance for 501(c)(6) Organizations

On September 16, 2022, the IRS published its Exempt Organizations Technical Guide TG 6 IRC 501(c)(6) Business League (“TG6”). TG6 discusses tax exemption of business leagues, chambers of commerce, real estate boards, and boards of trade described under Internal Revenue Code section 501(c)(6). The 42-page TG6 provides guidance and information on exemption requirements of IRC 501(c)(6) and related Treasury Regulations. See Treas. Reg. § 1.501(c)(6)-1. TG6 addresses core concepts such as associations defined, bona fide membership, authorized business lines, and application of inurement principles to trade associations and business leagues. The IRS dedicates several pages on the subject of business lines that may be engaged by trade associations, chambers of commerce, and business leagues. TG6 also provides a brief comparison of 501(c)(6) organizations to organizations described in, for example, 501(c)(3) and 501(c)(5). At page 33 of TG6, the IRS provides guidance on unrelated business income tax relevant to trade associations, including for revenue generated from trade shows and publications. See also Freeman Law’s Tax Exemption and Unrelated Business Income Rules (an in-depth three-part series dedicated to UBIT tax concepts; authored by Freeman Law attorney Cory Halliburton).

TG6 concludes with audit examination techniques that field agents are expected to take when examining 501(c)(6) organizations. The techniques include: A. Membership Examination Techniques; B. Inurement Examination Techniques; C. Unrelated Business Income Examination Techniques; D. Compensation Examination Techniques; E. Legislative Activities Examination Techniques; and F. Political Activities Examination Techniques. Each category contains a list of organizational and operational focus areas that the IRS will investigate with respect to the particular subject.

Insights: For over 15 years I have represented and served as outside general counsel to many trade associations. Most have thousands of members, complex governance, creative and international business relationships, and unique and industry-specific business lines. TG6 is an excellent resource for this industry and provides an inside look at the IRS’s prerogatives and organizational and operational focus points to consider if or when an examination ever befalls upon a trade association, business league, or chamber of commerce.

Freeman Law International Tax Symposium

Readers may be interested in the Freeman Law International Tax Symposium scheduled to take place virtually on October 20 and 21, 2022.  Attendees will qualify for CLE, CPE, and CE and the slate of presenters includes well-recognized speakers and panelists, such as the IRS Commissioner, a prior Chief Counsel of the IRS, a former Acting Assistant Attorney General of the U.S. Department of Justice Tax Division, and many others in government and private practice.

To Register for the Freeman Law International Tax Symposium, please visit