What Is The Measure For Comptia's Tax Exempt Status?
The IRS lists 501 (c) (6) organizations as business leagues, chambers of commerce, real estate boards, boards of trade and, believe it or not, professional football leagues.
/**/ /**/
Indeed, most technology associations qualify under the "board of trade" classification, which, as listed on the IRS website is defined as "persons engaged in a similar line of business. For example, a nonprofit organization formed to regulate the sale of a specified agricultural commodity to assure equal treatment of producers, warehouse workers and buyers is a board of trade."
"Chambers of commerce and boards of trade usually promote the common economic interests of all the commercial enterprises in a given trade community," reads the IRS website.
Comptia, for its part, lists its primary tax exempt purpose as a "computer industry international and national trade association." But how does the 501 (c) (6) status square with the Comptia's certification testing business? Does that testing business promote the "common economic interests" of its members who actually pay to take the certification tests?
Comptia's certification testing business garnered $31.47 million in revenue for 2007. And though Comptia reported net assets of $54.68 million on its 2007 IRS 990 form, it lists "no specific assistance to individuals" or "benefits paid to or for members."
The only grants paid out in 2007 was $2 million to The Computing Technology Industry Association [Comptia] Education Foundation, which is headed up by former Comptia President and CEO John Venator.
In its IRS 990 filing when asked to "explain how each activity for which income is reported "contributed importantly to the accomplishment of the organization's exempt purposes (other than by providing funds for such purposes)," Comptia says the certification program "provides the technology community with standards in the area of vendor neutral certifications." What's more Comptia says that thousands of companies rely on "these standards to provide a reliable predictor of employee success."
Todd Thibodeaux, the current president and CEO of Comptia, said that associations like Comptia provide big value to members by providing a vendor-agnostic avenue for members. "A lot of those [technology] companies want to talk about only their types of products," he said. "I think the types of things people get from non-profits is an unbiased, vendor-neutral message or a forum where they can discuss a range of issues, or have a peer-to-peer exchange.
"You've seen the communities popping up in a lot of places that were driven by some vendors and whether they were around their products they were marginally successful but not as successful in relaying the basic messages," he said. "A lot of the association work is blocking and tackling. It's getting out the basic stuff. And for-profit companies are not necessarily going to do that."
Thibodeaux said taking away the tax-exempt non profit status of technology associations would damage the industry. He said members are relying on associations of all kinds to help them through the economic downturn.
"I think now more than ever people are relying on associations whether they are technology or not," he said. "Should the hospitality industry have to give up their tax-exempt status? It's really all a matter of the money that's poured back into the industry and it's a good rule of thumb an association would keep in reserve one- to two-times operating expenses just to allow for these tough times. And the IRS has made specific provisions that allow for associations to pour dollars back in. And, in looking back at how the association has budgeted, it has budgeted very conservatively."