APA Plans To Restructure Practice Directorate To Comply With IRS Rules

By Henry Saeman, Editor
January 1, 2000 - Last updated: May 31, 2011

In a major action at its February 2000 Council of Representatives meeting, the American Psychological Association is expected to consider a proposal to reorganize APA by creating a new companion organization.

APA is expected to separate the Practice Directorate’s government relations activities and other related functions, and place them in a companion organization by forming a new 501(c)(6) organization, an Internal Revenue Code designation for business and professional organizations.

James L. McHugh, APA’s general counsel, likened the impending reorganization more as a housekeeping matter than a change in APA’s infrastructure. He said that APA’s real estate holdings, publishing enterprise and other vital resources will not be affected by the plan. “The bottom line is,” McHugh continued, “that people outside the APA governance operation may not notice any difference. The changes will be fairly legalistic distinctions.”

If enacted, the move is intended to meet two limitations imposed on APA by the Internal Revenue code. Nonprofit 501(c)(3) organizations like APA are limited in the amount of dollars they may expend annually on lobbying. However, the companion 501(c)(6) organization will have more freedom and flexibility because there will be no limit on its lobbying activities.

Also, the code requires that 501(c)(3) organizations, like APA, are to be primarily focused on scientific, charitable and educational activities. One APA official said that under current 501(c)(3) nonprofit limitations, “I couldn’t even talk about political gifting and significant issues dealing with Capitol Hill.”

The 501(c)(6) companion organization will be able to avert these restriction, and engage in activities that promote the professional concerns of members.

McHugh declared that the IRS has not challenged anything about APA’s present structure or activities. “We are doing this solely on our own initiative to give the organization more future options for dealing with the growing needs of the profession.”

McHugh also noted there will be no negative tax consequence for APA or the companion organization being spun off APA.

If Council approves the plan, it will go into effect on Jan. 1, 2001.

This is a condensed version. The full text can be found in the January/February 2000 issue of The National Psychologist.

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