Difference between revisions of "How to obtain tax-exempt status"
(→26 U.S.C. § 501(c)(3) Exemption from Tax on Corporations, Certain Trusts, and So Forth) |
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#no private shareholder or individual receives a benefit from the NGO’s net earnings | #no private shareholder or individual receives a benefit from the NGO’s net earnings | ||
#lobbying or political campaigning are not a substantial part of the NGO’s activities.<ref>Ibid.</ref> | #lobbying or political campaigning are not a substantial part of the NGO’s activities.<ref>Ibid.</ref> | ||
| − | ====Exempt Purposes==== | + | <blockquote>====Exempt Purposes====<br> |
An exempt purpose includes one or more of the following: | An exempt purpose includes one or more of the following: | ||
* any religious, charitable, scientific, literary or educational purposes | * any religious, charitable, scientific, literary or educational purposes | ||
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* preventing cruelty to children or animals.<ref>Internal Revenue Service, Applying for 501(c)(3) Tax-Exempt Status, Pub. 4220 (rev. June 2007), 3, http://www.irs.gov/pub/irs-pdf/p4220.pdf (accessed January 3, 2008).</ref> | * preventing cruelty to children or animals.<ref>Internal Revenue Service, Applying for 501(c)(3) Tax-Exempt Status, Pub. 4220 (rev. June 2007), 3, http://www.irs.gov/pub/irs-pdf/p4220.pdf (accessed January 3, 2008).</ref> | ||
| − | The most common are charitable, educational and religious. Charitable activities include: relief of the poor | + | The most common are charitable, educational and religious. Charitable activities include: |
| + | *relief of the poor | ||
| + | *advancement of religion, education or science | ||
| + | *defending human and civil rights | ||
| + | *eliminating discrimination.<ref>Ibid., at 4</ref> | ||
| + | Educational organizations include: | ||
| + | *schools | ||
| + | *groups that organize public discussions or panels | ||
| + | *museums | ||
| + | *zoos | ||
| + | *day-care centers.<ref>Ibid.</ref> | ||
| + | For religious purposes, the term church includes: | ||
| + | *synagogues | ||
| + | *temples | ||
| + | *mosques.<ref>Ibid.</ref> | ||
| + | Churches are automatically considered to be tax-exempt, but many apply for formal recognition of this status regardless.<ref>Ibid.</ref></blockquote> | ||
An NGO is considered ''organized for an exempt purpose'' if the NGO’s organizing documents: | An NGO is considered ''organized for an exempt purpose'' if the NGO’s organizing documents: | ||
Revision as of 08:42, 11 August 2008
This article is intended to provide a general description of the process for obtaining 501(c)(3) status under the U.S. Internal Revenue Code and is not intended to substitute for the advice of private counsel on specific issues related to the IRC or the 501(c)(3) application process. Original draft by Bobby C. Neal.
In the United States, a non-governmental organization (NGO) is generally subject to federal, state, and local taxes unless and until the organization qualifies for tax-exempt status. This article focuses on the process for obtaining a federal income tax exemption for NGOs.[1] NGOs that meet the criteria set forth in 26 U.S.C. § 501 of the Internal Revenue Code (section 501) are eligible for a federal tax exemption.[2] The benefits to obtaining tax exempt recognition by the Internal Revenue Service (IRS) include: income tax exemption, eligibility to receive tax-deductible contributions, possible exemption from certain employment taxes, and reduced postal rates. Section 501 describes the organizations that are eligible for tax-exempt status. The most significant category of tax-exempt organizations is section 501(c)(3).
