Difference between revisions of "How to obtain tax-exempt status"
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A tax-exempt applicant must provide the required financial data on its application, including the receipts and expenditures for the current year and the last three years, or for the number of years in existence if the NGO is less than four years old.<ref>Ibid.</ref> The applicant must also include the balance sheet for the current year.<ref>Ibid.</ref> If the NGO applicant has been in operation for less than one year, the organization must include “a proposed budget for two full accounting periods and a current statement of assets and liabilities” with its application.<ref>Ibid.</ref> | A tax-exempt applicant must provide the required financial data on its application, including the receipts and expenditures for the current year and the last three years, or for the number of years in existence if the NGO is less than four years old.<ref>Ibid.</ref> The applicant must also include the balance sheet for the current year.<ref>Ibid.</ref> If the NGO applicant has been in operation for less than one year, the organization must include “a proposed budget for two full accounting periods and a current statement of assets and liabilities” with its application.<ref>Ibid.</ref> | ||
| − | ===Additional | + | ===Additional Requirements for Particular Types of 501(c)(3) NGOs=== |
There are additional requirements to those described above for specific types of NGOs when applying for tax-exempt status under section 501(c)(3). Educational organizations, charitable organizations, churches, scientific foundations, literary organizations, amateur sports organizations, and organizations dedicated to the prevention of cruelty to animals or children must meet additional eligibility criteria and/or file additional documents or information with their application. | There are additional requirements to those described above for specific types of NGOs when applying for tax-exempt status under section 501(c)(3). Educational organizations, charitable organizations, churches, scientific foundations, literary organizations, amateur sports organizations, and organizations dedicated to the prevention of cruelty to animals or children must meet additional eligibility criteria and/or file additional documents or information with their application. | ||
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=====Educational Organizations===== | =====Educational Organizations===== | ||
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Organizations that may qualify as tax-exempt educational organizations include:<ref>Ibid., at 22; Internal Revenue Service, Applying for 501(c)(3) Tax-Exempt Status, at 4.</ref> | Organizations that may qualify as tax-exempt educational organizations include:<ref>Ibid., at 22; Internal Revenue Service, Applying for 501(c)(3) Tax-Exempt Status, at 4.</ref> | ||
Revision as of 09:55, 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).
