Difference between revisions of "How to obtain tax-exempt status"
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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> | ||
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# if viewpoints are “not aimed at developing an understanding on the part of the audience.” | # if viewpoints are “not aimed at developing an understanding on the part of the audience.” | ||
| − | + | '''Required Additional Documents and Information''' | |
In addition to Form 1023 and the other accompanying documents and statements, educational organizations must explain “by whom and where their activities are or will be conducted and the amount of admission fees, if any.”<ref>Ibid.</ref> These NGOs must also submit a copy of any “pertinent contracts, agreements, publications, programs,” or similar documents with their tax-exempt application.<ref>Ibid.</ref> If the NGO is a school, it must submit information to the IRS regarding tuition, the number of faculty and students, the courses of study and degrees, and a copy of the school catalog.<ref>Ibid.</ref> | In addition to Form 1023 and the other accompanying documents and statements, educational organizations must explain “by whom and where their activities are or will be conducted and the amount of admission fees, if any.”<ref>Ibid.</ref> These NGOs must also submit a copy of any “pertinent contracts, agreements, publications, programs,” or similar documents with their tax-exempt application.<ref>Ibid.</ref> If the NGO is a school, it must submit information to the IRS regarding tuition, the number of faculty and students, the courses of study and degrees, and a copy of the school catalog.<ref>Ibid.</ref> | ||
Private schools must complete and file Schedule B of Form 1023, which requires information on the operations and racial nondiscriminatory policy of the NGO, such as:<ref>Ibid.</ref> | Private schools must complete and file Schedule B of Form 1023, which requires information on the operations and racial nondiscriminatory policy of the NGO, such as:<ref>Ibid.</ref> | ||
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Additionally, the schools must include a statement in their governing documents that it has a racially nondiscriminatory policy and the NGO must circulate information on the school’s admission policies.<ref>Ibid. Further, private schools must keep four specific types of records for a minimum of three years beginning after the year of compilation. See ibid. at 23-24.</ref> | Additionally, the schools must include a statement in their governing documents that it has a racially nondiscriminatory policy and the NGO must circulate information on the school’s admission policies.<ref>Ibid. Further, private schools must keep four specific types of records for a minimum of three years beginning after the year of compilation. See ibid. at 23-24.</ref> | ||
| − | + | ====Charitable organizations==== | |
| − | + | ''Required additional documents and information'' | |
In addition to Form 1023 and the other accompanying documents and statements, a charitable organization must include information in its application that shows that the NGO is organized and operated for a purpose “beneficial to the public interest.”<ref>Ibid., at 24.</ref> For example:<ref>Ibid. at 25.</ref> | In addition to Form 1023 and the other accompanying documents and statements, a charitable organization must include information in its application that shows that the NGO is organized and operated for a purpose “beneficial to the public interest.”<ref>Ibid., at 24.</ref> For example:<ref>Ibid. at 25.</ref> | ||
Revision as of 10:02, 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).
