Difference between revisions of "How to obtain tax-exempt status"
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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> | ||
| − | + | *Schools or colleges | |
| − | + | *Groups that hold public discussions and lectures | |
| − | + | *Correspondence schools | |
| − | + | *Museums and zoos | |
| − | + | *Day-care centers. | |
The IRS defines educational as the instruction of individuals to improve and/or develop their capabilities or “the instruction of the public on subjects useful to individuals and beneficial to the community.”<ref>Internal Revenue Service, Tax-Exempt Status for Your Organization, at 22.</ref> An NGO’s educational method determines whether an NGO qualifies as educational.<ref>Ibid.</ref> The IRS looks at four factors:<ref>Ibid.</ref> | The IRS defines educational as the instruction of individuals to improve and/or develop their capabilities or “the instruction of the public on subjects useful to individuals and beneficial to the community.”<ref>Internal Revenue Service, Tax-Exempt Status for Your Organization, at 22.</ref> An NGO’s educational method determines whether an NGO qualifies as educational.<ref>Ibid.</ref> The IRS looks at four factors:<ref>Ibid.</ref> | ||
Revision as of 10:50, 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).
