When an organization wishes to become a tax-exempt organization eligible to accept tax deductible contributions from donors it is not sufficient that it be a non-profit organization. That, however, is the first step. Before the organization can be recognized by the IRS as a tax-exempt organization, it must file organization papers with the state as a non-profit corporation.
Until 1969, there was no legal requirement that an organization must file with the IRS to obtain tax-exempt status. This status was automatic if the organization could demonstrate that it met the requirements set forth in Section 501(c)(3) of the tax code. In other words, an organization claiming tax exempt status was presumed to be qualified unless the IRS determined to the contrary. However, in 1969, Section 508 was added to the tax code, specifying that no organization would be treated as tax-exempt unless it applied to the IRS for tax-exempt status. Thus Form 1023 was born as the tax-exempt status application.
Some exceptions were carved out, however. Three classes of organizations do not have to apply for tax exempt status: Read More
In order for contributions to a charitable organization to be deductible, the organization must be an IRS tax-exempt non-profit organization. Before making a contribution to a charitable organization, potential donors may inquire about the organization’s tax exempt status. In these cases, the organization should be able to demonstrate to the potential donor that it is, in fact, a tax-exempt organization. Many people confuse being a non-profit organization and having IRS tax-exempt status. An organization is established as a non-profit by filing with the state as a non-profit corporation. One becomes a tax-exempt organization by filing Form 1023 (or 1023EZ) with the IRS. However, churches are automatically exempt and do not need to apply for tax-exempt status.
Having tax-exempt status means that the organization is not subject to income tax on Read More
Churches occupy a distinct place in the tax code of the United States. They are tax exempt, but that is not where the uniqueness lies. Many types of charitable organizations are considered tax-exempt non-profit organizations. Most organizations wishing to obtain tax exempt status must first file Form 1023 (or the new Form 1023EZ) with the IRS, seeking approval as an IRS-qualified tax exempt organization. The unique aspect of a church is that qualifying as tax exempt is automatic if it meets the IRS definition of a 501(c)(3) organization:
1. The organization must be organized and operated exclusively for religious, charitable, scientific, or other charitable purpose.
2. Net earnings may not inure to the benefit of any private individual or shareholder. Read More
Martin Luther King Jr said, “Life’s most persistent and urgent question is, what are you doing for others?” Daily routine is an all-consuming machine, we do forget to ask ourselves this question.
Speaking of doing something for others, brings to mind Charitable Organizations. May 15th is creeping up on us real fast. And for those of us who have non-profit organizations as clients, we know that it is the deadline to file Form 990. This form is due on the 15th day of the fifth month after an organization’s tax year ends. Since most use the calender year, the deadline for them is May 15th.
A non-profit or a tax-exempt organization is one which seeks exemption from federal income Read More