Difference between revisions of "How to obtain tax-exempt status"
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An NGO’s application for federal tax-exempt status must include: | An NGO’s application for federal tax-exempt status must include: | ||
| − | + | *IRS Form SS-4 Employee Identification Number | |
| − | + | *the appropriate application fee | |
| − | + | *IRS Form 1023 Application for Recognition of Exemption | |
| − | + | *the required accompanying documents and statements or explanations | |
| − | + | *the relevant financial data | |
| − | + | *additional information related to their particular activities (for certain specific types of NGOs). | |
An NGO’s application package must show that the following is true: | An NGO’s application package must show that the following is true: | ||
| − | # the NGO is organized and operated exclusively for its exempt purposes | + | #the NGO is organized and operated exclusively for its exempt purposes |
| − | # no earnings will go to shareholders or individuals | + | #no earnings will go to shareholders or individuals |
| − | # lobbying and political campaigns are not “a substantial part of its activities.”<ref>Ibid., at 17.</ref> | + | #lobbying and political campaigns are not “a substantial part of its activities.”<ref>Ibid., at 17.</ref> |
| − | Upon submission the NGO will receive acknowledgement from the IRS | + | Upon submission, the NGO will receive acknowledgement from the IRS that they received the application or a letter seeking more information. Time estimates for processing an application average around four to six months. Applications that do not need additional work, or are not missing information, can be processed in six to ten weeks. |
===IRS forms=== | ===IRS forms=== | ||
Revision as of 08:11, 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).
