Difference between revisions of "How to obtain tax-exempt status"
From NGO Handbook
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Basically, an NGO’s application for federal tax-exempt status must include: | Basically, an NGO’s application for federal tax-exempt status must include: | ||
| − | *IRS Form SS-4 Employee Identification Number | + | *'''IRS Form SS-4 Employee Identification Number'''. |
| − | *The | + | *'''Form 8718 and the appropriate application fee'''. The United States charges an administrative fee to process each application. This form certifies the payment of this fee. The 1023, 8718 and the fee payment in U.S. dollars are sent to the address in Covington, Kentucky listed on the Form 8718. For each of these steps, there is help available on the IRS website or by calling the toll-free number listed on each form. |
| − | *IRS Form 1023 Application for Recognition of Exemption | + | *'''IRS Form 1023: Application for Recognition of Exemption'''. Form 1023 is the application for recognition of tax exempt status. The instructions are outlined in the Pub 557 and within the 1023 form. It is on this form that the organization explains exactly what they do and how they do it. The form requires that the organization provide a copy of the "organizing document." That is the official form or document that created your NGO. It might be a government application, a constitution or other official form. It should be submitted in its original format. Organizations are also asked to provide a document that describes how the organization operates, known in the United States as organizational bylaws. . |
| − | *The required accompanying documents and statements or explanations | + | *The '''required accompanying documents''' and statements or explanations |
| − | *The relevant financial data | + | *The '''relevant financial data''' |
| − | *Additional information related to their particular activities (for certain specific types of NGOs). | + | *'''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: | ||
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===IRS forms=== | ===IRS forms=== | ||
| − | Various IRS Forms, described in this section, are required to be submitted as part of the application for tax-exempt status. In addition to these forms, if an NGO will have a designated appointee representing the organization with the IRS, the NGO must also file IRS Form 2848 Power of Attorney and Declaration of Responsibility and IRS Form 8821 Tax Information Authorization. IRS Form 2848 authorizes someone other than the NGO’s principal officer or [[The Primary Responsibilities of an NGO Executive Director|director]] to represent the organization on matters regarding the application. IRS Form 8821 authorizes any individual, corporation, firm, organization, or [[NGO Networking|partnership]] designated by the applicant NGO to inspect and/or receive the NGO’s confidential tax [[NGO Information Management|information]] in any office of the IRS. | + | Various IRS Forms, described in this section, are required to be submitted as part of the application for tax-exempt status. All forms can be downloaded from the [http://www.irs.gov Internal Revenue Service website] from the [http://www.irs.gov/formspubs/index.html Section on Forms and Publications]. |
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| + | In addition to these forms, ''if'' an NGO will have a designated appointee representing the organization with the IRS, the NGO must also file IRS Form 2848 Power of Attorney and Declaration of Responsibility and IRS Form 8821 Tax Information Authorization. IRS Form 2848 authorizes someone other than the NGO’s principal officer or [[The Primary Responsibilities of an NGO Executive Director|director]] to represent the organization on matters regarding the application. IRS Form 8821 authorizes any individual, corporation, firm, organization, or [[NGO Networking|partnership]] designated by the applicant NGO to inspect and/or receive the NGO’s confidential tax [[NGO Information Management|information]] in any office of the IRS. | ||
=====Form SS-4 Employee Identification Number===== | =====Form SS-4 Employee Identification Number===== | ||
Latest revision as of 12:35, 14 January 2009
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).
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