Difference between revisions of "How to obtain tax-exempt status"
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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. <ref>See http://www.irs.gov/charities/article/0,,id=129028,00.html for a list of state and local tax authority Web sites.</ref>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.<ref>For tax year 2004, the IRS received tax returns from approximately 218,000 tax-exempt organizations. See Internal Revenue Service, “SOI Tax Stats - Charities & Other Tax-Exempt Organizations Statistics,” http://www.irs.gov/taxstats/charitablestats/article/0,,id=97176,00.html#top.</ref> 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). | 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. <ref>See http://www.irs.gov/charities/article/0,,id=129028,00.html for a list of state and local tax authority Web sites.</ref>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.<ref>For tax year 2004, the IRS received tax returns from approximately 218,000 tax-exempt organizations. See Internal Revenue Service, “SOI Tax Stats - Charities & Other Tax-Exempt Organizations Statistics,” http://www.irs.gov/taxstats/charitablestats/article/0,,id=97176,00.html#top.</ref> 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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==26 U.S.C. § 501(c)(3) exemption from tax on corporations, certain trusts, and so forth== | ==26 U.S.C. § 501(c)(3) exemption from tax on corporations, certain trusts, and so forth== | ||
Revision as of 10:58, 17 July 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).
