Difference between revisions of "How to obtain tax-exempt status"
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===Accompanying documents=== | ===Accompanying documents=== | ||
| − | In addition to the required IRS forms, the applicant must submit the NGO’s articles of organization, such as the articles of incorporation, certificate of incorporation, articles of association, trust deed, constitution, or other enabling documents.<ref>Internal Revenue Service, Tax-Exempt Status for Your Organization, at 19. The IRS also provides sample articles of organization. See ibid., at 20-21.</ref> As stated above, the articles or organization must limit the purpose and activities of the NGO to its exempt purposes and state that if the NGO is dissolved, the assets must be distributed for its exempt purposes or to a qualified beneficiary.<ref>Ibid., at 19. This is referred to by the IRS as the organizational test. It is not enough that this limitation is stated in the bylaws or the signed officers’ statements. Ibid. But, the test is met if the document refers to the limits in section 501(c)(3). Ibid. In interpreting the meaning of the articles of organization, the law of the state in which the NGO was organized controls. Ibid.</ref> | + | In addition to the required IRS forms, the applicant must submit the NGO’s articles of organization, such as the [[How to Start an NGO|articles of incorporation]], certificate of incorporation, articles of association, trust deed, constitution, or other enabling documents.<ref>Internal Revenue Service, Tax-Exempt Status for Your Organization, at 19. The IRS also provides sample articles of organization. See ibid., at 20-21.</ref> As stated above, the articles or organization must limit the [[Mission Statement|purpose]] and activities of the NGO to its exempt purposes and state that if the NGO is dissolved, the assets must be distributed for its exempt purposes or to a qualified beneficiary.<ref>Ibid., at 19. This is referred to by the IRS as the organizational test. It is not enough that this limitation is stated in the bylaws or the signed officers’ statements. Ibid. But, the test is met if the document refers to the limits in section 501(c)(3). Ibid. In interpreting the meaning of the articles of organization, the law of the state in which the NGO was organized controls. Ibid.</ref> |
| − | The applicant must also include any amendments to the articles of organization. All copies of the NGO’s enabling documents must be conformed copies | + | The applicant must also include any amendments to the articles of organization. All copies of the NGO’s enabling documents must be conformed copies. That is, the copy must agree with the original and all amendments.<ref>Ibid., at 3.</ref> An officer of the NGO must certify that the document is complete and accurate, and the certification of incorporation must be “approved and dated by an appropriate state official.”<ref>Ibid.</ref> Each attachment to the application must be labeled properly with the name, address and EIN of the NGO applicant, and the applicable section of the application.<ref>Ibid.</ref> |
===Financial data=== | ===Financial data=== | ||
Revision as of 08:44, 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).
