Subsection (a)(1) includes churches, schools, hospitals, and other charities that are publicly supported by a broad range of donors, including those described in section 170(b)(1)(a)(vi) as your organization is. As long as you continue to file the annual tax returns and don’t engage in activities to jeopardize your status, the 501(c)(3) designation remains indefinitely. However, if your organization has three years of gross receipts under $50,000 and assets of less than $250,000, you may be able to file the simpler Form 1023-EZ. To file this form, you must first fill out the Form 1023-EZ Eligibility Worksheet in the Instructions for Form 1023 to determine your eligibility. If your organization is eligible to use Form 1023-EZ, the user fee fixed assets is $275 and is due at the time of filing on Pay.gov. To write your bylaws, start by finding out what your state includes in its nonprofit corporate act for nonprofit bylaw inclusions.
3 Requirements Checklist
Section 501(c)(3) is the portion of the US Internal Revenue Code that allows for federal tax exemption of nonprofit organizations that meet the code’s requirements. These nonprofits may be considered public charities, private foundations, or private operating foundations, which we’ll explain in more detail later. Private foundations are a form of 501(c)(3) which is often further divided between operating foundations and non-operating foundations. As the name implies, non-operating private foundations do not actively engage in charitable activities or services. Rather, they raise money to distribute as grants to other nonprofits and charitable organizations. Although not actively participating in activities, they must still define and state their charitable goals and then fund other organizations who engage in actions furthering those goals.
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26 U.S.C. § 170 provides a deduction, for federal income tax purposes, for donors who make charitable contributions to most types of 501(c)(3) organizations. Regulations specify which such deductions must be verified in order to be allowed. In order to remain a public charity (and not a private foundation), a 501(c)(3) must obtain at least 1/3 of its donated revenue from a fairly broad base of public support.
Apply for 501(c)( Status
For information on how to apply for an EIN, check out this compact guide to EINs. Also, contributions to private operating foundations as described in Internal Revenue Code section 4942(j)(3) are deductible by the donors to the extent of 50% of the donor’s adjusted gross income. Each state has different requirements for filing your articles of incorporation. For this reason, we advise you to seek a business formation or business incorporation lawyer at the local level for direction on how to correctly file incorporation paperwork. Other nonprofitsOrganizations meeting specified requirements may qualify for exemption under subsections other than Section 501(c)(3). These include social welfare organizations, civic leagues, social clubs, labor organizations and business leagues.
- So what do these terms mean, why does it matter which one you use, and how do you get your nonprofit on the right track?
- At this point, the board needs to make the articles of incorporation part of the official record.
- I was impressed by how quickly Alan, my Business Formation Specialist, reached out to me.
- The first step is to apply with the Internal Revenue Service (IRS) for the official 501(c)(3) status.
- A violation example would be using organizational funds to support a specific political candidate.
- Additionally, our team knows the ins and outs of nonprofit compliance, ensuring organizations like yours reduce risk and advance their missions.
Using Legal Zoom made my business…
Nonprofit corporations make up the vast majority of all 501(c)(3) entities. Believe it or not, accuracy isn’t just for your donors and board—it also https://www.bookstime.com/ helps your search engine rankings. If your website uses “5013c” instead of “501(c)(3),” you might be hurting your ability to show up in search results. Using “501(c)(3)” instead of “5013c” isn’t just about being technically correct—it’s about professionalism and credibility. So what do these terms mean, why does it matter which one you use, and how do you get your nonprofit on the right track?
Tax exemption
This resource is based on laws and guidance available as of the date of original publication. Subsequent legislation, including the One Big Beautiful Bill Act of 2025, may have introduced changes not reflected in this content. To ensure you have the most current information for your circumstances, we encourage you to consult the most recent IRS guidance or a qualified tax professional. Consider people in your personal and social media networks and people in your community who might share your commitment to your nonprofit’s mission. Bundle essential services, like Form 990 preparation and fundraising registration, plus consulting appointment access to our team of nonprofit professionals. You can trust our team of professionals to provide the services you need, when you need them, so that your nonprofit is always in good standing.
- Processing times vary greatly, but it typically takes the IRS between 3-9 months to review your submission and issue a determination letter.
- Trust our tax-exemption professionals to assist your organization with this critical tax filing.
- Grantmakers usually fund organizations that qualify for public charity status under Section 501(c)(3) of the Internal Revenue Code.
- However, without official IRS 501(c)(3) tax-exempt status, the group is not tax-exempt, and people giving it cannot deduct the amount from their taxes.
- Donors love the convenience of recurring donations because they can regularly support their favorite organizations without needing to think about it.
- You won’t receive a status or progress update due to tax return confidentiality under Section 6103 of the Internal Revenue Code.
Look for attorneys and accountants with nonprofit experience to ensure you’re getting the best guidance throughout this process. Should you wish to change your name or address in the future, the IRS mandates that an exempt organization must report the name, address, and structural and operational changes. When an organization files an annual return (such 5013c as Form 990 or 990-EZ), it must report the changes on its return. If your organization needs to report a change of name, see Change of Name- Exempt Organizations. If you need to report a change of address, see Change of Address – Exempt Organizations. Keep solid accounting records of income, expenses, assets, and liabilities.
- If you find an organization listed on the Auto-Revocation List, it may have been reinstated by the IRS since the automatic revocation date.
- Here, we provide an overview of the form so you can familiarize yourself with the type of questions you’ll be asked to address.
- Formally becoming a 501(c)(3) also elevates your position in the eyes of others and may make it easier for you to win support and receive donations to help your cause.
- They are not required to be publicly supported, so revenue may come from a relatively small number of donors, even single individuals or families.
The type of tax exemption you qualify for depends on the purpose of your organization. A nonprofit organization is one whose purpose is not to earn a profit but instead to do charitable work or perform a public service. A tax-exempt organization is officially recognized by the Internal Revenue Service (IRS) as exempt from paying federal income taxes. This section relates to your nonprofit’s classification as a public charity or private foundation. Public charities, which include churches, schools, hospitals, and a number of other groups, derive most of their support from the public or receive most of their revenue from activities related to tax-exempt purposes. Most groups want to be classified as a public charity because private foundations are subject to strict operating rules and regulations.
