Non-profit status is a state-level designation that provides certain tax benefits but does not guarantee federal tax exemption. To qualify for federal tax exemption under section 501(c)(3), an organization must be organized and operated exclusively for exempt purposes such as charitable, religious, educational, or scientific causes. It cannot be organized for private interests and its earnings cannot benefit individuals. It is also restricted in how much political and lobbying activity it can conduct while maintaining tax-exempt status.
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Non-profit status is a state-level designation that provides certain tax benefits but does not guarantee federal tax exemption. To qualify for federal tax exemption under section 501(c)(3), an organization must be organized and operated exclusively for exempt purposes such as charitable, religious, educational, or scientific causes. It cannot be organized for private interests and its earnings cannot benefit individuals. It is also restricted in how much political and lobbying activity it can conduct while maintaining tax-exempt status.
Non-profit status is a state-level designation that provides certain tax benefits but does not guarantee federal tax exemption. To qualify for federal tax exemption under section 501(c)(3), an organization must be organized and operated exclusively for exempt purposes such as charitable, religious, educational, or scientific causes. It cannot be organized for private interests and its earnings cannot benefit individuals. It is also restricted in how much political and lobbying activity it can conduct while maintaining tax-exempt status.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOC, PDF, TXT or read online from Scribd
Non-profit status is a state-level designation that provides certain tax benefits but does not guarantee federal tax exemption. To qualify for federal tax exemption under section 501(c)(3), an organization must be organized and operated exclusively for exempt purposes such as charitable, religious, educational, or scientific causes. It cannot be organized for private interests and its earnings cannot benefit individuals. It is also restricted in how much political and lobbying activity it can conduct while maintaining tax-exempt status.
Copyright:
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What is the difference between non-profit and tax-exempt status?
Non-profit status is a state law concept. Non-profit status may make an organization eligible for certain benefits, such as state sales, property, and income tax exemptions. Although most federal tax-exempt organizations are non-profit organizations, organizing as a non-profit organization at the state level does not automatically grant the organization exemption from federal income tax. To qualify as exempt from federal income taxes, an organization must meet requirements set forth in the Internal Revenue Code. See Types of Tax-Exempt Organizations or Publication 557 for more information.
To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.
Organizations described in section 501(c)(3) are commonly referred to as charitable
organizations. Organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with Code section 170.
The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization's net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.
Section 501(c)(3) organizations are restricted in how much political and legislative (lobbying) activities they may conduct. For a detailed discussion, see Political and Lobbying Activities. For more information about lobbying activities by charities, see the article Lobbying Issues; for more information about political activities of charities, see the FY-2002 CPE topic Election Year Issues.
The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.
