The tax law of the United States recognizes twenty-eight different types of non-profit organizations. One of the most common types of non-profit organizations is the section 501c3 organizations. Section 501c3 is a tax code that authorizes particular kinds of non-profit organizations in the United States. Such non-profit organizations must have charitable, educational, scientific, or religious. Section 501c3 organizations get a huge advantage of tax exemption for making certain kinds of contributions for the welfare of the society and economy.
Every 501c3 organization is classified by the IRS as either a public charity or a private foundation. The public charities and private foundations file different annual returns with the IRS. The public charities of the country file Form 990 or 990-EZ and private foundations file Form 990-PF. Getting the tax-exemption facility from the government as a private foundation is tougher than being a public charity due to certain factors.
Anyway, we are going to talk about section 501c3, IRS, and the IRS paperwork or we can say charity IRS application in this blog. It will help you to get an overall understanding of the subject matter.
Understand the section 501c3
501c3 is a status that can be obtained by non-profit organizations in the United States. Section 501c3 is a part of the Internal Revenue Code (IRC). It allows federal tax exemptions for non-profit organizations in the United States. This status has been developed for public charities, private foundations, corporates, trusts, Limited Liability Corporations (LLC), community chests, and incorporated associations. So these are the types of entities that can apply to obtain the 501c3 as a non-profit organization.
Understand the IRS
The term IRS means the Internal Revenue Services. The IRS is a revenue service for the government of the United States. This service is responsible for collecting taxes. Internal Revenue Service (IRS) is also responsible for administrating the Internal Revenue Code (IRC).
Basically, the IRS is an agency of the U.S. government. The government agency has the responsibility for the collection of tax and enforcement of tax laws. The IRS has been established in the year 1862. The agency operates under the authority of the U.S. Department of the Treasury.
Know about the process of the charity IRS application
The procedure of the charity IRS application involves going through a lot of incorporation paperwork and filling out required forms. We have mentioned the whole procedure in the most simplified manner. So let’s discuss this further…
First and foremost focus on IRS paperwork.
The procedure for tax exemption of the non-profit organization includes a lot of complex paperwork. That is why it is extremely important to prepare and file your incorporation paperwork. Within your incorporation paperwork you will be able to officially declare the following important things about your organization:
a) Organization’s name
b) Location
c) Purpose
d) Initial Board of Directors and many more…
You must file ‘articles of information.’ with your state’s corporate filing office. You will be ready to send the incorporation paperwork to your filing office after the completion of it.
You will need to apply for exempt status with the Internal Revenue Service (IRS). By filing IRS Form 1023 get the recognition of tax exemption. Before you start filling out form 1023 make sure you have done the following things:
a) Filed your articles of incorporation.
b) Prepared your bylaws.
c) Held your first non-profit meeting.
The IRS is going to ask you for some specific details that should be documented in your charity IRS application. Make sure that your articles of incorporation and bylaws include the following information:
a) A statement of your exempt purpose.
b) A dissolution clause.
c) A conflict of interest clause.
Consider answering about your...
a) Basic information.
b) A copy of your 'articles of incorporation’ and your bylaws added to the form of application.
c) Clauses.
d) A detailed and narrative description of all of your organization's activities.
e) Information about all proposed compensation.
f) A statement of revenues.
g) A statement of expenses.
h) A statement of balance sheet.
Conclusion
So now you know about the charity IRS application it is your time to take all the necessary steps to obtain the 501c3 status for your non-profit organization.
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