Basics of Obtaining 501(c)(3) Tax-Exempt Status

By Claudia Pollak, Esq., Updated October 19, 2020

We are a charitable organization and want to be classified as a 501(c)(3) tax-exempt organization. Where do we start?

You’ve selected the board of directors, drafted the bylaws, and successfully incorporated your organization under your state’s not-for-profit corporation laws. From there, the next – and possibly most daunting – task is submitting the necessary paperwork to the Internal Revenue Service to achieve tax-exempt status. Federal tax-exemption is necessary for exemption from local, state, and federal taxes, to qualify for many types of grants, and to be eligible to receive tax-deductible donations and contributions from individuals and other charitable organizations. While filing paperwork with the IRS isn’t exactly the highlight of starting a charity, the process of obtaining tax-exemption need not be stressful -– especially with the right support.

Basics of Filing for Tax-Exemption

As with any IRS exercise, applying for tax-exempt status will require the submission of various forms and information detailing the organization’s purpose and governing body, beginning with Form 1023 – Application for Tax-Exempt Status. In order to gain retroactive tax-exempt status, you must file Form 1023 within 27 months of the official date of formation. To get started, Form 1023 will require the following information:

• General contact information
• Incorporation status and date
• Governing document information
• Description of activities
• Compensation and financial arrangements with officers and members
• History and specific activities performed
• Financial data
• Public charity status
• Additional information for schools, churches, hospitals, medical research, homes for elderly or low-income individuals.

Once complete, the forms and a copy of the articles of incorporation and several other documents must be filed with the IRS for consideration. These include a statement about the organization’s mission and purposes, and a copy of the conflict of interest policies as well as the bylaws, trust agreement, or another applicable governing instrument. Once the tax-exempt status is obtained, charitable organizations enjoy shelter from income, property, and various other taxes. Additionally, the organization’s benefactors enjoy a tax deduction for their donations to the charity.

If you are a new or existing charitable organization and would like to discuss your options in obtaining tax-exempt status, please do not hesitate to contact Westchester County business law attorney Claudia Pollak today at (914) 908-6220.

By |2020-10-19T22:46:14+00:00August 4, 2015|Business Law, Non Profit Law|
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Claudia Pollak

Claudia Pollak, Esq. is an experienced Westchester and NYC-based employment lawyer representing employees facing discrimination, retaliation or wrongful termination because of their race, disability, pregnancy, sexual orientation, gender, or other protected characteristic. She also advises on executive severance agreements and restrictive covenants. Call her at 914-LAW-9111 (914-529-9111) for a free consultation.

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