Tax benefits and exemptions are a primary benefit for nonprofits as well as their donors. Organizations that meet the requirements of Section 501(c)(3) are exempt from federal income tax. You are required to file a 501(c)(3) application to start using your benefits.
While the IRS recognizes more than 30 types of nonprofit organizations, only organizations that qualify for 501(c)(3) status can say that donations to them are tax deductible. According to IRS, organizations described in section 501(c)(3) are commonly referred to as charitable organizations, churches and religious organizations, or private foundations.
The organization must not be operated for the benefit of private interests. 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.
501(c)(3) organizations must pay their employees fair market value wages. To receive its favorable tax treatment, nonprofit organizations must not deviate from their purpose or mission.
BizStarter will be happy to help you prepare your 501(c)(3) application. For best results, given the complexity of the application and compliance process, it’s best to contact us to guide your organization through the entire process.