Certain organizations are started not to make a profit for owners, but instead to serve the public good or to provide a benefit to society. These nonprofit organizations are given special Tax-Exempt Status from the Internal Revenue Service since any income that is earned is generally returned to the nonprofit in order to fulfill the organization’s aims. There are different sections of the IRS Code that specify when an organization may become Tax-Exempt and the requirements to achieve Tax-Exempt Status. The majority of Nonprofit Organizations will seek Tax-Exempt Status under Internal Revenue Code section 501(c)(3), which provides the exemption for companies organized and operated for charitable purposes.
Before submitting your application to the IRS for Tax-Exempt Status, it is imperative you understand the meaning of Charitable Purpose to qualify as the official IRS definition is specific on this issue. An experienced Scottsdale Arizona nonprofit corporations lawyer at Lotzar Law Firm, P.C. can assist you in determining if your organization meets the criteria. Our attorneys can also help you to complete your application with the IRS for Tax-Exempt Status and to demonstrate that the goal of your organization should qualify you as a “Charity.”
What is a Charitable Purpose to Qualify as a Nonprofit?
In order to qualify as a 501(c)(3) Tax-Exempt Organization as a Charitable Purpose your business may include:
- Relieving the distressed.
- Promoting health.
- Reducing the burden of government to provide services to the people.
- Advancing religion.
- Advancing education.
- Advancing science.
- Promoting social welfare.
- Promoting the arts.
- Serving as an instrumentality of government.
In order for your organization to have a Charitable Purpose, in order to qualify as a nonprofit, the organization must specify its specific purpose in its Charter and the Charter must make clear that the goals of the enterprise are to achieve one of the objectives that are considered charitable.
When the IRS receives information from the organization on an Application for Tax-Exempt Status, it will review the Charter to determine if designation as a nonprofit is appropriate. If so, the organization will no longer be taxed on income used to fulfill its charitable goals. Those who make donations to a Nonprofit Charitable Organization may also take deductions for the donations. This can make it easier to raise funds to fulfill your organization’s purpose.
Determining the definition of a charitable organization can be challenging and you may be uncertain as to whether your business should qualify for Tax-Exempt Status under 501(c)(3) of the Internal Revenue Code. It is always advisable to consult with a qualified and experienced nonprofit lawyer at Lotzar law Firm, P.C. for help when applying for Tax-Exempt Status for your organization. Our experienced attorneys can review your Charter and other relevant organization information. Our attorneys can also assist in completing an IRS application and advise you to ensure you comply with all legal requirements necessary to maintain your not-for-profit status. Call today to schedule a consultation and learn more about how our Scottsdale Arizona nonprofit formation lawyers can assist you.
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