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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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How to obtain a tax exempt status without filing for 501(c)

Resolved Question:

How to obtain a tax exempt status without filing for 501(c) app. Advantages and disadvantages..........
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

LEV :

Hi and welcome to Just Answer!
You may not obtain a tax exempt status without filing for 501(c) ...
Only churches may use tax exempt status without filing.

LEV :

See here - http://www.irs.gov/charities/article/0,,id=136195,00.html
What is the difference between nonprofit and tax-exempt status?


Nonprofit status is a state law concept. Nonprofit 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 nonprofit organizations, organizing as a nonprofit organization at the state level does not automatically grant the organization exemption from federal income tax. To qualify as exempt from federal income tax, an organization must meet requirements set forth in the Internal Revenue Code.

Please be aware that your organization might have additional benefits - such as may be exempted from sales taxes, real estate and property taxes, etc.
The advantages of filing the form 1023 are that you get a letter, proving that you have satisfied IRS requirements for exemption. As a result - donations will be tax deductible for donors. Many donors will not donate unless they receive tax benefits.

LEV :

The disadvantage might be that filing an application takes time, effort, and money.


A 501(c) organization must keep detailed records and submit annual filings to the state and IRS by the deadline in order to keep its active and maintain the exempt status.
Tax filing by the 501(c) organization is public information and is available for everyone.


A nonprofit organization is subject to laws and regulations, including its own articles of incorporation and bylaws. Personal control over such organization is limited.

Customer:

What happens if we don't file form 1023 and how can we be tax exempt and paying no income and sales tax

Customer:

without the IRS approval

Customer:

Donations will not be tax deductible in that case (if it is not approved 501(c).?

Customer:

So basically my question is that without filing form 1023, how we can claim that we are tax exempt organization. Or this will be a false claim, (merely because we registered with the sttate as non profit org.)

LEV :

What happens if we don't file form 1023 and how can we be tax exempt and paying no income and sales tax without the IRS approval?
IRS approval will only affect income taxes. To be exempt from sales taxes - you need approval from your state DOR. If you do not have IRS determination letter - you would not be exempt from income taxes.






Donations will not be tax deductible in that case (if it is not approved 501(c).?






That is correct.



So basically my question is that without filing form 1023, how we can claim that we are tax exempt organization.
Only if your organization is a church you may have tax exempt without filing form 1023. All other organization need to file.
Or this will be a false claim, (merely because we registered with the state as non profit org.)
Registering with the state might provide you tax advantages on the state level. But not on the federal level.



Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22654
Experience: Taxes, Immigration, Labor Relations
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Expert:  Lev replied 1 year ago.
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