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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3913
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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does a non profit corp that never filed for 501c status and

Resolved Question:

does a non profit corp that never filed for 501c status and operated as a corp for profit, filing with the irs as a corp and payed taxes, become recognized as a for profit after 3 years?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

NPVAdvisor :

Hi,

JACUSTOMER-6xl2spi8- :

hello

NPVAdvisor :

It's not just automatice, you'll need to do the filing

JACUSTOMER-6xl2spi8- :

what kind of filing?

JACUSTOMER-6xl2spi8- :

do tyou know what form and it is after 3 years that can switch, right? do you know where i can verify that on SOS ?

NPVAdvisor :

I'll get the form for you, but there's a great IRS question (step by step) for see whether you qualify:

JACUSTOMER-6xl2spi8- :

ok, great

NPVAdvisor :

Here's the form:

NPVAdvisor :

IRS for 1023

JACUSTOMER-6xl2spi8- :

no, im not trying to become a non profit im trying to be a corp that originally filed as a non profit with sos but never got 501c status.

NPVAdvisor :

and here's the eon for pretty much all the other non-profit forms OTHER than 501(c)(3)

JACUSTOMER-6xl2spi8- :

im in the middle of a divorce and trying to prove my ownership of 51% but my x is saying ts a non profit because it filed as one but it never operated as one.

NPVAdvisor :

ahhh

NPVAdvisor :

the 1023 would still be required to tyrun your corp into a non-profit corp

JACUSTOMER-6xl2spi8- :

our irs filings show me at 51%

JACUSTOMER-6xl2spi8- :

but i a not trying to turn it into a non profit

NPVAdvisor :

If you've been filing the 1120 then no-one will every say that it's a non-profit

JACUSTOMER-6xl2spi8- :

sos is saying it is

NPVAdvisor :

That's my point ... one has to jump through all KIND of hoops to

NPVAdvisor :

get no-profit status

NPVAdvisor :

if you don't have that LETTER OF DETERMINATION form IRS

NPVAdvisor :

then you aren't

NPVAdvisor :

Who is sos?

NPVAdvisor :

only IRS ges to make that determination at the federal level

JACUSTOMER-6xl2spi8- :

secratary of state

NPVAdvisor :

]ahhhh

NPVAdvisor :

Now, for the state you may have FILED that way ... but your proof is in the kind of federal returns you've filed)

NPVAdvisor :

If you were really operating as a non-profit...

NPVAdvisor :

you'd be filing a 990

NPVAdvisor :

not an 1120

JACUSTOMER-6xl2spi8- :

they said the state overrides the federal

JACUSTOMER-6xl2spi8- :

its crazy and i know they are wrong

NPVAdvisor :

No Ma'am

NPVAdvisor :

Federal Supremacy clause of the Constitution

NPVAdvisor :

Have you been showing a profit?

JACUSTOMER-6xl2spi8- :

where can i find that?

NPVAdvisor :

and what about the state returns each year?

JACUSTOMER-6xl2spi8- :

franchise tax

JACUSTOMER-6xl2spi8- :

all paid tax and shows me at 51%

JACUSTOMER-6xl2spi8- :

crazy, right?

JACUSTOMER-6xl2spi8- :

hate my x

NPVAdvisor :

Not very smart, honestly...non-profits don't pay tax

NPVAdvisor :

they're exempt

JACUSTOMER-6xl2spi8- :

they also threw me out of my director chair without giving me a chance to defend it and without even notifying me of any meeting

NPVAdvisor :

SO, even the state returns will show you as s for-profit ... If you had tax axampt status there would be no tax

NPVAdvisor :

That's illegal too, most likelyt (First state law governs, then articles of incorporation, then by-aws of te corp

NPVAdvisor :

(sorry for the typos)

NPVAdvisor :

but he really has no case

NPVAdvisor :

you should just get your attorney to look at the articles of incorporation

NPVAdvisor :

on that one

NPVAdvisor :

on the non-proft part, he doesn't have a leg to stad on

JACUSTOMER-6xl2spi8- :

there are none so we have to go by BOC

NPVAdvisor :

Believe me there are state statutes tht govern what happens when there are no articles

NPVAdvisor :

C-crop or s_corp?

JACUSTOMER-6xl2spi8- :

C

JACUSTOMER-6xl2spi8- :

i know there are, but i dont know where to look so i got on here in hopes for someone who can find

NPVAdvisor :

The have your atty look at the statues (state laws) regarding C-Corps

NPVAdvisor :

Hang on just a second, let me look at something for you

JACUSTOMER-6xl2spi8- :

all i can afford right now is my divorce attorney

JACUSTOMER-6xl2spi8- :

i know what he did was illegal but i wonder what punishment that is?

NPVAdvisor :

Let me see if I can get him/her a couple of citations for TX state law, this isn't rocket science for any atty ... they should be able to easily sho that you can't just be throw out

NPVAdvisor :

just a sec

NPVAdvisor :

In the divorce proceeding, you would just sue for what's rightfully yours

NPVAdvisor :

just because they had some meeting does't actually change the ownership

NPVAdvisor :

What is your title, "president, etc." ?

JACUSTOMER-6xl2spi8- :

i am president and governing director and director

JACUSTOMER-6xl2spi8- :

he is tresusrer and director

NPVAdvisor :




(a) Subject to this code and the governing documents of the entity, notice of a meeting of the owners, members, or governing persons of a domestic entity, or a committee of the owners, members, or governing persons, must:




(1) be given in the manner determined by the governing authority of the entity; and





(2) state the date and time of the meeting and:




(A) if the meeting is not held solely by using a conference telephone or other communications system authorized by Section 6.002, the location of the meeting; or





(B) if the meeting is held solely or in part by using a conference telephone or other communications system authorized by Section 6.002, the form of communications system to be used for the meeting and the means of accessing the communications system.






TX BUS ORG § 6.051

NPVAdvisor :


(b) Subject to this code and the governing documents of a domestic entity, notice of a meeting that is:




(1) mailed is considered to be given on the date notice is deposited in the United States mail with postage paid in an envelope addressed to the person at the person's address as it appears on the ownership or membership records of the entity; and





(2) transmitted by facsimile or electronic message is considered to be given when the facsimile or electronic message is transmitted to a facsimile number or an electronic message address provided by the person, or to which the person consents, for the purpose of receiving notice.





TX BUS ORG § 6.051
JACUSTOMER-6xl2spi8- :

i got a txt message later where i asked if i was removed and he said yes

JACUSTOMER-6xl2spi8- :

thats all i got

JACUSTOMER-6xl2spi8- :

no notice or chance to defend my chair

NPVAdvisor :

's silly -

JACUSTOMER-6xl2spi8- :

i know

NPVAdvisor :

You have voting rights

JACUSTOMER-6xl2spi8- :

is there any clause that says they can do that under certain circumstances?

NPVAdvisor :

They would have to petition a court, have you declared incmpetent, etc

JACUSTOMER-6xl2spi8- :

they tried to investigate me for bugus charges of creating a hostile work environment...in TEXAS!

NPVAdvisor :

They cany just say they did it

NPVAdvisor :

That's Title VII

NPVAdvisor :

also requires a court

NPVAdvisor :

or at least a judge and summary judgement

NPVAdvisor :

and that cannot happent without your presence and testimony

JACUSTOMER-6xl2spi8- :

what if they felt it needed to be immediate for the safety of the company, because...oh i dont know, i might call someone a goofy name, which ive never done, but ...

NPVAdvisor :

NO, ownership of corporatons doen't just change

NPVAdvisor :

All you have to do is check with Sec of State

JACUSTOMER-6xl2spi8- :

so there is absolutely no way to do that? my company tax atorbey resigned when he heard what they did.

NPVAdvisor :

The registration is a public record

JACUSTOMER-6xl2spi8- :

he told him not to but he did it anyway

JACUSTOMER-6xl2spi8- :

what registration? whats that?

NPVAdvisor :

Your compnay registration iwth the state

JACUSTOMER-6xl2spi8- :

oh, that, i did

NPVAdvisor :

the board and officers are a matter of public record

NPVAdvisor :

whatevers there is what it is

JACUSTOMER-6xl2spi8- :

he did change it but i can show still the most recent record says i am director 2 times and him once

JACUSTOMER-6xl2spi8- :

so, what kind of charges can i get him on for what he did?

NPVAdvisor :

You teo are the only directors?

NPVAdvisor :

Fraud and deceipt

NPVAdvisor :

Theft by conversoion

JACUSTOMER-6xl2spi8- :

yes, but he added my dad and they voted me out and replaced my chair with someone else

NPVAdvisor :

embezzlement

JACUSTOMER-6xl2spi8- :

they locked me out of the bank accounts

NPVAdvisor :

but he can't just add a director, without your signature ..... so now....

NPVAdvisor :

forgery

JACUSTOMER-6xl2spi8- :

i know! and he keeps passing this paper around, even the address he uses for my dad is not my dads address! and its not my dads name he uses.

JACUSTOMER-6xl2spi8- :

he added my dad as "chris" when his legal name is raymond

NPVAdvisor :

I would go right to the police/sheriff and charge him with fraud, embezzlement, and forgery

NPVAdvisor :

Of sue him for the corresponding civil charges and have HIUM reoved as an equitable remesy at the very least

JACUSTOMER-6xl2spi8- :

then he told my dad he was going to transfer the company over and give my dad 20% and keep 80% and give me half of the 80...but i own 51%!

NPVAdvisor :

"equitable remedy"

NPVAdvisor :

yeah, it's all kind of goofy

NPVAdvisor :

none of tis is really possible

JACUSTOMER-6xl2spi8- :

i have that recorded on my phone.

NPVAdvisor :

if you own 51% and you're both directors having one vote

JACUSTOMER-6xl2spi8- :

i recorded a few of the conversations with my dad

NPVAdvisor :

then he really has no power to do any of this stuff ... it's all ust words

JACUSTOMER-6xl2spi8- :

he put me on admin leave first and then voted me out when i was on eave

JACUSTOMER-6xl2spi8- :

leave

NPVAdvisor :

Based on what you've told me, you really hold all the cards ...

NPVAdvisor :

He can't just PUT you on leave, ahatever that is

JACUSTOMER-6xl2spi8- :

i know, but proving it...to who?

NPVAdvisor :

2 votes, 51% .... it all stops there ... the rest of it's just folly

JACUSTOMER-6xl2spi8- :

i got a letter from HR saying i was put on administrative leave and being investigated (still dont know what for, but they told my dad it was for creating a hostile work environment)

NPVAdvisor :

you either have to go to the sherriff/policy and make criminal charges of fraud, theft by conversion, forgery OR sue him in a civil action for the same thing

JACUSTOMER-6xl2spi8- :

but i didnt and have proof i dodnt but they never asked me my side of the story

NPVAdvisor :

and on the hostile work environment... that's crap to

NPVAdvisor :

if no-one has filed with the EEOC... the he's just getting someone to write a letter

JACUSTOMER-6xl2spi8- :

and noone has from what he said

NPVAdvisor :

You have to be served for any of that to be real

NPVAdvisor :

right

NPVAdvisor :

51%, 2 votes

NPVAdvisor :

the rest of it's words

JACUSTOMER-6xl2spi8- :

i think he was just buying time and planned to switch the company out from under me and it backfired when i filed for divorce

JACUSTOMER-6xl2spi8- :

have to be served what?

NPVAdvisor :

Again, unless he gets a court order there's not way to "switch ownership"

JACUSTOMER-6xl2spi8- :

i got an email of admin leave and a txt about my removal from chair

NPVAdvisor :

Sounds like you beat him tothe punch by taking the first real legal action

NPVAdvisor :

words

JACUSTOMER-6xl2spi8- :

he says there is no owners because it filed as a non profit, which takes me back to the originak qu...

NPVAdvisor :

on;y a court pof law or administrative agency can do that

NPVAdvisor :

non-profits don't pay taxes

JACUSTOMER-6xl2spi8- :

SOS says some corp non profits do.

NPVAdvisor :

sorry, but even your divorce attorney should know this is all just words

NPVAdvisor :

NOPE they lose their tax exempt status, unless the reserves are put ntoward the charitable purpose

NPVAdvisor :

what doe the company do?

JACUSTOMER-6xl2spi8- :

so...after 3 years, of a non profit acting as a for profit, doesnt it then revert to for profit?

JACUSTOMER-6xl2spi8- :

autism therapy for children

JACUSTOMER-6xl2spi8- :

i built the entire thing for my daughter

NPVAdvisor :

If you never got a letter of determination for the IRS you were never a non-profit to begin with

NPVAdvisor :

You may have files that way with the state originally

JACUSTOMER-6xl2spi8- :

husband was suppose to do the biz side but has screwed it all up

NPVAdvisor :

Just take a copy of the tax returns

NPVAdvisor :

sounds like it

JACUSTOMER-6xl2spi8- :

take them to who?

NPVAdvisor :

My advice?

JACUSTOMER-6xl2spi8- :

yes

NPVAdvisor :

Just push hard for everything that's rightfully your in the divorce

JACUSTOMER-6xl2spi8- :

and so i am

NPVAdvisor :

get your attorney to (during the discovery phase)

NPVAdvisor :

ask for the actual legal dosuments that back up these words

NPVAdvisor :

there won't be any, unless he frged your name

JACUSTOMER-6xl2spi8- :

right

NPVAdvisor :

If he won't compe up with what you ask for

JACUSTOMER-6xl2spi8- :

this could take a year

NPVAdvisor :

that's comtempt of court

NPVAdvisor :

I understan.... If I were you I'd get the sheriff to go there and impose yourself

NPVAdvisor :

If you own 51% that's all there is to it

JACUSTOMER-6xl2spi8- :

but they already went to the sherriff and told them all sorts of crap

JACUSTOMER-6xl2spi8- :

and the bank

NPVAdvisor :

claims have to be substantiated

NPVAdvisor :

same thing there

JACUSTOMER-6xl2spi8- :

the police are across the street from our office

NPVAdvisor :

If you own it, have your attorney put a lien on them

JACUSTOMER-6xl2spi8- :

he is dragging around an edited form from the sos

NPVAdvisor :

they can't just change ownershi[ without YOUR SIGNATURE

JACUSTOMER-6xl2spi8- :

what kind of lein?

NPVAdvisor :

FORGERY

NPVAdvisor :

EMBEZZLEMENT

NPVAdvisor :

THEFT BY AONVERSION

JACUSTOMER-6xl2spi8- :

i know and ive asked for the paper with my signature but he says its the original but it is not

JACUSTOMER-6xl2spi8- :

defamation of charactor

NPVAdvisor :

Ther it is

NPVAdvisor :

that's what it all turns on'

JACUSTOMER-6xl2spi8- :

that one signature?

NPVAdvisor :

you'r going to have to sue him or go the criminal route

JACUSTOMER-6xl2spi8- :

and the fact the sec of state is saying its a non profit but it is not

NPVAdvisor :

thatose are your only two options

JACUSTOMER-6xl2spi8- :

and he knows im too nice

JACUSTOMER-6xl2spi8- :

i dont want anyone to go to jail

JACUSTOMER-6xl2spi8- :

not even him as much as i hate him for this

NPVAdvisor :

Now we're getting down to it

NPVAdvisor :

He's oput nyou int this position

NPVAdvisor :

if you don

NPVAdvisor :

t press criminal charges, then ...

NPVAdvisor :

you sue him under a civi; action

NPVAdvisor :

forgery, is also a tort

JACUSTOMER-6xl2spi8- :

he has nothing

NPVAdvisor :

just to get show true ownership

JACUSTOMER-6xl2spi8- :

breech of fiduciary duty is as well

NPVAdvisor :

you don't have to sue for damages, you can ask for the equitable remedy of getting him out of there

NPVAdvisor :

take it back (although you really never lost it, just words)

JACUSTOMER-6xl2spi8- :

ok. well thank you

NPVAdvisor :

Sorry I couldn't make it easier.... but based on what you've told ne he really has no rights here

JACUSTOMER-6xl2spi8- :

i know its somewhere about non profit corp droping its non profit part after 3 years, but i dont know where it is. i think its in the BOC, if you find it, please let me know. ill pay for that!

NPVAdvisor :

you know, threat of civil suit from a lawyer, can be a place to start ... you may NOT have to take it to trial

JACUSTOMER-6xl2spi8- :

i know and he must know that, unless he drank his own kool-aid

NPVAdvisor :

This doesn't turn on whether you are non-profit or not... taht's crap too 51% is 51%

JACUSTOMER-6xl2spi8- :

maybe i can bargain with it for custody

JACUSTOMER-6xl2spi8- :

he says no owners because it filed as a non profit and got the fricken sec of state on the phone with my dad who told my dad that it is considered a non profit without non profit staus

NPVAdvisor :

Ok, sorry, I thought you said you ownder 51%

JACUSTOMER-6xl2spi8- :

what the heck is that?! thats ridiculous to even exist but it does.

JACUSTOMER-6xl2spi8- :

i do!

NPVAdvisor :

yes, a non-profit doesn't have to be set up with owners

NPVAdvisor :

BUT a non-profit can't earn money aee this:

JACUSTOMER-6xl2spi8- :

its on my tax returns its on our company franchise tax filings

NPVAdvisor :

See this, re:Texas non-profits:

NPVAdvisor :

Although a nonprofit corporation can choose to have members who have voting rights, many nonprofit corporations decide not to adopt a membership structure and, in the interests of efficiency, leave the decision making up to the directors. If a nonprofit does opt for a membership structure, the members participate in major corporate decisions. Specifically, the members have the exclusive right to elect directors, amend articles and bylaws, and vote on a merger or dissolution of the corporation

NPVAdvisor :

so, even if set up this way, he would havge to have forged something to take away your voting rights

JACUSTOMER-6xl2spi8- :

right

NPVAdvisor :

Making a Profit From "Unrelated" Business Activities


Sometimes nonprofits make money in ways that aren't related to their nonprofit purposes. While nonprofits can usually earn unrelated business income without jeopardizing their nonprofit status, they have to pay corporate income taxes on it, under both state and federal corporate tax rules. (Generally, the first $1,000 of unrelated income is not taxed, but the remainder is.)

NPVAdvisor :

In some situations, excessive unrelated business activities can also prompt the IRS to reconsider a nonprofit's 501(c)(3) tax-exempt status. To avoid this, a nonprofit should never let its unrelated business activities reach the point where it starts to look like a regular commercial business. For instance, unrelated business activities shouldn't absorb a substantial amount of staff time, require additional paid staff or volunteers, or produce much more income than that generated by the organization's exempt activities.

NPVAdvisor :

I think it's the voting right s issue that the pivotal issue

JACUSTOMER-6xl2spi8- :

he got me out to dissolve the comany and switch it over to a new one with intent to take my ownership, as i have recorded on my phone.

JACUSTOMER-6xl2spi8- :

the original filing says we are a school, the forged one says therapy

NPVAdvisor :

UNLESS you can file a omplaint with IRS/TX that there's too much unrelated business income

NPVAdvisor :

Geez

JACUSTOMER-6xl2spi8- :

its all related income

NPVAdvisor :

I'd oput thatb all together and sue for embezzelement, forgery then

NPVAdvisor :

sorry, but its either that or you're jusy yellin'

NPVAdvisor :

Then wer'e back to the voting rights....

NPVAdvisor :

Corporate Records Requirements


All nonprofit corporations must keep good corporate records. These records help to preserve directors' limited personal liability and protect your organization's tax-exempt status. Good record keeping means preparing minutes of directors' and members' meetings and documenting important corporate decisions.

JACUSTOMER-6xl2spi8- :

ok, well thank you for your time, and again, if you can find that section about after 3 years, the non profit part falls off the corp. then please let me know. my dad was reading the site and read it but he is blind (siri read it) and he doesnt know where it is, only that it is there.

NPVAdvisor :

Here's what you were thinking about re: the three year stuff

NPVAdvisor :

this again is at the ederal level

NPVAdvisor :

n May 2010, the IRS began revoking the tax-exempt status of organizations that are required to file Form 990, Form 990-EZ, Form 990-N (E-postcard) or Form 990-PF (private foundations) and have failed to do so for 3 consecutive years. MOST NON-PROFITS ARE SUBJECT TO THESE REQUIREMENTS. If exempt status is revoked, the only way to reinstate it is to reapply for tax exemption.


On June 8, 2011, the IRS released its first list of over 275,000 organizations whose tax exemptions were automatically revoked for failure to file the required Form 990 information return for three consecutive years. This list is updated monthly.


- See more at: http://www.njnonprofits.org/Legal.html#sthash.Oqom5R9a.dpuf

NPVAdvisor :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.

NPVAdvisor :

Click here for more information including a list of revoked organizations and what you can do if your status has been revoked -

JACUSTOMER-6xl2spi8- :

you got it!

JACUSTOMER-6xl2spi8- :

thank you

NPVAdvisor :

:)

JACUSTOMER-6xl2spi8- :

that website didnt work

NPVAdvisor :

Hang on'

NPVAdvisor :

Here we go

JACUSTOMER-6xl2spi8- :

there has to be something else thats on the state level

NPVAdvisor :

Well, the IRS and the state of texas are two different taxing authorities

NPVAdvisor :

the rules will very , depending on what tax wants to require to have you keep you tax exempt stateus

JACUSTOMER-6xl2spi8- :

yea, and i have the irs proof but he is trying to hang his hat on the state

JACUSTOMER-6xl2spi8- :

which is where my dad read it about the 3 years

NPVAdvisor :

the thre year rule is the rule that if you don't file the federal 990 for thhree straight year, you're lose you exempt status with the IRS

NPVAdvisor :

Texas department of revenue may not have the same (I can't fin that they do) requirement

JACUSTOMER-6xl2spi8- :

ok

JACUSTOMER-6xl2spi8- :

yea, its odd, isnt it? all i can find are people fighting FOR 501c, not trying to RUN from it! lol

JACUSTOMER-6xl2spi8- :

but i think federal proves ownership

JACUSTOMER-6xl2spi8- :

so, he is in a world of trouble, isnt he?

NPVAdvisor :

yes, he's just trying to use this to wrestle control ... but again, HERE, if you have voting rights, that doesn't just go away

NPVAdvisor :

Again, the entity may not ever have been set up as having "owners" persay

NPVAdvisor :

BUT it does HAVE to have establiched board and voting rights

JACUSTOMER-6xl2spi8- :

and it does and one is forged

JACUSTOMER-6xl2spi8- :

ok, well. thank you for all your help

NPVAdvisor :

Yep, that's you cse

NPVAdvisor :

see this:

NPVAdvisor :
Nonprofit corporation appealed from order of the 116th Judicial District Court, Dallas County, Frank Andrews, J., which ordered inspection of books. The Court of Appeals, Boyd, J., held that: (1) in view of protective order, application of statute allowing inspection of books by member of nonprofit corporation was not unconstitutional; (2) persons who had resigned from board of directors of nonprofit corporation were still members entitled to inspect books and records; (3) statutory amendment clarifying that right to inspect included right to copy was applicable to request made prior to the amendment; but (4) genuine issue of fact existed as to whether corporation was exempt from certain recordkeeping requirements because it was engaged in charitable activities related to wildlife conservation.


Citizens Ass'n for Sound Energy (CASE) v. Boltz, 886 S.W.2d 283 (Tex. App.--Amarillo 1994)

NPVAdvisor :

Here's the Texas law, as it relates to loss of non-profit status:

NPVAdvisor :



(f) Revocations, withdrawals, or loss of exemptions.






(1) Except as provided in paragraph (2) of this subsection, if at any time the comptroller has reason to believe that an exempt organization no longer qualifies for exemption, a comptroller's representative will notify the organization that its exempt status is under review. A comptroller's representative may request additional information that is necessary to ascertain the continued validity of the organization's exempt status. An organization must immediately notify the comptroller in writing of a revocation, withdrawal, or loss of exemption when the organization no longer qualifies for exemption. If the comptroller determines that an organization is no longer entitled to its exemption, then the comptroller will notify the organization. The date of the notification letter is the effective date of the revocation. All subsequent purchases by the organization are subject to tax.







(2) For nonprofit organizations that are granted an exemption under Tax Code, § 151.310(a)(2), the revocation, withdrawal, or loss of the federal income tax exemption automatically terminates the sales tax exemption, effective on the date on which the IRS serves formal written notice of the revocation on the nonprofit organization or the date on which the IRS notifies the comptroller, whichever is earlier. All subsequent purchases by the organization are subject to tax.






(A) The effective date of a revocation for a nonprofit organization that was granted an exemption as a recognized subordinate is the date on which the organization ceased to be recognized as a subordinate under the federal group exemption. All subsequent purchases by the organization are subject to tax.







(B) The organization must notify the comptroller in writing of the revocation, withdrawal, or loss of exemption immediately upon receiving notice from the IRS of such revocation, withdrawal, or loss.







(C) Under a federal/state exchange agreement, the IRS may notify the comptroller when an organization no longer qualifies for federal exemption.








(3) An organization that loses its exempt status must immediately notify its suppliers that its purchases are subject to tax. Failure to so notify a supplier is a violation of the sales tax law.







(4) After revocation, the organization may re-apply for exempt status under other provisions of this section







Tex. Admin. Code tit. 34, § 3.322

JACUSTOMER-6xl2spi8- :

but its not a 501c

NPVAdvisor :

501(c)(3) is a federal classificaton

JACUSTOMER-6xl2spi8- :

What is a nonprofit corporation?


A “nonprofit corporation” is a corporation no part of the income of which is distributable to members, directors, or officers. A nonprofit corporation is created by filing a certificate of formation with the secretary of state. See Form 202 (Word 152kb, PDF 142kb). A nonprofit corporation may be created for any lawful purpose, which purpose must be stated in its certificate of formation.

NPVAdvisor :

nonprofit organizations are granted an exemption under Tax Code, § 151.310(a)(2) under the Texas Code

JACUSTOMER-6xl2spi8- :

i know

NPVAdvisor :

RIght that's the original filing with your secretary of state

JACUSTOMER-6xl2spi8- :

but...ahh... they said we have been operating in a loop hole

NPVAdvisor :

the three year rule does not apply at the state level

JACUSTOMER-6xl2spi8- :

that although we filed as non profit, we never got non profit staus and never operated as a non profit

NPVAdvisor :

But this does Tex. Admin. Code tit. 34, § 3.322

NPVAdvisor :

and that's all there is

NPVAdvisor :

non-profit status is greanted by IRS

NPVAdvisor :

in texas you just file that way originally

JACUSTOMER-6xl2spi8- :

right

NPVAdvisor :

listen I have to get ready for a 4:30 meeting

NPVAdvisor :

can I help with with ANYTHING else today?

JACUSTOMER-6xl2spi8- :

its nuts that the sec of state said it is non profit corp without non profit status!

NPVAdvisor :

its really just two diferent things

NPVAdvisor :

the sec of state is the place where you file riginally

JACUSTOMER-6xl2spi8- :

ok, thank you.

NPVAdvisor :

IRS then granst FEDERAL tax emption if you jump through all the hoops , in order to get the benefit of not paying ederal taxes

NPVAdvisor :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


 


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

NPVAdvisor :

listen, I can move us to the "Q&A" mode so we continue the dialogue (we just can do it in real-time as we can here), if you'd like to drill down on this some more

JACUSTOMER-6xl2spi8- :

ok, thank you

NPVAdvisor :

i think you MAY have the extent of my wisdom, however :

NPVAdvisor :

alright

NPVAdvisor :

Gotta go, but will check back in later

NPVAdvisor :

Lane

JACUSTOMER-6xl2spi8- :

yes, but want to big a little more

NPVAdvisor :

sounds good

JACUSTOMER-6xl2spi8- :

lane?

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3913
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and 5 other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  Lane replied 1 year ago.

Hey Stacy,

Sorry I had to run, but as you think of anything just drop it back here, and I can do the research for you.

Thanks
Lane
Expert:  Lane replied 1 year ago.

Hi Stacy,

A couple more thoughts, and also wanted to kind of re-cap:

(1) They really are playing hardball with you ... the hostile environment thing? ... That's a form of sexual harassment claim that can only be filed as a Title Vii (of the civil rights act) claim.

Not only does it have to be a claim of employment discrimination because of sex, the employer must have at least 15 employees, they have to file with the state agency, then EEOC, then wait for a right to sue letter from EEOC BEFORE they can even file a suit.


(2) If you have voting tights, that can't just be taken away without a court order


(3) We DID pin down that the three years issue is the IRS (federal issue) and although not an organizational (how is the entity organized at the state level) issue, DOES help to make the case that the entity may be more of a non-profit in name only.



Those seem to be the three salient issues at this point.




If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.

HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Thanks,
Lane

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