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Can you help me understand what a 501C3 is? When an organization

Can you help me understand...
Can you help me understand what a 501C3 is? When an organization opts to become a 501C3 does that take over all operations and funds of that organization? I will fill you in on why I need this information after you answer these 2 questiond.

Thank you
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Answered in 11 minutes by:
7/17/2013
P. Simmons
P. Simmons, Lawyer
Category: Real Estate Law
Satisfied Customers: 35,677
Experience: 12+ yrs. of experience including real estate law.
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Thanks for the chance to help. I am an attorney with over 12 years experience. Hopefully I can help you with your legal question.

I am very familiar with 501(c)(3). This is a provision of the US Tax code. Specifically it is an "exemption" that allows certain cooperations to be exempt from US tax law.

501(c)(3) exemptions apply to corporations, and any community chest, fund, cooperating association or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, to foster national or international amateur sports competition, to promote the arts, or for the prevention of cruelty to children or animals.

For your question

When an organization opts to become a 501C3 does that take over all operations and funds of that organization?

The answer is no...if granted by the IRS, the corporation is exempt from paying taxes...it does not otherwise change the structure of the corporation.

Did you have a specific question?






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Customer reply replied 4 years ago

what would you advise to be the best way to force this person to abide by the by laws of our Temple? He is a member of the masonic lodge but has been intimidating fellow members to the point that they vote for whatever he proposes. The man who was treasurer has been expelled from the Temple for being arrested on a felon count. Now we don't know who is paying the bill or just where the funds our organizations are being assessed are going. We been told that actions are being looked into by the Grand Master of Iowa but we have seen nothing happening and the situation is getting worse.

Customer reply replied 4 years ago

Are there rules in the 501c3 that say we have to give goods, services, space and availability to our building without cost or at very little charge? Would the 501c3 over ride by laws, rules, and regulations that have always governed said corporation?

Sorry for the delay...I was called away.

Just a moment Ma'am and I will address your questions.
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The key to understand 501c3 is to understand that it grants an exemption to taxes IF the corporation in question meets the criteria.

So, arguably, when your corporation applied for this exemption, at that time...when they applied, prior to the exemption being granted? They were in compliance with the rules...so unless the IRS imposed requirements in conjunction with granting the status (which is very rare), if it was good enough to meet the requirements to get the exemption, it should be good enough to keep the exemption.

The rules are not complex....as I mention, you have to show that your organization

operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, to foster national or international amateur sports competition, to promote the arts, or for the prevention of cruelty to children or animals.

If you meet one or more of the above? You have it. That is all the IRS requires.

So to the question

Are there rules in the 501c3 that say we have to give goods, services, space and availability to our building without cost or at very little charge?

NO....no there is no such rule. At all. Now...it is important to understand that this status is not granted if the organization is engaged in an effort to make a profit...so, for example, if they have charges for goods, and that money earned from the sale of goods is funneled to the directors or officers of the corporation? That could be a red flag for the IRS.

But if the proceeds from goods sales is used to further the mission of the non profit? THen it is not an issue at all

And you ask

Would the 501c3 over ride by laws, rules, and regulations that have always governed said corporation?

No...no way...as I mentioned above, it you were good at the time you applied (and you must have been to have been granted status) the rules can apply today.

Part of the process in applying is to provide the IRS with the bylaws of the organization. THere is nothing in the 501c3 exemption that trumps state corporation law at all


Let me know if you have more questions...happy to help if I can
P. Simmons
P. Simmons, Lawyer
Category: Real Estate Law
Satisfied Customers: 35,677
Experience: 12+ yrs. of experience including real estate law.
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Customer reply replied 4 years ago

When the 501c3 was applied for all rules, regulations and law required by the IRS were complied with. So there should be not problem with that but we have one man who seems to think he can interrupt all these things as he wishes and and is threatening us with the sale of our building and expulsion from the building so we have a committee meetings this week again to set forth review our options. I just needed the advise of a lawyer to help us with the 501c3 as that is what is being touted as the almighty rule over and above the Masonic Temple Association by laws. I will have your replies to present to the committee. Thank you very much. Beverly XXXXXXX

Ma'am thank you. I wish you the best of luck with this mess. Please let me know if you have any further questions.

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Customer reply replied 4 years ago

Thank you for your advise. I won't be needing anything more so I will be discontinuing this site.


 


Beverly

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