How to Get Tax Exempt Status as a Non-Profit

When talking about tax exempt statuses as they relate to non-profit organizations the first distinction that needs to be made is whether we are talking about a “non-profit” entity or a 501(c)(3) registered charitable organization. There are clear distinctions between the two when it comes to tax laws and operations, so it’s important to know the differences.

A 501(c)(3) organization requires specific approval by the IRS that includes the submission of a 30-page application that details activities the organization will engage in. We recommend partnering with an experienced tax attorney to complete and submit the application. Some examples of well-known organizations that meet these requirements are charities like The Salvation Army, American Red Cross or United Way. If this is the exemption you seek, it’s also worth noting the approval process can be as short as three weeks or stretch as long as 12 months.

The process for not-for-profit organizations is a bit simpler. The organization must apply for a Federal Tax Identification Number (FEIN) in order to establish a bank account, and generally has a list of governing rules for operation of the organization. The application for this exemption can be completed online and the approval is instant. Examples of organizations that may fall in this category include:  social clubs; church-controlled organizations; community or volunteer groups; a homeowners association or PTA group.

As with all exemptions and deductions, it’s important to stay current on specifics and tax laws. We have experience working with both types of organizations and are familiar with the ins and outs to help. If you want to partner with an accountant to help manage taxes or accounting for your non-profit, our knowledge and expertise can benefit you. We can also provide recommendations for area tax attorneys to provide application guidance. You can reach us at (913) 888-9100.