Question

nonprofit organizations must fulfill certain state laws and federal laws to be registered as a nonprofit entity. In addition, there are filing that are required for nonprofits with the internal revenue service in order to be approved as a tax-exempt organization. Identify laws that nonprofits organizations need to follow regarding its formation and tax filings that are required on its initial application as a tax-exempt entity. Also, what other additional tax filing are required for nonprofit organizations once they are approved as a tax-exempt organization by the IRS.

Answer 1

A 501(c) organization is a nonprofit organization in the federal law of the United States according to Section 501(c) and is one of over 29 types of nonprofit organizations exempt from some federal income taxes. Sections 503 through 505 set out the requirements for obtaining such exemptions. Many states refer to Section 501(c) for definitions of organizations exempt from state taxation as well. 501(c) organizations can receive unlimited contributions from individuals, corporations, and union

Forms required to apply tax exemption status

Charitable, Religious and Educational Organizations (501(c)(3))

• Form 1023-EZ
• Interactive Form 1023

Social Welfare Organizations (501(c)(4) organizations)

• Form 8976, Notice of Intent to Operate Under Section 501(c)(4)
• Form 1024-A

Other Nonprofit or Tax-Exempt Organizations (501(a))

• Form 1024

Comply With State and Local Requirements

If your organization gets approved for tax-exempt status at the federal level, that's great. Next, you'll need to make sure your organization will also be tax-exempt at the state and local levels so it doesn't have to pay state corporate income tax, sales tax, or property tax.

Requirements vary by state, but your IRS approval may be all your organization needs to also be recognized as a nonprofit at the state level.

Once you've met your state's requirements for operating as a nonprofit, you'll need to get any permits or licenses required to operate your business and make sure to comply with building codes and other local regulations.

Additional tax filings to be made under 501 (c) after getting approval.

Comply with annual IRS requirements to file Form 990 or Form 990-EZ. In these forms, you will report your organization's activities, governance, revenue, expenses, and net assets.