501(c)(3)

Richardson's Writing Service

  Contact

Nonprofit Tax Exempt Organization 

501c3

What does being a 501c3, tax-exempt organization mean?

The term "tax-exempt," when used in reference to nonprofit organizations, generally refers to the net profits (proceeds over and above expenses) of an organization being exempt from federal and/or state income tax. While a nonprofit organization can be established by incorporating, the entity is not automatically tax-exempt upon creation with the state. Tax-exemption can usually be achieved only through applying for and receiving Internal Revenue Service (IRS) approval.

Is there more than one category of tax-exempt organization?

Yes. The one most familiar (and addressed in subsequent questions below) is the Internal Revenue Code (IRC) Section 501(c)(3) public charity or private foundation, which is established for purposes that are religious, educational, charitable, scientific, literary, testing for public safety, fostering of national or international amateur sports, or prevention of cruelty to animals and children. There are also IRC Section 501(c)(4) through 501(c)(27) organizations that are considered tax-exempt, but not charitable. Examples include trade associations, social clubs and certain advocacy organizations involved in substantial political lobbying activity. 

What benefit does being 501c3 offer my nonprofit and its contributors?

One of the primary benefits of being considered tax-exempt under IRC Section 501(c)(3) is the ability to accept contributions and donations that are tax-deductible to the donor. Additional benefits include, but are not limited to:

• Exemption from federal and/or state corporate income taxes

• Possible exemption from state sales and property taxes (varies by state)

• Ability to apply for grants and other public or private allocations available only to IRS-recognized, 501(c)(3) organizations

• Potentially higher thresholds before incurring federal and/or state unemployment tax liabilities

• The public legitimacy of IRS recognition

• Discounts on US Postal bulk-mail rates and other services

•  Businesses

•  Associations

•  Government

•  Charities

• Fire Departments

• Public Service

• Educational

For more information on how we can get started  just send us a quick email.

Richardson's Writing Service
P.O. Box 44 Darling, Mississippi 38623
Phone:                      662-326-3996          
Email: jkricha1@yahoo.com