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Understanding the Non Profit 501c3 Tax Exempt Application

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FTAX Blog Pic Understanding the Non Profit 501c3 Tax Exempt Application

The Non Profit 501c3 Tax Exempt Application

For getting a tax exemption status, most non-profit organizations opt for filling out a non profit 501c3 tax exempt application. Most of these organizations are charity and welfare organizations working for welfare motives.

Organizations Eligible for Tax Exemption

Organizations which are eligible to apply for tax exemption could include old-age homes, charity hospitals, schools, parent-teacher associations, clubs, churches, alumni associations, and more. These organizations have motives, promoting positive values and goodness in society due to which they are given exemption for federal taxes.

The concept for tax exemption is that taxes are used for public welfare and since non profits organizations are promoting healthy activities like public safety, animal rights, education and sports they should be spared from the tax burden, which is regularized through the non profit 501c3 tax exempt application.

Filling Out the Form

Filing out the non profit 501c3 tax exempt application form is a challenging task. The form can be obtained as the IRS form 1023 known as the ‘Application for Recognition of Exemption under Section 501(c) (3) of the Internal Revenue Code’.

The internal revenue service (IRS) estimates state that an average person takes about 4 hours to comprehend the form and about 8 hours to fill it up. The filled form is then returned to IRS for further processing.

To get it done right, the services and guidance of a consultant or lawyer who has knowledge and expertise regarding non profits can prove to be really helpful.

When to File For the 501c3 Status

The right time to file for the 501c3 status by filing out the non profit 501c3 tax exempt application is within 27 months of filing the non profit’s articles of incorporation.

Why is it the right time? This is because doing so would put your tax exemption in effect as per the date you filed for the articles of incorporation.

Failure to do so and inability to present the IRS with a reasonable cause for the delay will make the tax exemption status take effect from the date after the IRS form application.

Benefits of 501c3 Status

There are a number of benefits organizations enjoy after filling out the non profit 501c3 tax exempt application and achieving a 501c3 status, which include:

  • Tax Exemption from federal income tax on income earned
  • Tax deductible donations for donors
  • Qualified to get grants (private and public)
  • Less rates charged for postage when on corporate mailings
  • Qualification to receive private and public grants
  • Decrease in the rates charged for public announcements on radio and the local media
  • Increased credibility in the nonprofit community

To achieve the 501c3 status and benefit from all the above mentioned advantages, organizations need to be organized for non-profit and eligible to qualify for the status. Adequate preparation on paper work and other requirements including preparing up documents such as nonprofit statement and non profit bylaws can make the process go smooth.

If you need more information about our Orlando accounting and tax services, please contact us at 407-344-1012.  Freedomtax Accounting’s staff has been providing honest accounting services and tax services for 15 years.  Our Orlando accounting and tax firm has its main offices in Kissimmee, FL.  Our services are provided nationwide, but mainly in the Central Florida market to areas like Orlando, South Orlando, Kissimmee, St. Cloud, Poinciana, Clermont, Davenport, and Hunters Creek, FL.  Our tax accountants and IRS enrolled agents (irs ea) specialize in corporate accounting and bookkeeping, tax services, tax preparation, back taxes help, tax debt relief, tax resolution, tax planning, itin numbers, incorporations, and non profit 501c3 tax exempt status applications.


Robert AcevedoUnderstanding the Non Profit 501c3 Tax Exempt Application

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