While filing for a Non-profit 501c3 tax exempt application, firms should consider all the rules and regulations stated by the IRS as important to their organization. Firms often engage in fund collecting activities that the IRS does not approve of. Recently one of the nonprofit firm was found collecting funds through internet and this activity was unknown to the IRS. The IRS does allow non-profits to collect funds through internet if they adhere to its policies. This was stated by the IRS in their recent Information letter.
Still, there are a number of firms who violate the non-profit 501c3 tax exempt application rules and carry on with secret fund collection. The IRS reminded all the firms who had filed for non-profit 501c3 tax exempt application regarding important considerations about the Section 501c3.
Need to be recognized!
Before filing for a non-profit 501c3 tax exempt application, make sure you have read all the policies and have mentioned every practice with which you collect funds for your nonprofit. If any of the information is missing and/or turns out to be false then you might be liable for tax deductions.
Donations that can be deductible
When you are a non-profit firm, according to the IRS rules, you need to mention it on all of your solicitations, and if you have a website on the internet, then it is compulsory for you to mention that your organization comes under Section 501c3. If you are caught declaring your organization as a non tax exempt firm, then the fund you’ve collected will become tax deductible. Same goes for the non profits that have not yet been recognized as 501c3 tax exempt; they are to mention it on their website. This way you’ll save your donations and use it for the right cause.
Get all your details straight
When you are part of a non-profit 501c3 tax exempt firm, you need to be transparent with the IRS about every procedure and step you take. Mention the ways through which you earn funds, fundraising expenses, and fundraising activities on the exemption Form 1023. Also, the annual information return Form 990, Form 990-EZ or Form 990PF, needs to be filled in with all your organization’s annual fundraising expenses.
Any fundraising activity planned by an outside body might be too expensive and include excessive money. The firm should know that this should be reported to the IRS so that they can ensure that no violation of the rules against private benefit has taken place.
If an organization is collecting massive funds by a party and in return provides them with a valuable thing service, this must be reported to the IRS. The IRS will decide whether this exchange violates the rules against private benefit.
According to these rules reiterated by the IRS, the non-profit 501c3 tax exempt firms are supposed to develop a transparent relation with the IRS regarding every step of their fundraising activity. This will help firms save themselves from fines and deductions from donations. In addition, organizations which are planning to file a nonprofit 501c3 tax exempt application need to consider the new policy letters posted by the IRS to avoid inconvenience.
If you need more information about our accounting and tax services, please contact us at 407-502-2400. 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, Hunters Creek, Lake Nona, Celebration, Winter Park, Windermere, Dr. Phillips, Maitland, Altamonte Springs, Winter Garden, Ocoee, Apopka, Belle Isle, Edgewood, and Oakland 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.