As non profit accountants in Florida we know the the federal policies related to taxes, provides benefits to non profits organizations in terms of exempts from their income. This has been mentioned in the 501(c)(3) of IRC or the Internal Revenue Code. You would have to submit a Non Profit 501(c)(3) tax exempt application so that the IRS can modify your status. There is an alternative option available as well which requires you to become affiliated with a charity that serves as an agent for the IRS. However, this would be valid only if the charity is allowed to give full control over.
The Benefits of a Applying to a 501(c)(3) Status
Submitting a Non Profit 501(c)(3) tax exempt application has many advantages in terms of the fact that you are exempted from taxes on your income and you also become eligible for charity contributions. In some cases, you might not even be charged with employee taxes anymore. These benefits are provided only after you submit a Non Profit 501(c)(3) tax exempt application, and qualify for the status.
Generally the 501 (c) (3) is more availed by corporate donors and individuals because it makes their donations tax deductible. In most cases, the status is accepted as long as the purpose is valid. For instance, individuals may not have to pay taxes on their income, property or sales. The Postal Service also offers discounted rates if you have a 501 (c)(3) status.
In order to gain an exemption from taxes, you would have to meet the following requirements. Failing even one of these would lead to a rejection of your Non Profit 501(c)(3) tax exempt application.
Any organization applying for the 501(c)(3) must be organized as a trust, corporation or unincorporated association. All the documents must abide by the following:
- Limit the purpose of the organization according to IRC
- Disallowing all activities that can affect the exemption in a negative way
- Dedicate all assets to the purpose
A 501(c)(3) form must refrain from the following activities. The list includes most situations but is not comprehensive.
- Refrain from taking part in any political campaign at a local, state and federal level
- Restrict all lobbying activities until they become almost insubstantial
- Any part of the earnings must not provide any benefits to a private individual or shareholder
- Operations of the company must not be beneficial to any private interests that involve the founders, the shareholders and their families
- The company must not be aimed at conducting a business or a trade if it is not related to the exempt purpose
- Must not be involved in any illegal activities
An organization can be exempted from taxes only if it aims itself at any exempt purpose, which has been described in detail in the IRC. These include educational, charitable, religious, literary, scientific, sports prevention, cruelty prevention and public safety management. The most common of these are educational, charitable and religious.
Private Foundations and Public Charities
Once you receive your 501(c)(3) status, you are either regarded as a private foundation or public charity. The former of these has limited financial support where as the latter has extensive options.
If you need more information about our, Orlando 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, 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.
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