IRS laws applicable to NPOs

A non-profit organization is subject to provisions of several sections of the IRS code (title 26). Some common IRS sections relevant to non-profit organizations are: IRS Section Title Section 501 Exemption from tax on corporations, certain trusts, etc Section 503 Requirements for Exemption Section 507-509 Rules related to private foundations Section 511 Tax on unrelated […]

501(c)(3) exemption : eligibility

There are 3 eligibility criteria fixed by IRS for granting of 501(c)(3) exemption. I) Organized – The organization must either be a corporation, trust, or unincorporated association which must be evidenced by its organizing document which could be its articles of incorporation, trust documents or articles of association. II) Exempt Purpose – For tax exemption, the […]

IRS prescribed Article of Incorporation clauses for Section 501(c)(3) tax exempt recognition

To be eligible for tax-exempt recognition under section 501(c)(3) of the Internal Revenue Code, a nonprofit organization must be organized and operated exclusively for “exempt purposes” as prescribed by IRS. Exempt purposes as defined by IRS The purposes declared as exempt purposes in section 501(c)(3) are charitable, educational, religious, scientific, literary, fostering national or international […]

Federal State Unrelated business Income tax

Introduction A nonprofit organization that has received tax exempt recognition under Section 501(c)(3) of the IRS code is exempt from taxes on Income from any activity which is substantially related to its tax exempt purpose. Income derived from the normal purpose for which the organization has been established is called as the “Exempt function income”. […]

Tax exemption for nonprofits:The basics

As per the Federal taxation system tax must be paid on income earned by individuals or corporations. There are however certain categories of Income that are exempt from tatxation under special statutes passed by the Congress. Non profit organizations are exempt from paying taxes, if they comply to certain norms and provisions laid down for […]