Obtain 501(c)(3) Status for Your Non-profit Organization

If you have a non-profit organization then you can apply for obtaining 501(c)(3) status. A non-profit organization does not make profits. Thus, such organizations should be exempted from paying taxes. It is because non-profit organizations do not work for making profits instead these organizations regulate and serve for the welfare of society. Companies with 501c3 status get rid of the burden of paying taxes to the government. It helps such non-profit organizations to grow much faster. 


Don’t think that you can easily obtain the status of your non-profit organization. Applicants need to go through a specific procedure. There are legal accounting and technical hurdles that you need to overcome to start a 501c3 non-profit organization.

Not every organization can apply for this status. Only non-profit organizations can get the advantage of not paying taxes. For that, the non-profit organizations must apply to the IRS for getting recognition for tax redemption.

Therefore, research, plan and raise funds for your organization in a systematic way.

We are here to talk about the 501(c)(3) status and IRS. This article will help the readers to gather essential information so that they can get a clear understanding of the concept. Once you get an overall idea, you can pursue getting the 501(c)(3) IRS.

What is 501(c)(3) status?

Basically, 501(c)(3) is a status that organizations can obtain in the United States. This 501(c)(3) section is a portion of the Internal Revenue Code of the United States. It allows federal tax redemption for non-profit organizations. The status is mainly for the public charities, private foundations, or private operating foundations. Corporations, trusts, LLCs, community chests, and incorporated associations are the entities that can apply for obtaining this 501(c)(3) status.

What is IRS?

Internal Revenue Service is also known as IRS. It is a revenue service for the United States federal government. The service is responsible for collecting taxes. It is also responsible for administering the Internal Revenue Code.

In simple words, the Internal Revenue Service is an agency of the government of the United States. The agency is responsible for collecting taxes and enforcing tax laws. The IRS agency was established in 1862 and operates under the authority of the U.S. Department of the Treasury. Collecting income taxes of individuals and employment taxes are the main purposes. Non-profit organizations need to submit IRS form 1023 to seek tax redemption. 

In 2020 it processed nearly 240 million tax returns. Tax returns were filed electronically and the percentage was more than 94% in 2020.

Who can apply for obtaining 501(c)(3) status?

As you have already got an idea of what sort of organizations can opt for obtaining the 501(c)(3) status. Still, we are going to provide detailed information to let all the readers know precisely.

Entities like corporations, trusts, LLCs, community chests, and incorporated associations can apply for obtaining 501(c)(3)IRS. The status is mainly developed for public charities, private foundations, and private operating foundations. Only non-profit organizations that are in the United States are allowed to get 501(c)(3). 

These non-profit organizations must have exclusive charitable purposes that come under certain categories. Purposes such as:

  • Religious 
  • Charitable 
  • Scientific
  • Literary 
  • Educational 
  • Testing for public safety 
  • Fostering national and international amateur sports 
  • Prevention of cruelty to children 
  • Prevention of cruelty to animals

Now you know specifically what sort of non-profit organizations can get the status. Check if your organization falls under any category from the list.

Steps to start a 501(c)(3) organization

There are a lot of things that you need to do to start a non-profit organization and grant 501(c)(3) status. Proper research, planning, and fundraising are needed for developing and regulating a non-profit organization. You also need to overcome all the legal, accounting, and technical hurdles. To obtain the status your organization needs to go through a specific procedure.

Meet the eligibility criteria and fulfill all the filing requirements for non-profits to obtain the 501(c)(3) status.

So, follow the steps that are given below:

  • Establish a non-profit organization. 
  • Meet the eligibility criteria of 501(c)(3) by adapting certain traits and characteristics of your non-profit organization to opt for 501(c)(3). 
  • Make sure to fit your non-profit organization to fit into a category that is accepted. 
  • Understand the requirements of the IRS and go through the IRS application process. 
  • Know about 501(c)(3) paperwork & charity paperwork.
  •  Apply to the Internal Revenue Service (IRS) for getting recognition for tax redemption.

Discussion on the requirements of a 501(c)(3) organization

To get your non-profit organization exempted from paying taxes under section 501(c)(3) you should completely avoid serving any private interest. It includes the interest of the creator and the creator’s family, shareholders of the organization, and other designated individuals controlled by private interests. The income of the organization cannot be used to benefit any private shareholder or individual. All the earnings and activities should have a charitable purpose. These organizations also cannot use their activities to influence legislation. It also includes participating in campaign activities to support or oppose any political candidate. Lobbying is strictly prohibited. Employees of these non-profit organizations should receive reasonable compensation.

It is important to stick to the particular charitable purpose that has been reported to the IRS for regulating the non-profit organization. So don’t change your mission at any cost. The majority of your firm’s efforts must go toward its exempt purpose as a non-profit organization.

Conclusion

If you want to obtain 501(c)(3) status then you have to have a non-profit organization that has all the necessary traits or characteristics to fit into the status. Get exempted from paying tax to regulate your organization without any burden. Stay engaged with charitable work for the welfare of society. If your organization adheres to all the rules and regulations of the U.S. government then you will get all the necessary advantages. So, wait no more and opt for obtaining 501(c)(3). Remember, you need to apply to the Internal Revenue Service for getting recognition for tax redemption. Your non-profit organization will flourish more rapidly so good luck to all the applicants.

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