Do I Have to File for Tax Exempt Status to Be a Nonprofit?
Do I Have to File for Tax Exempt Status to Be a Nonprofit?Answer: Do not confuse an IRS registered, tax-exempt 501(c)(3) nonprofit with a non-exempt charitable organization. Many groups serve the public but are not registered with the IRS as a nonprofit. Some “charitable” organizations do register with the state in which they reside and even incorporate in that state as nonprofit corporations and never apply for federal tax-exempt status However, many small “charitable” organizations never seek recognition as a nonprofit from their state or the federal government. The disadvantage to not becoming a registered nonprofit is that donors cannot take a tax deduction on their donations, and you cannot receive grants from foundations or corporations. Becoming a 501(c)(3) organization is not for the faint of heart. It involves a lot of paperwork and some expense.
From Joanne Fritz, Your Guide to Nonprofit Charitable Orgs. Answer: Do not confuse an IRS registered, tax-exempt 501(c)(3) nonprofit with a non-exempt charitable organization. Many groups serve the public but are not registered with the IRS as a nonprofit. Some “charitable” organizations do register with the state in which they reside and even incorporate in that state as nonprofit corporations and never apply for federal tax-exempt status. However, many small “charitable” organizations never seek recognition as a nonprofit from their state or the federal government. The disadvantage to not becoming a registered nonprofit is that donors cannot take a tax deduction on their donations, and you cannot receive grants from foundations or corporations. Becoming a 501(c)(3) organization is not for the faint of heart. It involves a lot of paperwork and some expense. Think carefully before you begin the arduous process of a becoming a tax-exempt nonprofit organization. If your purpose is simple
