Optima Tax Relief reviews the Tax-Exempt Application Process for Charities

Organizations that meet the requirements under Section 501(c) of the Internal Revenue Code could qualify for a tax-exempt status. These organizations include, charities, social welfare organizations, civic leagues, social clubs, labor organizations and business leagues. 

Optima Tax Relief reviews key items that charities should know about the applications process.

  1. The application includes a fee. In order to be even considered a charity, organizations must first complete the application and pay for the user fee. 
  1. The IRS provides assistance to those who need help. While completing the application process on the IRS website, organizations can look at a step-by-step review of what information and requirements the organization will need to know about how to apply for a tax-exempt status.
  1. Organizations that are exempt from applying. Certain organizations do not need to apply for 501(c)(3) status to be tax-exempt. These include churches and their integrated auxiliaries as well as public charities that have annual gross receipts normally less than $5,000.
  1. Organizations are required to have an employer identification number. An employer identification number or an EIN is known as an organization’s account number with the IRS. It’s required for the organization to apply for a tax exempt status in order to receive their full benefits even if they don’t have any employees. Organizations can apply for an EIN online, fax or by mail.
  1. Time Frame to notify the IRS. A charitable organization is typically required to apply for recognition of exemption and must notify the IRS within 27 months from the date it was formed to be recognized as exempt from formation.
  1. How a private foundation or public charity is classified. The agency determines that an organization qualifies for exemption under Section 501(c)(3). It will also be classified as a private foundation unless the organization meets the requirements to be recognized as a public charity.
  1. Documents will be available to the public. A charitable organization must make certain documents available to the public. This includes the approved application for recognition of exemption as well as any supporting documents and its last three annual information returns.
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