Maintaining Non-Profit Tax Exempt 501c3 Organizations
Robinson Law PC has Non Profit Tax Exempt Attorneys dedicated to helping churches, ministries, and other nonprofit charitable organizations obtain and maintain tax exempt status. We have clients nationwide whom we have advised and represented in:
- 501(c)(3) Tax-Exempt Organizations
- Other Classifications of Non-Profit Corporations
- Professional Fundraisers and Marketers
There are over one million 501c3 organizations in the United States. This category of nonprofit organizations includes publicly supported charities, private foundations, colleges, schools, universities, churches, religious organizations, supporting organizations, and other types of organizations.
Nonprofit Organization Mission Statement, Board of Trustees, Record Keeping and Financial Duties
The Nonprofit Organization Mission Statement is the most basic and foundational principle that every nonprofit organization should clearly understand and publicly express. This assures that the organization provides a public benefit and does not drift away from activities that support its charitable purposes. It also helps an organization avoid any practices that are inconsistent with tax-exempt status.
Another core governance principle is that the organization’s board of trustees should be independent thinkers and voters, informed decision makers, and actively engaged in the affairs of the entity. The board should have real responsibility and authority. For example,board members must be able to implement and strictly adhere to the rules against inurement and self-dealing.
Financial Fiduciary Duty and Accountability relates to the proper use and safeguarding of assets. This principle must be supported by policies and practices that address executive compensation, that protect against conflicts of interest, and that support independent financial reviews.
Finally, transparency is another key principle in record keeping. Board decisions should be adequately reflected in minutes, and records supporting decisions should be retained for reasonable periods of time. The public should be able to see on each year’s Form 990 that the organization’s records are complete, accurate and prepared in good faith.
Robinson Law PC Nonprofit Tax Exempt Ministry Lawyers focus their practice on ensuring that Nonprofit Organizers have clear mission statements, a slate of trustees that is educated on their fiduciary duty, policies and procedures to safeguard assets and good board minutes. Robinson Law PC works with accountants familiar with Form 990 who can ensure that they are properly filed on a yearly basis.
Facts a Donor Should Know about Tax Exempt Organizations
Every year there are millions of taxpayers who donate money to charitable organizations. There are some important things to know about the tax treatment of tax-exempt organizations.
1. Tax returns are made available to the general public.
2. Donor lists and specific contributions generally are not public information.
3. You can find a list of approved tax-exempt organizations on the IRS website under the title Publication 78 – Cumulative list of Exempt Organizations.
4. You want to know which organizations may accept charitable contributions.
5. Some Nonprofit organizations not able to provide exemption for some donations.
Robinson Law PC analyzes the organizations mission, by laws, financial structure and potential reliance on donors for charitable support in determining the best way to submit an application for tax exempt status. An experienced nonprofit attorney will know the proper documentation necessary to submit to the IRS. Without this guidance tax exempt status could be denied and donor support extinguished.
Incorporating a Non-Profit Organization in the State DOES NOT Give You Tax Exempt Status
If you are forming a Non-Profit Organization, you should know that merely filing as a Non-Profit corporation under state law does not give you State or IRS tax-exempt status. A state filing will only give you State recognition as a non-profit corporation. However, unless you are a church, more steps are necessary to be recognized as tax exempt.
As an exempt organization, a Certificate (or Articles) of Incorporation filed with the state must meet the detailed requirements of the IRS Regulations. Proper Bylaws and Resolutions must be drafted demonstrating that you are organized for a charitable purpose.Finally, to document that you are conducting exempt activities for the charitable purposes, you must prepare and submit the appropriate documents and forms to the IRS. This process can easily take 6 months to one year. You need to rely on an experienced nonprofit lawyer to help guide you in the many steps during the lengthy process of IRS scrutiny.
Maintaining a Non-Profit Organization
The services of an experienced nonprofit attorney such as Robinson Law PC are also beneficial in maintaining your exempt status. Generally, as long as you stick to the conduct as described on your application you will not lose your tax exempt status.
However, in recent years, the IRS has begun closer scrutiny of existing organizations and have revoked exempt status of several organizations. Robinson Law PC will stay abreast of all areas of the law and IRS regulations and procedural rulings to keep you, our nonprofit client organization, informed and compliant.
One of the most recent changes implemented by the IRS is the increased requirement for tax exempt organizations to file information returns such as Form 990. In the past, some organizations were not required to file this form. The IRS has released the revised instructions that tax-exempt organizations will need to fill out the redesigned Form 990.
It is no longer enough to obtain tax-exempt status; now you must work to maintain recognition as a valid tax exempt nonprofit organization. The IRS recently removed the tax-exempt status of 275,000 non-profit organizations because they did not file tax reports with the IRS. For a limited period of time, organizations can re-file and receive retroactive re-instatement if they act quickly. Robinson Law PC nonprofit tax exempt attorneys can advise you about this and other areas of special focus that has the current attention of the IRS exempt organization examiners. Contact us today.