Exempt Organizations

Indiana Food Safety and Defense Symposium

March 12, 2008

Section 501(c)(3)

Section 501(c)(3) of the Internal Revenue Code provides exemption to organizations organized and operated exclusively for charitable, religious, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition.

Applying for Exemption

Application for recognition of exemption under section 501(c)(3) of the Code is made on Form 1023 (latest revision date June 2006).

Generally, the application must be made within 27 months from the date of legal formation.

Determination Letters

When the Internal Revenue Service approves an application for exemption under section 501(c)(3) of the Code, a determination letter is issued.

If an organization loses or misplaces their determination letter, they may request an affirmation letter from the Service.

Form 1023 Not Necessary

The following types of organizations may be considered tax exempt under section 501(c)(3) even if they do not file Form 1023:

ChurchesIntegrated auxiliaries of churches and conventions or associations of churchesAny organization that has gross receipts in each taxable year of normally not more than $5000A subordinate covered by a group exemption letter

Form 1023 Not Necessary, cont.

Note: If an organization wants a letter from the Internal Revenue Service stating that it is exempt from Federal income tax under section 501(c)(3), it must file an application on Form 1023.

Exceptions to 27 Month Requirement

The following organizations are excepted from the 27 month filing requirement:

Churches, associations or conventions of churches, or integrated auxiliaries of churchesPublic charities with annual gross receipts that are normally $5000 or lessSubordinates covered by a group exemption letter (if the parent notified the Service of a subordinate’s inclusion in the group within 27 months of the date the subordinate was formed)

Deductibility

Contributions made by donors to organizations exempt under section 501(c)(3) of the Code are generally tax deductible under section 170(c) of the Code.

Publication 78 provides a listing of 501(c)(3) organizations to which contributions are tax deductible.

Charitable

Regulation 1.501(c)(3)-1(d)(2) provides that for purposes of section 501(c)(3) of the Code, the term charitable is used in its generally accepted legal sense.

Charitable Defined

The term “charitable” includes relief of the poor and distressed or of the underprivileged, advancement of religion, advancement of education or science, erection or maintenance of public buildings, monuments or works; lessening the burdens of government; and promotion of social welfare by organizations designed to accomplish any of the above purposes.

Religious

The term “religious” as used in section 501(c)(3) is not subject to precise definition.

Some types of religious organizations may include churches, associations or conventions of churches, religious retreats, and missions.

Educational

Regulation 1.501(c)(3)-1(d)(3) provides that educational as used in section 501(c)(3) relates to

The instruction or training of the individual for the purpose of improving or developing his capabilities, or

The instruction of the public on subjects that are useful to the individual and beneficial to the community.

Other Code Sections

Civic organizations are described in section 501(c)(4) of the Code.

Fraternal organizations are described in sections 501(c)(8) and 501(c)(10) of the Code.

Veterans organizations are described in section 501(c)(19) of the Code.

Not Required to File

Organizations described in sections 501(c)(4), 501(c)(8), 501(c)(10) and 501(c)(19) are not required to file an application with the Internal Revenue Service to be exempt.

To receive a determination letter from the Service, however, organizations must submit an application, Form 1024.

Resources

Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code of 1986

Publication 4220, Applying for 501(c)(3) Tax Exempt Status

Publication 4221-PC, Compliance Guide for 501(c)(3) Public Charities

Resources, cont.

Publication 4221-PF, Compliance Guide for 501(c)(3) Private Foundations

Publication 557, Tax Exempt Status for Your Organization

www.irs.gov/eo

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