Once an organization has been created under state law and begins to operate, it may want to be recognized as exempt under section 501(c)(3) of the Internal Revenue Code. In addition to exemption from federal income taxation, 501(c)(3) organizations may enjoy collateral benefits under the Internal Revenue Code, as well as under state or local income, property, sales, use or other tax provisions.
To apply for exemption, an organization should obtain and complete the required forms (exemption application and application for employer identification number) and submit them, along with the required user fee. If an organization will be represented by an attorney or other representative, it must also submit a power of attorney.
Public disclosure requirements apply to exemption applications that the IRS approves. In addition, cases in which the IRS has issued a letter denying or revoking an organization's exempt status are subject to public disclosure under Internal Revenue Code section 6110.
Organizational leadership can learn more about this topic and the benefits, limitations and expectations of tax-exempt organizations by attending ten courses at the online Small to Mid-Size Tax Exempt Organization Workshop.
Interactive training - Applying for Section 501(c)(3) Status