Overview of Organizations Described

How To Request Recognition of Tax-Exempt Status Under Section 501(c)(3) Section 501(c)(3) describes organizations organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals. Unless an exception applies, an organization must file Form 1023 or Form 1023-EZ (if eligible) to obtain recognition of exemption from federal income tax under section 501(c)(3). You can find information about eligibility to file Form 1023-EZ at IRS.gov/Charities .

Organizations not required to obtain recognition of exemption. The following types of organizations may be considered tax exempt under section 501(c)(3) without filing Form 1023 (or Form 1023-EZ).

Instructions for Form 1023 (Rev. 12-2024) Catalog Number 17132z Jan 7, 2025 Department of the Treasury Internal Revenue Service www.irs.gov

Churches, including synagogues, temples, and mosques.
Integrated auxiliaries of churches and conventions or associations of churches.
Any organization that has gross receipts in each tax year of normally not more than $5,000. For more information on gross receipts exceptions, go to IRS.gov/Charities .

Even though these organizations aren't required to seek recognition of exemption, they may choose to file Form 1023 (or Form 1023-EZ, if eligible) to receive a determination letter stating they are recognized as exempt under section 501(c)(3) status. The determination letter will also state whether an organization must file annual information returns or notices and will specify whether contributions to that organization are tax deductible.

Requirements for Tax-Exempt Status Under Section 501(c)(3)

To qualify for exemption under section 501(c)(3), an organization must be organized and operated exclusively for one or more exempt purposes.

Organized. An organization must be organized as a corporation, a limited liability company (LLC), an unincorporated association, or a trust. Its organizing document (corporate articles of incorporation, LLC articles of organization, articles of association or constitution of an unincorporated association, or trust agreement or declaration of trust) must limit the organization's purpose(s) and permanently dedicate its assets to exempt purposes.

Operated. An organization described in section 501(c)(3) must be operated to further one or more of the exempt purposes stated in its organizing document. Certain other activities are prohibited or restricted, including, but not limited to, the following activities. A section 501(c)(3) organization must:

Absolutely refrain from participating in the political campaigns of candidates for local, state, or federal office;

Legislative and political campaign in- tervention. Section 501(c)(3) denies exemption to an organization if a substantial part of its activities is attempting to influence legislation or if it directly or indirectly participates or intervenes in any political campaign on behalf of (or in opposition to) any candidate for elective public office. These issues are described in more detail in the instructions for Part IV, lines 5 and 6.

Public Charities and Private Foundations

Every organization described in section 501(c)(3) is classified as a private foundation unless it qualifies for one of the public charity exceptions. For some organizations, the primary distinction between a public charity and a private foundation is its sources of financial support.

Public charities. The following section 501(c)(3) organizations are classified as public charities.

Organizations that are public charities based upon their activities (without regard to their sources of support), such as churches, schools, hospitals, medical research organizations, and cooperative hospital service organizations and agricultural research organizations (sections 509(a)(1) and 170(b)(1)(A)(i), (ii), (iii), and (ix)).
Organizations that normally receive substantial support from grants, governmental units, and/or contributions from the general public (sections 509(a)(1) and 170(b)(1)(A)(iv) and (vi)).
Organizations that normally receive more than one-third of their support from contributions, membership fees, and gross receipts from activities related to their exempt functions, and not more than one-third of their support from gross investment income and net unrelated business income (section 509(a)(2)).

Private operating foundations. A private operating foundation actively conducts exempt programs. Private operating foundations are subject to more favorable rules than other private foundations in terms of charitable contribution deductions and attracting grants from private foundations. In order to be classified as a private operating foundation, an organization must meet certain support tests. Search for “private operating foundations” at IRS.gov for more information.

Key distinctions between public chari- ties and private foundations. Foundation classification is important because different tax rules apply to the operations of each entity. For more information on the different rules, see IRS.gov/Charities-Non-Profits/EO- Operational-Requirements-Private- Foundations-and-Public-Charities .

Foundation classification has

TIP nothing to do with the name of the

organization. Many organizations that aren't private foundations include the word “foundation” in their names.

State Registration Requirements

Tax exemption under section 501(c)(3) is a matter of federal law. After receiving federal tax exemption, an organization may also be required to register with one or more states where it holds assets or where it will solicit contributions. The organization may also need to seek exemption from state taxes. The National Association of State Charity Officials (NASCO) maintains a website that provides informational links to the various states for these purposes. It can be accessed at nasconet.org .