Filing for Tax Exemption Status
Filing for tax exemption status will likely take the longest amount of time for the start up of any not-for-profit organization. Even once the application (Form 1023) has been submitted, there is still a chance that the IRS can deny your status and request that you resubmit the form. In 2005, Congress really cracked the whip, if you will, and proposed to “clean up” non-profits by requiring them to submit a tax exempt status form every five years (Collins, 2005). Fortunately, I am still only working on my first form, but unfortunately this new procedure means that I need to remain up to date on all my revenues and expenses and remember to submit and tax exempt form ever five years to remain a tax exempt not-for-profit. Being tax exempt means that individuals, foundations or businesses who give monetary or in-kind donations receive a tax write off when they file their taxes each year.
A charitable organization now has to demonstrate that they continue to deserve tax exemption status by following numerous information with the agency, such as the articles of incorporation, financial statements, bylaws, salaries of top ranking executives (for non-profits who are large enough to have paid staff), and prior, current and contemplated activities for that projected period (Collins, 2005).
Sooner than later,
The Tiny Professional