Non-profits will want to apply for and obtain federal and state nonprofit tax exemptions. Many groups don't want to form a non-profit unless they can qualify for tax-exempt status. Unfortunately, you must form your corporation before you submit your federal tax exemption application because the IRS requires that you submit a copy of your filed articles with the exemption application. Still, you should carefully review the tax exemption application before you submit your corporation papers. Doing so will give you a good idea of whether your organization will qualify for a tax exemption or not.
Most organizations obtain a federal tax exemption under Section 501(c)(3) of the Internal Revenue Code, for charitable, educational, religious, scientific, or literary purposes. States typically follow the federal lead and grant state tax-exempt status to nonprofits recognized by the IRS as 501(c)(3) organizations.
To qualify for a 501(c)(3) IRS tax exemption the organization must meet the following conditions:
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