Step 3: Get Your IRS Approval for Tax Exempt Status
The IRS code allows you to operate as a nonprofit, tax-exempt organization. We recommend having a lawyer and accountant with nonprofit experience advise you on the proper steps to register and operate within government rules.
There are 27 different types of tax-exempt organizations under section 501(c) of the Internal Revenue Code.
1. 501(c)(1) – Corporations organized under the Act of Congress
2. 501(c)(2) – Title-holding companies for exempt organizations
3. 501(c)(3) – Religious, educational, charitable, scientific, literary, testing for public safety, to foster national or international amateur sports competition or prevention of cruelty to children or animals organizations
4. 501(c)(4) – Civic leagues, social welfare organizations, and local associations ofemployees
5. 501(c)(5) – Labor, agricultural and horticultural organizations
6. 501(c)(6) – Business leagues, chambers of commerce, real estate boards, etc.
7. 501(c)(7) – Social and recreational clubs
8. 501(c)(8) – Fraternal beneficiary societies and associations
9. 501(c)(9) – Voluntary employee beneficiary associations
10. 501(c)(10) – Domestic fraternal societies and associations
11. 501(c)(11) – Teacher’s retirement fund associations
12. 501(c)(12) – Benevolent life insurance associations, mutual ditch or irrigation companies, mutual or cooperative telephone companies, etc.
13. 501(c)(13) – Cemetery companies
14. 501(c)(14) – State-chartered credit unions, federal credit unions, and mutual reserve funds
15. 501(c)(15) – Mutual insurance companies or associations
16. 501(c)(16) – Cooperative organizations to finance crop operations
17. 501(c)(17) – Supplemental unemployment benefit trusts
18. 501(c)(18) – Employee funded pension trusts
19. 501(c)(19) – Post or organization of past or present members of the Armed Forces
20. 501(c)(20) – Group legal services organizations
21. 501(c)(21) – Black lung benefit trusts
22. 501(c)(22) – Withdrawal liability payment fund
23. 501(c)(23) – Veterans organizations
24. 501(c)(24) – Section 501(c)(3) Black Lung Benefit Trusts
25. 501(c)(25) – Title-holding corporations for exempt organizations
26. 501(c)(26) – State-sponsored organization providing health coverage for high-risk individuals
27. 501(c)(27) – State-Sponsored Workers’ Compensation Reinsurance Organizations
Remember that each type has specific requirements and qualifications that must be met to maintain tax-exempt status.