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.
A PUBLIC CHARITY organization must meet a 509(a) exception.
The criteria for being a 509(a)(1) public charity simply refers to organizations engage in inherently public activities described in Section 170(b)(1)(A)(i)-(vi):
- IRC § 170(b)(1)(A)( i) – Churches
- IRC § 170(b)(1)(A)(ii) – Schools
- IRC § 170(b)(1)(A)(iii) – Hospitals
- IRC § 170(b)(1)(A)(iv) – Endowment for a college/university
- IRC § 170(b)(1)(A)(v) – Governmental entities
- IRC § 170(b)(1)(A()vi) – Publicly supported charities
Publicly supported organizations:
- More than one-third of support from gifts, grants, contributions, membership fees, and certain gross receipts
- Not more than one-third from gross investment income and net unrelated business taxable income.
Supporting organizations that, in general, support organizations described in IRC § 509(a)(1) or (2), although they themselves are not publicly supported.
Organizations that are organized and operated for the purpose of testing products for public safety.