Quite often, people underestimate the time and effort that it takes to begin a nonprofit organization. The process can be confusing and tedious. If you are contemplating establishing a nonprofit organization or seeking to obtain federal or state tax exempt status, the attorneys at Pratt & Thomas will provide confidential, personal, and compassionate legal counsel.
501(c)(3) Tax Exempt Status
An organization becomes tax-exempt from federal income taxation by applying for recognition of exemption from the Internal Revenue Service (IRS). In order for an organization to qualify for exemption from paying federal income taxes, the organization must be organized and operated exclusively for one of the following: religious, charitable, or scientific purposes; for the purpose of testing for public safety, furthering amateur sports competitions, or furthering literary or educational ends; or for the prevention of cruelty to animals or children. The process of seeking 501(c)(3) recognition requires the filing of Form 1023 – Application for Recognition of Exemption with the IRS. This application must be completed with accuracy and proper advocacy because the IRS will examine it carefully to make sure that the proposed organization exits to benefit the public in some manner.
The Texas Tax Code provides exemptions from paying sales, franchise, and hotel occupancy taxes for organizations meeting specific requirements. A nonprofit organization that is characterized as charitable, religious, educational, or as a homeowners association may be exempt from paying sales, franchise, and/or hotel occupancy taxes. In order to obtain Texas tax exemptions, an organization must complete the appropriate Texas Application for Exemption and submit it to the Texas Comptroller of Public Accounts. The type of application completed will determine if an organization will be exempt from paying sales, franchise, and hotel occupancy taxes or if it will only be exempt from sales and franchise taxes.
The attorneys at Pratt & Thomas have helped dozens of people with non-profit set up and with obtaining state tax exempt status. We will meet with you at no cost to help determine the correct approach to solving your particular issue. We will help you ensure all requirements are fulfilled so that your nonprofit organization receives its federal and state tax exemptions.
For a consultation and evaluation of your situation, call us today!214-741-2186