What are some of the benefits of having the IRS 501c3 tax exemption?A nonprofit that qualifies for tax-exempt status is not liable for taxes to the federal government on income (if it is related to their tax-exempt purpose). Donations and contributions to the organization would be tax deductible to the person or organization donating
Is a church required to obtain federal tax-exempt status to operate?A church is considered to be tax-exempt irrespective of filing a tax-exempt application. Many churches are applying for tax-exempt status to position themselves to compete for more funding from federal, state and private foundation funds.
What are basic responsibilities of board members?Board members are responsible for:
- Determining the organization’s mission and purposes;
- Selecting the executive staff through an appropriate process;
- Providing ongoing support and guidance for the executive;
- Reviewing his/her performance;
- Ensuring effective organizational planning;
- Ensuring adequate resources; Manage resources effectively;
- Determining and monitor the organization’s programs and services;
- Enhancing the organization’s public image;
- Serving as a court of appeal; and
- Assessing the performance of the board.
What is the recommended number of board members for a nonprofit organization?It is recommended that an organization have at least five board members. Having an odd number allows for resolving ties during votes. Your organization’s by-laws will determine the number of board members appropriate for your organization.
How long does it take to receive your nonprofit status from the Internal Revenue Service?The average response time is up to 180 days or 6 months. This time will vary depending on the case load of the IRS representative and your response time.
After receiving your tax exempt status, are there any state reporting requirements?The state of Mississippi requires that nonprofit organizations file the United Registration Statement form annually. There is a $50 application fee associated with this form. This form is normally due on your anniversary date of incorporating with the state.
What are some user-friendly accounting software packages for nonprofit organizations?Many organizations are using Quickbooks or Peachtree. Each of these packages allow for easy integration of nonprofit accounts and related information.
What is the IRS Form 990 and when is it due?Form 990 is the Annual Information Return which nonprofit organizations must file with the Internal Revenue Service within four-and-a-half months following the end of the its fiscal year.
What information are nonprofits required to disclose to the public?Nonprofit organizations are required to disclose its exemption application and its three most recently filed annual information returns. An exemption application includes the Form 1023 (for organizations recognized exempt under § 501(c)(3).
What role does private inurement play in IRS audits?A nonprofit organization is not supposed to operate for the benefit of an individual. If the IRS determines that an individual is deriving inurement from the nonprofit, then the organization may lose its exempt status.