Determination Letter from The U.S. IRS 501(c)(3)
Hope for Children Foundation provides our Determination Letter from the U.S. IRS for viewing by the general public. We usually have the letter updated once per year. Hope for Children Foundation received authorization as a U.S. IRS Public Charity 501(c)(3) in the year 1998.
Understanding the meaning of a U.S. IRS 501(c)(3)
Tax rules for nonprofit corporations are established, authorized and monitored by United States Internal Revenue Service, including the charitable organizations formed under state law and in accordance with Section 501(c)(3) of the federal tax code. An United States IRS 501(c)(3) is established to operate in the public interest or for charitable purposes and not for the profit of any individual or group. If the 501(c)(3) conforms with these requirements, it is usually authorized as being tax-exempt. The U. S. IRS is the final arbiter on tax status for charitable organizations, using determination letters to qualify its authorization and decisions.
Application Process for Tax-Exempt Status
To apply for 501(c)(3) tax-exempt status, an organization must go through a step-by-step processes required and outlined by the IRS. It must declare the type of organization it is; trusts, corporations and associations qualify. It must have a specific and exempt purpose, which may include a charitable, religious, educational or scientific purpose; foster amateur sports; or be organized for the prevention of cruelty to children or animals. It must submit its organizing documents, the completed IRS Form 1023, Application for Recognition of Exemption; and a user fee.
What is Allowable as a U.S. IRS 501(c)(3)
The tax – exemption allows a charitable organization to operate more efficiently when serving the public interest and devote more of its funds to whatever purpose it serves. Once an application for a charitable organization is approved by the U.S. IRS as a 501(c)(3) any donations or grants the group collects in order to operate, or any income it earns from its activities, do not incur tax. The IRS does, however, require these groups to file annual returns known as the 990 series, which report gross receipts, expenses and assets. The IRS requires different versions of the 990 depending on these amounts; groups with less than $50,000 in gross receipts may file electronically.
Receiving Donations as an Approved U.S. IRS 501(c)(3)
A tax-exempt status from the U.S. IRS 501(c)(3) also allows for individuals who donate to the group to deduct those donations from their taxable income. The IRS allows individuals to deduct donations to the organization for estate and gift tax purposes. This is truly a vital feature of the IRS tax code that encourages charitable donations, which for many individuals means reducing the tax rate they pay on their income.
Upon receipt, the U.S. IRS assigns an examiner, from the Exempt Organizations Rulings and Agreements Office for EO Determinations, to the application to process the submitted documents. The examiner ensures all required forms and reports are complete, and then issues a determination letter to the organization. The letter gives the contact name and number of the organization, date of the determination and its basic reporting responsibilities. The organization must follow guidelines and requirements of the U.S. IRS or the organization can be terminated by the U.S. IRS.
Care and Handling
The IRS determination letter is a vital document that every 501(c)(3) organization must keep safe. State laws vary, but in order to keep nonprofit status current, the group may be required to file a copy of the determination letter with the state agency that registers nonprofits. Grant applications and other formal funding programs usually require a copy of the determination letter, which should also be available to individuals or groups requesting information on the group’s legal and tax status.
References & Resources
gov: Publication 557: Tax-Exempt Status for Your Organization
gov: Form 1023, Application for Recognition of Exemption
gov: Rulings and Agreements: Exempt Organizations Determination Letter Program
gov: Form 990: Return of Organization Exempt From Income Tax