Once they achieve non-profit status, startup charities and other non-profits often feel that they already cleared the most difficult bureaucratic hurdles they must face.  In fact, effectively maintaining non-profit status requires constant vigilance and attention to the laws and regulations governing tax-exempt status.  The following are some quick tips for new organizations looking to maintain their tax-exempt status. For more detailed and tailored information, non-profits should consult with an experienced Minneapolis non-profit lawyer.

Fundraising: Solicit donations from the general public

To maintain their tax-exempt status, 501(c)3 organizations must receive at least one-third of their support from the general public.  For new 501(c)3s, this usually means that they must devote a substantial amount of time and energy to fundraising.  Even if the organization came into being because of a single grant from a foundation, corporation, or wealthy philanthropist, the tax-exempt organization must immediately begin to solicit funds from the public at large.

Taxes: File and pay on time

501(c)3 tax-exempt organizations do not have to pay the same kinds of taxes as other incorporated organizations.  For example, 501(c)3s do not need to pay income tax on profits, as all revenue should be used to further the public mission of the organization.  But if the 501(c)3 has employees, it must pay federal income tax withholding, Social Security, and Medicare taxes for those employees.

Although non-profits do not need to pay taxes on their income, they still must file annual returns with the Internal Revenue Service.  Organizations must file by the 15th day of the fifth month following the end of their financial year.  Non-profit organizations that normally have gross receipts of $25,000 or more must file Form 990 or Form 990EZ along with Schedules A and B.  Organizations with gross receipts under $100,000 and fewer than $250,000 in assets may file Form 990EZ—all others must use Form 990.

Daily operations: Follow the rules

Non-profit organizations must stay within boundaries set by the IRS and Congress.  For example, non-profits may not intervene in any political campaign or endorse any candidate for office without putting their 501(c)3 status at risk.  Additionally, non-profits may not publicly oppose any candidate. 

Tax-exempt organizations must exercise caution when taking stances on legislation and public policy issues. The Internal Revenue Code prohibits non-profits from devoting more than an insubstantial portion of their activities to lobbying and other attempts to influence legislation. 

Experienced Minneapolis non-profit lawyer serving Minnesota and Ohio

The Urban Law Group PLLC  assists nonprofit entities with formation, charitable trust registration, 501(c)3 status, fundraising, gaming and bingo, fiduciary duties, and legal compliance.  Seasoned non-profit attorney Jennifer L. Urban, Esq. has dedicated her career to providing high-quality legal services to non-profit organizations throughout Ohio and Minnesota.  For help and advice on non-profit related legal issues, please contact her online, by phone at (612) 284-6441 or toll-free at (877) 309-4394.

Urban Law Group, PLLC
The Minnesota Center
7760 France Avenue S.,
11th Floor
Minneapolis, MN 55435

The Minneapolis-based Urban Law Center PLLC offers quick guidelines for non-profits seeking to maintain their tax-exempt status.  It is essential that 501(c)3 organizations be careful to abide by fundraising and tax law requirements.

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