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Show OMs, Social,-sensational Social,-sensational Groups Exempt tan DE3S Taxes The Internal Revenue Code lists more than 20 categories of exempt organizations, but by far the most common are those qualifying as religious, charitable or educational organizations or-ganizations under section 501 (c) (3) of the Code. ORGANIZATIONS cannot be treated as tax exempt under the law unless they apply ap-ply to the Internal Revenue Service and receive a favorable favora-ble ruling. Churches and charitable organizations (other than private foundations), founda-tions), whose gross receipts are normally not more than $5,000 annually, are an exception ex-ception as stated in IRS Publication 557, "How to Apply Ap-ply for and Retain Exempt Status for Your Organization." Organiza-tion." : The "Application for Recognition of Exemption," Form 1023 or 1024 require information in-formation on the purposes and proposed activities of the organizations, as well as financial data. DONATIONS to certain exempt organizations, .generally those qualifying f under section 501 (c) (3), are deductible as charitable contributions con-tributions on the donor's federal income tax return. Prospective donors can get advance assurance that their contribution is deductible by checking Publication 78, "Cumulative List of Organizations." Or-ganizations." In many instances organizations, or-ganizations, such as churches, apply for a group exemption letter which covers numerous subordinate groups within a larger organizational' grouping. To do this the central cen-tral organization must submit certain information on behalf of the subordinates to be included in the group exemption exemp-tion later. 1 IN ADDITION to the application procedure, most organizations wishing to maintain an exempt status are required by law to provide annually financial and other information to the IRS on Form 990, "Return of Organization Or-ganization Exempt From Income In-come Tax." Many organizations, otherwise other-wise tax exempt, may be liable lia-ble for tax as a result of carrying on a trade or business which is substantially substan-tially unrelated to their exempt purposes. Examples of income which could be taxable to an exempt organization or-ganization include profit from a manufacturing operation, retail sales, and proceeds from the operation of a ' parking lot. SOME activities are excluded by law from the definition of unrelated trade or business. Briefly, these include activities in which substantially all the work is performed without compensation compen-sation or are carried on primarily for the convenience of the organization's members, the sale of merchandise which had been donated to the organization, and certain regularly scheduled bingo games. Exempt organizations may be examined by IRS to determine deter-mine compliance with tax laws affecting their activities' and financial operations. To meet the requirements for tax exemption, a qualifying group must be organized and operated exclusively for religious, charitable, educational, educa-tional, or certain other specified purposes; prohibit inurement of income to a private individual or shareholder; and comply with certain restrictions on political poli-tical and lobbying activities. FAILURE TO comply with these requirements may result in IRS action to deny an application for recognition of exemption or revoke the tax exempt status of an organiza-tioa organiza-tioa Further information and assistance on exempt organization or-ganization matters is available availa-ble from local IRS offices. The IRS also offers the free pamphlets, "How to Apply for and Retain Exempt Status for Your Organization," Publication Publica-tion 557, and "Tax on Unrelated Business Income of Exempt Organizations," Publication 598. |