Does a nonprofit need to file a tax return before they receive tax exempt status? Yes, the IRS requires organizations to file information returns before they apply for tax exempt status.
Here’s what the IRS website states:
Tax Law Compliance Before Exempt Status Is Recognized
An organization that claims tax-exempt status under section 501(a), but has not yet received an IRS letter recognizing exempt status, is generally required to file an annual exempt organization return.
So the answer is YES, you need to file either tax returns (and pay tax!) or information returns before you are granted tax exempt status.
In this short podcast episode (14 minutes) Carol Topp, the HomeschoolCPA, will explain this very confusing requirement.
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Have more questions about your homeschool organization’s tax exempt status? My book, The IRS and Your Homeschool Organization would be a big help.
The IRS and Your Homeschool Organization
Does your homeschool group need to pay taxes? Could they avoid paying taxes by being a 501c3 tax exempt organization? Do you know the pros and cons of 501c3 status? Do you know what 501c3 status could mean for your homeschool group?
I have the answers for you in my book The IRS and Your Homeschool Organization. The information I share in my book has been helpful to homeschool support groups, co-ops, music and sports groups and will help you understand:
- The benefits of 501c3 status
- The disadvantages too!
- What it takes to make the IRS happy
- What your state requires
- Why your organization should consider becoming a nonprofit corporation
- What is the difference between nonprofit incorporation and tax exemption
- IRS requirements after you are tax exempt
Carol Topp, CPA