We recently formed a non-profit in Texas but do not want to file for 501c3 tax exempt status. When we created our bylaws your site was very helpful to us. I thought I read somewhere on your site that it is better to include the IRS 501c3 verbiage from the beginning so that if we ever decided to do that, it would already be included.
I now can not find where I thought I read that.
Do we need to include it anyway or should it be left out if we have no plans on filing 501c3?
Thanks so much,Cathy
Cathy,
The IRS requires their specific language to be included in your “organizing documents.” That’s usually the Articles of Incorporation or Articles of Association if your group is not a nonprofit corporation.
This requirement is found in the IRS Instructions to the Form 1203 Application for Tax exempt Status and IRS Pub 557 Tax Exempt Status for Your Organization (p. 22)
If you have no plans to request tax exemption as a 501(c)(3) charitable or educational organization, then your Articles of Incorporation do not have to include the IRS required language.
But, being a CPA, I always think about money and taxes, so I will warn you that without 501 tax exempt status of some kind (501c3 or c4 or c7), your organization must be filing a corporate income tax return, IRS Form 1120, every year and paying federal taxes on any surplus you had that year. Texas may have a corporate or franchise tax as well.
By the way, that Form 1120 can be pretty complex. You’ll probably need professional help from a CPA to prepare it. You have to prepare and submit this form every year even if you didn’t have any profit! The Form 1120 shows the IRS that you didn’t have any profit!
So, you might want to reconsider your decision not to apply for tax exempt status.
I’m happy to discuss the pros and cons of tax exempt status with your board. Contact me.
