Nearly everyone’s heard of the infamous 501(c)(3) tax-exempt formation. But did you know that there are other no less than 32 tax-exempt options for nonprofits?
To follow is a listing of four of the most popular ones — including 501(c)(3) — along with a brief description of what makes each of them unique …
501(c)(3)
These are typically public charities or private foundations established for a variety of purposes including: religious, educational, charitable, scientific, literary, testing for public safety, fostering of national or international amateur sports, or prevention of cruelty to animals and children.
- Application form number: 1023
- Annual return required to be filed: 990 or 990EZ, or 990-PF
- Charitable contributions allowable: Typically, yes
501(c)(4)
Geared toward civic leagues, social welfare organizations, and local associations of employees. This type of nonprofit generally promotes community welfare, as well as charitable, educational and recreational endeavors.
- Application form number: 1024
- Annual return required to be filed: 990 or 990EZ
- Charitable contributions allowable: No, generally
501(c)(6)
This type of nonprofit is often a business league, chamber of commerce, or real estate boards. The general nature of activities involves improvement of business conditions of one or more lines of business.
- Application form number: 1024
- Annual return required to be filed: 990 or 990EZ
- Charitable contributions allowable: No
501(c)(7)
Consisting predominantly of social and recreation clubs, this type of nonprofit organization focuses on pleasure, recreation and social activities.
- Application form number: 1024
- Annual return required to be filed: 990 or 990EZ
- Charitable contributions allowable: No
A Note on Defining Your Business Purpose
Your business purpose is an explanation of what your nonprofit corporation is formed to do or provide. Having a very detailed description is essential. If you plan to apply for tax-exempt status, the IRS will require a copy of your Articles of Incorporation and will pay particular attention to your business purpose and use it to classify your business.
For a complete list of nonprofit, tax-exempt formation choices, visit our IRS Organization Reference Chart.
We’re Here to Help
If you have questions, or would like assistance with forming a nonprofit company, feel free to give our customer service team a call between 8am and 7pm CST, at 800-981-7183. Or, send us an e-mail anytime. We’re always happy to help.
These are good explanations of the different corporate structures available – it is important to choose the best one for your specific tax situation.