Is Your Non-Profit Tax Exempt?

On Behalf of Griswold LaSalle Cobb Dowd & Gin LLP

A common misconception is that a non-profit corporation is the same thing as a “501(c)(3)” tax-exempt entity.  They are two separate, but related ideas.

Only a 501(c)(3) organization can accept tax deductible contributions and is tax exempt.  Being tax-exempt means the organization does not pay federal income tax, and contributions made by donors can be tax deductible.  It’s a win-win situation.

Forming a non-profit corporation is merely the first step to becoming a 501(c)(3) organization.  Merely being a non-profit does not mean the organization pays no taxes, and donations made to a non-profit corporation are not tax deductible unless the non-profit is a registered 501(c)(3).  There are many non-profit organizations that pay income tax.

In addition, a non-profit corporation is also responsible for state taxes on any donations received unless they are exempted by the state which is a separate process from getting 501(c)(3) status.

If you are curious, you can check the status of any organization which claims to be tax exempt online at the IRS website by visiting

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