{"id":4865,"date":"2016-04-04T10:47:45","date_gmt":"2016-04-04T15:47:45","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/incorporation-and-legal-structures\/run-a-non-profit-keeping-your-tax-exempt-status.html"},"modified":"2024-05-22T23:19:48","modified_gmt":"2024-05-23T04:19:48","slug":"run-a-non-profit-keeping-your-tax-exempt-status","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/run-a-non-profit-keeping-your-tax-exempt-status.html","title":{"rendered":"Keeping Your Nonprofit Tax Exempt Status"},"content":{"rendered":"\n
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Keeping Your Nonprofit Tax Exempt Status<\/h1>\n
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\n By Jade Yeban, Esq.<\/a> | Legally reviewed by Aviana Cooper, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Running a nonprofit organization is rewarding but comes with certain responsibilities. This is especially true when it comes to taxes. As a nonprofit owner, you’ve worked hard to get your tax-exempt status. Note that just because you are tax-exempt does not mean that you are exempt from all taxes. Understanding your organization’s tax liability and ensuring all tax due is accurately reported and paid is key to maintaining your status.<\/p>\r\n

This guide will help you understand how to maintain that tax-exempt status in the future.<\/p>\r\n

Form your nonprofit with confidence.\u202fOur trusted partner LegalZoom has packages starting at $99 + filing fees.<\/a><\/i><\/b><\/p>\r\n

Maintaining Tax-Exempt Status: A Brief Overview<\/h2>\r\n

Maintaining tax-exempt status for a nonprofit organization involves a careful balancing act. Business owners must adhere to various tax laws and regulations. It’s essential to file the correct tax returns annually, even as a tax-exempt entity. This demonstrates ongoing compliance with the Internal Revenue Service<\/a> (IRS) and state requirements. <\/p>\r\n

This includes managing employment taxes for staff. It also includes understanding state-specific tax exemptions. You will also need to accurately report any taxable income from unrelated business activities.<\/p>\r\n

Staying up to date with filing requirements is key. You also need to keep meticulous financial records and understand the nuances of sales and use tax. Nonprofits must ensure their activities align with their stated mission and public support criteria to maintain their exempt status. The public support criteria are a set of guidelines used by the IRS. They help determine whether a nonprofit<\/a> organization qualifies as a public charity.<\/p>\r\n

Public Support Criteria<\/h2>\r\n

These criteria are important because they help differentiate public charities from private foundations. These two types of businesses are subject to different rules and regulations. The public support criteria focus on the sources of an organization’s financial support.<\/p>\r\n

To meet these criteria, a significant portion of a nonprofit’s funding must come from the general public, government grants, and other public sources. This is instead of a small group of individuals or families. This ensures that the organization is genuinely serving the public interest and is not being used for private benefit.<\/p>\r\n

There are two main tests for public support:<\/p>\r\n