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501(c)(3) Tax Compliance

One of the most significant benefits to being a non-profit organization and obtaining 501(c)(3) status with the Internal Revenue Service (IRS) is the tax-exempt status it affords the organization. At Carolina Estate Planning, we understand the importance of maintaining 501(c)(3) tax compliance and can provide guidance throughout the formation and administration of your non-profit.

Understanding Section 501(c)(3) of the Internal Revenue Code

The IRS states that in order to be tax-exempt under section 501(c)(3), an organization “must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e. it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.” 

What does “organized and operated” mean?

In order to comply with the “organized and operated” portion of Section 501(c)(3), an organization: 

  • Must be either a corporation, fund, foundation, or community chest. Charitable trusts qualify; individuals do not.
  • Must only engage in substantial activities that further the purpose of the organization.
  • All of the organization’s assets must be dedicated to an exempt purpose- permanently.

What are “exempt purposes”?
Exempt purposes include:

  • Charitable
  • Religious
  • Educational
  • Scientific
  • Literary
  • Testing for public safety
  • Fostering national or international amateur sports competition
  • Preventing cruelty to children or animals

What does “none of its earnings may inure to any private shareholder or individual” mean?

This means that none of the proceeds of the organization may be private interests. For example, the proceeds cannot be used to benefit the creator of the organization or their family.

Ongoing Filing Requirements

There are several state and federal filing requirements organizations must comply with to maintain their 501(c)(3) status. They include:

  • North Carolina Charitable Solicitation License: This license gives the organization the ability to solicit funds from the public. It must be filed within 4 months and 15 days of the close of the organization’s fiscal year.
  • IRS Form 990: Like the Charitable Solicitation License, this federal return is due within 4 months and 15 days of the close of the organization’s fiscal year.
  • Comply With North Carolina Secretary of State: The North Carolina Secretary of State requires that all non-profit organizations maintain a registered agent that is located within the state. The name and address of the registered agent must be kept current at all times.

Speak With A 503(c)(3) Tax Compliance Attorney 

I am attorney Jeff Bloomfield, and if you need guidance with tax compliance issues involving a 501(c)(3), I am here to help. I encourage you to reach out to me to discuss your questions and concerns. I am available at 336-221-4457 or you can reach me online. I look forward to hearing from you!

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