Charitable Contributions

No, you are not off base. Sec.6033(a)(3) merely provides an exemption from having to file an annual return to certain tax-exempt organizations. This has nothing to do with the organization's tax-exempt status or a taxpayer's ability to deduct a contribution to a qualified charitable organization.

That is the way I have always thought. - er, that they would be deductible, not that you are off base.

I thought, and I think Stuart was asking, if a qualified nonprofit that grosses less than $5,000 per year it isn't even required to file with the IRS to obtain its 501(c)(3) status - it is automatic unless somehow revoked by the IRS. This is in addition to possibly not having to file annual returns.

I wasn't asking about the organization filing a return.

My question is, for a 501(c)(3) nonprofit that is not required to and does not file Form 1023, whether contributions to that organization are nevertheless deductible.

I'd say yes, for example, religious organizations also fall in the category you describe, and folks routinely deduct those contributions.

However, if they don't file Form 1023, all the usual tools for verifying their status, such as online Pub 78, would not be available. This would seem to shift the risk to the taxpayer to ensure the organization is indeed eligible for tax-deductible contributions. All other things being equal, I'd rather contribute to an organization that has official IRS recognition.

Per the Form 1023 instructions:

"Form 1023 not necessary. The following types of organizations may be considered tax exempt under section

501(c)(3) even if they do not file Form 1023. ? Churches, including synagogues, temples, and mosques. ? Integrated auxiliaries of churches and conventions or associations of churches. ? Any organization that has gross receipts in each taxable year of normally not more than $5,000.

"Even though the above organizations are not required to file Form 1023 to be tax exempt, these organizations may choose to file Form 1023 in order to receive a determination letter that recognizes their section 501(c)(3) status and specifies whether contributions to them are tax deductible."

Thanks, Mark.

OK, but don't forget state rules. They might require the state version of form 1023 to be filed. For example, in CA

says that the charitable trust (is that an organization) should file if it receives assets -- and cash is an asset. There appears to be no $5,000 exemption. I think there is a filing fee too, of $10 or $25 if late, and a few charitable/religious organizations are exempt (educational, religious, charitable org for prevention of cruely to animals/children).

Wow, very interesting. I did not know that. For some start-up nonprofits, I wonder if that could be an easier way to get started in the beginning -- and maybe make it easier later on if the nonprofit grows and they need to file a Form 1023. By that I mean that if the nonprofit has been operating appropriately as a nonprofit for several years while its gross receipts are less than $5,000 then when the gross receipts increase it will be easier to complete the Form 1023 and show an accurate history of revenues and expenses as well as nonprofit activities. Completely new nonprofits have to project what they will be doing in completing the Form 1023, but an existing nonprofit (with less than $5,000 in gross receipts) can accurately show what it has been doing.

My interpretation of the above is that the organization can act as a non-profit. Does that automatically imply that the donor can act as if the organization is a 501(c)(3)?

Yes, but the donor will have a tough time in the case of an audit.