Need Opinion On Charitable Contribution Deductions

Not-for-profit is not the same as tax-exempt. Publication 526 is quite clear:

"You can deduct your contributions only if you make them to a qualified organization. To become a qualified organization, most organizations other than churches and governments, as described later, must apply to the IRS."

So, no, contributions are not tax deductible. From what you say, your organization may qualify as a 501(c)(19) veterans organization or a 501(c)(4) social welfare organization, which have less onerous qualification rules than 501(c)(3).

See

Note the words "most organizations" have to apply to the IRS. The instructions to Form 1023 very explicitly say that if gross receipts are $5000 or less you may be considered tax-exempt under Sec. 501(c)(3) without applying for a determination letter.

No form 1023 filing => no contribution deduction. It's that simple.

Exactly. There are basically two kinds of nonprofits - those who can accept deductible contributions because they qualify under §501 (c)(3), and those who can't take deductible contributions but qualify as non-taxable under another subsection of §501(c).

Again, tax exempt (not having to pay income tax) is not the same as being able to accept tax deductible contributions. Can a nonprofit that has not been approved under §501(c)(3) actually accept deductible contributions if they don't take in too much money? I haven't had occasion to look into this issue, but I'd doubt it.

Everyone seems to say No. Then would someone please explain to me why the IRS says that you don't have to submit Form 1023 to obtain a determination letter that you are tax-exempt as long as your gross receipts are under $5K.

=============================Who Is Eligible for Section

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. ============================= The corporation I described is organized and operates exclusively for charitable purposes. It has gross receipts that are less than $5K.

I left out the last paragraph from the 1023 instructions: ====================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

recognition

Are you certain that the exception isn't just for churches?

I also found this blurb in IRS Pub 557. Note the words "These organizations are exempt automatically....."

Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. These include: ? Churches, interchurch organizations of lo- cal units of a church, conventions or as- sociations of churches, or integrated auxiliaries of a church, such as a men?s or women?s organization, religious school, mission society, or youth group. ? Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). These organizations are exempt automatically if they meet the requirements of section 501(c)(3).

I think you are correct. That is what I concluded a number of years back when I filed paperwork on behalf of an organization that qualified under

organization

Note: A charity has no control over whether its gross receipts will exceed $5k for the year, as contributions are under donor control until made. Returning a donation is to assert control over it, which means it has been received, so refusal of acceptance will not skirt the requirement.

As for wanting the determination letter, such is generally necessary for certain exemptions under state and local laws, especially sales and property taxes.

This is just plain nutty. Of course a charity can exercise control over the donations it receives. Just about every large charity has a policy statement on acceptance and refusal of donations. Do you think Greenpeace is going to accept a donation from British Petroleum?

This charity is so small, it can easily control the amount of money and property it receives as it would not be in the best interest of the charity to grow beyond a certain point. A donation refused does not generate gross receipts.

This is a non-issue for this small charity as they would not be subject to any business personal property taxes and they are not seeking any exemption from sales taxes.

My recollection of the $5K limit is flexible. As I recall in a very limited number of years (perhaps one out of five) it can receive up to $15,000 or $25,000. I don't remember the exact numbers.

First of all, let me say that I would certainly defer to the expertise of the other posters, who are tax professionals.

And as some other people have pointed out "tax exempt" is not the same thing as "able to receive tax deductible contributions".

Tax exempt means that the organization doesn't have to pay taxes. This applies to the taxation of the organization. There are tax exempt organizations to whom contributions are NOT tax deductible.

I would draw your attention in particular to the sentence in the passage you quote above which reads "these organizations may choose to file Form 1023 in order to receive a determination letter that ... specifies whether contributions to them are tax deductible."

So it would seem to be the case that if you want tax deductible contributions you need to file.

I wouldn't draw that conclusion.

I think you missed the point. To refuse a donation is to exercise control over it, which means that the gross receipts limit can easily be violated. The organization doesn't have control over donations attempted.

I was the "some other people" who said that. And based on other things people have posted, it was pretty clear to me (I have not done the research to verify it) that when receipts are small, not only is a qualified entity tax exempt, but it can receive tax deductible contributions.

That doesn't mean anything as far as the contributions are concerned. It only means that, if you want to give the donors confidence that contributions are deductible, it might be a good idea to get IRS approval. But it doesn't say that not doing so has any effect.

I doubt that a court would agree with your position, but note that an organization has some time after its receipts exceed the test limits to file its paperwork.

The regulation says "normally". So it seems like it's based on what they've received in the past and expect to receive in the future. Since it's hard to predict precisely, apparently they allow quite a bit of wiggle room, as long as they don't repeat it.