Nonprofit - no 1023

Mar 01, 2020 Last reply: 6 years ago 4 Replies
S

Hi all -



According to the IRS, a non-church nonprofit can qualify under section



501(c)(3) without filing Form 1023, if it normally takes in gross revenues of under $5,000.

My question is, is a nonprofit that qualifies without filing, able to receive contributions that are tax deductible to the donor? I'd think not, though religious organizations can take deductible contributions even if they don't apply for exemption. And I don't see any other rules dealing with "under $5,000" organizations.



I'd appreciate any insight you may have. I've checked the code and regulations under both sections 501 and 170, but have not found anything at all on this point, which leads me to believe that deductible contributions can be made to such organizations.



Thanks.


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A

If the organization meets the definition in Section 501(c)(3) and gross receipts are not more than $5000, then they are tax-exempt. If a taxpayer makes a contribution to the organization that meets the definition in Section 170(c) as a charitable contribution, there is a deduction. Formal filing by the organization for recognition of

501(c)(3) status by the IRS is not required to meet the Sec. 170(c) definition for the deduction.

Additionally, at least here in CA, I don't know of an equivalent gross receipts rule for being tax-exempt in CA. The only way to do that is to file the applicable form (assumes entity filed the papers with the Sec'y of State to be a nonprofit) which mimics the federal 1023. CA has a short form version but that can only be used if you already filed the

1023 and got IRS recognition. Basically, you might as well file the 1023 for formal recognition.

All that said, it is extremely difficult for these small organizations to get contributions without formal recognition.

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J

It says here that they are.

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S

Thanks John. I actually saw that page but didn't read that particular sentence.

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S

Thanks Alan. I appreciate the insight.

As far as California goes, this webpage from the Franchise Tax Board (or whatever it's calling itself now) says that there is no state equivalent to the federal $5,000 rule:

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