Texas Nonprofit Annual Maintenance Attorney

When filing your annual taxes, pay special attention to Section 501 (c)(3). Section 501(c)(3) is the portion of the US Internal Revenue Code that allows for federal tax exemption of nonprofit organizations, specifically those that are considered public charities, private foundations or private operating foundations. The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals.  If your nonprofit falls out of this purview, you should not attempt to file under this section.

With any nonprofit, you must demonstrate that your business operates solely in service of its mission. You cannot stray from your initial purpose, and any new services you provide must be added to your mission. For example, if you help support disease research and decide to also help the homeless, you could be disqualified for withholding that information. If you need help incorporating new aspects into your organization, allow Perliski Law Group to help keep your exemption valid.

The IRS will scrutinize the money that comes into your corporation and how it is used. Groups that qualify for Section 501 (c)(3) may pay their employees a fair salary based on market values, but they cannot give bonuses for performance. They cannot support private interests within or outside of the nonprofit. Income may originate from places beyond donations, but it is strictly limited. For example, it cannot come from unrelated businesses, and merchandising is also limited. All Section 501 (c)(3) earnings must be used for the advancement of the organization’s cause. In general, no organization may qualify for section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation (commonly known as lobbying).  A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status. Supporting political candidates running for office is expressly prohibited.

At Perliski Law Group, we understand the complexities of nonprofit income. We can help guide you, keeping you from making mistakes as you bring in money. If your good faith actions are misconstrued by the IRS, we can help represent you, explaining how you were operating within the bounds of legal restrictions.