When Form 990 Schedule H Hospitals 2023-2024

Many people use the terms nonprofit corporation and tax-exempt organization interchangeably, but it's important to understand that they have different meanings. In the state of Minnesota, you can become a nonprofit corporation by filing with the Secretary of State's office. However, simply being a nonprofit corporation does not allow you to receive tax benefits or collect money from foundations. To be eligible for those benefits, you need to become a tax-exempt organization. This requires filing an application with the Internal Revenue Service using IRS Form 1023. This form can be quite lengthy and needs to be completed accurately. Our firm assists individuals in filing Form 1023 and guiding them through the process. The key factor in gaining tax-exempt status is proving to the IRS that your organization has a charitable purpose. The IRS generally accepts purposes related to education, charitable work for low-income individuals, housing, and healthcare. If your purpose aligns with these categories, the process should be straightforward, and approval is likely. However, the IRS may contact you for further clarification. Typically, it takes around 100 days from submission of the application to receiving approval. Therefore, it's important to plan ahead and file early if you wish to start fundraising. Keep in mind that there are fees associated with the application. If you expect your tax-exempt organization to raise more than $10,000 per year, the filing fee is $400. For organizations expecting to raise more than that, the fee increases to $850. While this amount may seem significant, there are options available to help cover those costs. Many clients in the Duluth area can approach local foundations or individuals for support. Additionally, you may consider partnering with a fiscal agent, such as a church or school, who can collect contributions on your behalf during the application process.