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Tax-Exempt Organizations

Perhaps more than any other entity type, nonprofit organizations need to operate as efficiently as possible. Revenue and assets tend to be limited, and a philanthropic outcome, not financial growth, is the ultimate goal. Achieving tax exempt status means a massive financial burden is lifted, allowing the organization to devote more resources toward achieving its main objectives.

Careful planning is needed in order to make sure your organization falls under the IRS’s tax exempt designation. As Illinois’s full service law firm, Hart David Carson can provide you with the legal guidance necessary to navigate the complex regulatory minefield imposed on achieving this status.

IRS Regulations

The majority of tax-exempt entities are charitable organizations that fall under IRC section 501(c)(3) rules, which dictate that the organization must be designed for specific tax-exempt purposes. “Exempt purposes” include the following:

  • Relief for the poor or underprivileged
  • Lessening neighborhood tensions
  • Religious advancement
  • Scientific advancement
  • Literary purposes
  • Testing for public safety
  • National or international amateur sports
  • Reducing government-related burdens
  • Eliminating discrimination, prejudice, and other social issues

In addition, these organizations should not be structured primarily to influence legislation, or participate in political campaigning. Finally, the organization’s activities may not directly or indirectly benefit the private interests of its creator, shareholders, or similar individuals.

Compliance with these regulations and others set forth by the IRS can be difficult, especially since new rules are codified on a regular basis. Our attorneys can work with you to determine whether you qualify for tax-exempt status and to make needed changes if you do not.

Careful Organizational Structuring and Governance

The structure of a nonprofit or other tax-exempt entity needs to facilitate efficient operation while also maintaining compliance with strict federal and state standards. Our attorneys are highly experienced with corporate governance matters, so we can help you develop the governance structure and policies that you need in order to operate effectively as a tax-exempt organization.

Interactions With Other Organizations

Many of a tax-exempt organization’s operations will involve other entities, and it’s important to know how to structure those in a way that will maintain compliance with IRS and state rules. This can become highly complex as more involved transactions take place, so skillful legal counsel is absolutely vital to avoid any pitfalls. We help both tax-exempt entities and other organizations navigate these interactions and transactions in the most tax-efficient manner possible.

Legal Services

At Hart David Carson, we assist nonprofit organizations and charitable trusts with the following legal matters:

  • Organizational structure, governance, and conflict of interest issues
  • Filling and filing tax exemption applications
  • Private letter ruling requests
  • Compliance with fundraising and solicitation regulations
  • Legal counsel regarding international and domestic issues
  • Structuring joint ventures, mergers, restructurings, and acquisitions
  • Developing programs and initiatives
  • Minimizing liability for officers, directors, and the organization as a whole
  • Representation in the event of disputes, audits, and appeals
  • Managing resource usage, compensation issues, and similar matters

In order to obtain and maintain your tax exempt status and operate in a fiscally sound manner, consult with the tax attorneys at Hart David Carson today.

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