There are several types of businesses that are eligible to apply for tax exemptions from the government. These business types include churches, charities, political organizations, private charitable foundations and other non-profit business types. There are very specific IRS requirements and regulations in place for tax-exempt organizations, which must be followed closely in order to retain the exemption each year. Keep in mind that attaining tax-exempt status with the IRS is for federal taxes only. State tax exemptions are handled on state level and may have different qualifications and requirements.
Applying For Tax Exempt Status
In order to apply for tax exemption, a business must follow the process lined out by the Internal Revenue service. An Employer Identification Number must be obtained before applying for exemption, even if an organization has no employees. This can be done online, over the phone or by filing a form SS-4 either by mail or by fax.
Once an EIN has been issued, the organization can then apply for recognition as a tax-exempt business from the IRS by filing Form 1023 or Package 1024. Be sure to fill out the form completely and accurately in order to have your application processed in a timely manner. According to the IRS, the factor causing the most delays in processing exemption applications is businesses failing to submit the correct user fee for application. Refer to section 6 of the current Revenue http://www.youtube.com/watch?v=tDCe4X6GrqI