Section 501(c)(3) status is recognized by the Internal Revenue Service for federal income tax purposes and the states are not involved. 501 (c)(3) status does not have to be “renewed.”
But under the new provisions of the Pension Protection Act of 2006, a small charity that is not required to file a Form 990 because its gross receipts are below the threshold for filing will be required to file a new statement that it continues to exist. Any charity required to file the new report or a tax information return will lose its exempt status if it fails to do so for three consecutive years. The report is not so much a renewal as a confirmation of continued activity. (See Ready Reference Page: “Small Nonprofits Must File E-Postcard to Retain Exemption.”)
Many organizations receive an “advance ruling” that they qualify as public charities rather than private foundations when they receive their original letter of recognition of exemption. Those organizations must subsequently prove to the IRS that they have sufficiently broad sources of support to qualify as public charities on the basis of their first five years of income. But the question is whether they are public charities or private foundations, not whether they are 501(c)(3) exempts. (See Ready Reference Page: ‘Calculating Public Support.”)
Some states require periodic reports to maintain corporate status within the state and failure to do so can cause lose of corporate status. Some require periodic renewal of charitable exemption for sales or other taxes. Check with a knowledgeable attorney in your state.
With pressure mounting on nonprofits to consider affiliations with other organizations, this workshop is designed to help you better navigate the world of mergers, acquisitions and affiliations. Unlike the corporate world, there are no financial "matchmakers" to help nonprofits identify successful partners for a merger. Learn more in our pre-recorded webinar.
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