I have incorporated a nonprofit and obtained a tax ID number, but haven’t filed yet for 501(c)(3) status. I am about to host a fundraising event. Can I solicit money for the nonprofit or will I need to pay taxes on the money donated until the exemption letter is received?
If you file an application for recognition of charitable exemption within 27 months after the end of the month in which the organization was incorporated, the exemption will revert back and be effective as of the date the organization was formed. Therefore, gifts received at the fundraiser should be deductible by the donors and not subject to tax in the organization.
Be sure you determine if you have to register in order to solicit charitable contributions in your state (or other states) before you begin solicitations. You don’t want to start out violating the law.