What Exemptions Does a Nonprofit Organization Under Category 501(c)(3) Have?


Quick Answer

A charitable nonprofit organization registered under category 501(c)(3) receives an exemption from federal income tax, according to the IRS. In addition to tax exemptions, donors to a 501(c)(3) organization that is religious, charitable, scientific, literary or educational as well as those that are sporting or providing relief to the poor and oppressed may claim tax deductions.

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Full Answer

Organizations that receive 501(c)(3) exemptions are permitted to apply for funding from federal, state or local agencies and private foundations through grants, according to the Council of Literary Magazines and Presses. Since the rules governing 501(c)(3) exemptions vary from state to state, some organizations may be exempt from paying other taxes such as sales tax and property tax, the Foundation Group reports.

If an organization is eligible for excise taxes on insurance premiums or annuity contract payments, the organization is exempt from paying such taxes if the beneficiaries are also organizations, according to the IRS. The U.S Postal Service offers discounted postage to charitable and nonprofit private charities or public foundations registered under the Internal Revenue Code 501(c)(3).

Individuals and partnerships do not qualify for exemptions under 501(c)(3). Other organizations that are exempt from income tax are permitted to operate separate funds that may be tax exempt under this section, according to IRS guidelines.

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