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Tax Exemption for Nonprofits

Forming a nonprofit corporation with your state does not automatically qualify you for federal tax exemption with the IRS. Once you have created your nonprofit by filing the necessary documents with your state, if you want federal tax exemption, you must file a separate application with the IRS. This application is often referred to as the 501(c)(3) application since that is the IRS code section most commonly applicable to nonprofits. In fact, there are more than 20 code sections for nonprofit qualification. Another common one is 501(c)(7), which applies to social and recreational clubs.


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