Nonprofit organizations enjoy tax-exempt status but must meet strict compliance requirements to maintain it. Here’s how:
1. File Annual Tax Returns (Form 990)
Nonprofits must file Form 990 annually to report financial activities and maintain transparency.
2. Operate for Exempt Purposes
Ensure that your nonprofit’s activities align with its mission statement and tax-exempt purpose as defined under IRS Code 501(c)(3).
3. Avoid Political Campaigning & Lobbying
Excessive political activities can lead to loss of tax-exempt status. Nonprofits should remain non-partisan.
4. Follow Proper Record-Keeping Practices
Maintain detailed records of donations, expenditures, and governance to ensure compliance and financial accountability.
5. Maintain Public Charity Status
If classified as a public charity, ensure that at least one-third of funding comes from public donations or grants.
How to Stay Compliant
- Regularly review IRS guidelines.
- Train board members and staff on compliance best practices.
- Conduct internal audits and work with a tax professional.
By staying informed and proactive, businesses and nonprofits can navigate legal and tax complexities successfully. Need expert legal guidance? Contact Visa Immigration Pro today for tailored compliance and business solutions!
