General Tax-Exempt Entity Education

General Tax-Exempt Entity Education

We educate our clients on key issues surrounding the formation and generation of tax-exempt entities including the following:

Nonprofit Status and State Tax-Exempt Status: Nonprofit entities must be properly registered at the city, county and state level. To be exempt with respect to certain state taxes, an entity must be organized and operated in compliance with requirements for a nonprofit entity. Several state registrations and annual filings must occur to maintain a nonprofit entity. An entity that is tax exempt under federal law is often not exempt from all state level taxes.

Federal Tax-Exempt Status: A myriad of different types of tax-exempt entities are available. To be tax exempt at the federal level, a nonprofit must be organized and operated in compliance with requirements for a tax-exempt entity. Nonprofits generally must submit a tax exempt application to the IRS and receive a determination letter from the IRS to be recognized as tax exempt, although there are certain exceptions to this rule. Nonprofits recognized as tax exempt normally must file an annual information statement.

Director and Officer Fiduciary Duties: Directors and officers of a nonprofit have duties of care, loyalty and obedience.

Liability Protection: Directors and officers can protect themselves from liability through appropriate corporate minutes, proper processes and policies, annual reviews, governance documents, and other resources.

Conflicts of Interest: Transactions between a nonprofit and an interested person (such as a director, officer, substantial donor and that person's family) or the individual's related entities should be properly disclosed and determined to be reasonable and necessary.

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