Tax-Exempt Organizations

We help organizations qualify for and maintain tax-exempt status

Certain organizations are exempt from paying state and federal income taxes, a valuable benefit that allows these organizations to pursue the important work they do more effectively. To qualify, your organization must meet some very specific structural requirements and a number of ongoing compliance requirements and restrictions. Our attorneys advise and represent schools, healthcare organizations, publicly supported charities, supporting organizations, religious organizations, and private foundations. We can help your organization by handling the legal issues so that your organization can devote more time to its charitable purpose.

Qualifying as a tax-exempt organization

The process of qualifying as a tax-exempt organization begins at formation. Under Internal Revenue Service (IRS) regulations, a corporation’s articles of incorporation must contain very specific language and must not allow for monetary distributions to shareholders or members. This can vary depending on the type of organization, including:

An organization seeking tax-exempt status must provide the IRS with a copy of its articles and other documentation with its application requesting tax-exempt status. We can guide your organization through the application process by drafting qualifying articles of incorporation and gathering necessary documents and forms.

Ongoing compliance requirements for tax-exempt organizations

Although tax-exempt organizations are generally not liable for income tax, they still need to file annual statements with the IRS and, if they solicit charitable donations, with the Ohio Attorney General’s Office. Tax-exempt organizations must also file a certificate of continued existence with the Ohio Secretary of State every five years. Our attorneys can help you understand how these requirements affect your organization.

Even if an organization is tax exempt, it may be liable for income tax and subject to additional reporting requirements if it has more than $1,000 in annual unrelated business income. Our firm can help your organization determine if a planned activity generates unrelated business income that could incur this additional tax liability.

Ongoing compliance issues also include corporate governance, internal policies and procedures, conflicts of interest, employee benefits, executive compensation, excess benefits transactions, labor and employment, and tax reporting. We provide advice on these issues to help your organization safeguard its tax-exempt status.