If a nonprofit is a 501(c)(3) organization, it is considered a charity and it receives certain tax exemptions.
Memphis, TN – Lawyers are an integral part of how the government handles taxation issues and collects outstanding tax debts for all kinds of companies and organizations. While individuals and businesses must file taxes, there are certain tax rules set by the federal government and states that apply to non-profit organizations as well, and these must be followed. Because many of these rules are not commonly known or intuitive, it is best for a nonprofit organization to keep advice from tax professionals such as lawyers when needed to remain compliant with the complex tax rules that apply to this special type of organization.
Foundational issues
From the time the nonprofit is started or being planned, there can be legal issues related to taxation that are important. Like other kinds of businesses, Memphis tax lawyers can advise whether a nonprofit corporation or other business structure is appropriate. These varying structures have tax consequences, and they also affect whether the owners may be personally liable for any legal issues that arise.
Tax exemptions
If a nonprofit is a 501(c)(3) organization, it is considered a charity and it receives certain tax exemptions. Tennessee tax lawyers should be advised about drafting the articles of incorporation in a manner that will be accepted by the IRS, and the organization needs to file for the tax exemption within approximately two years from the time the organization was created. It is important to realize that not all organizations that file with the federal government will be granted this status, but having an attorney help with the process will greatly increase the chances.
Tax attorneys and recordkeeping
Tax lawyers can review the records that nonprofits keep for various issues. Review is important because these types of organizations are able to keep their status because of how they use their money and other financial matters. This is why thorough financial accounting and records of transactions are especially important at tax time.
Setting up a trust
Charitable causes can also be supported by trusts created with the purpose of supporting a certain cause rather than a nonprofit organization. Estate planning lawyers can provide advice about whether setting up a trust is necessary or preferred for the client’s goals, as well as any potential tax issues that can affect either the trust or nonprofit organization. Trusts can be very beneficial when the person or group setting up the instrument wants to pay out money to the charitable cause over time.
Advice about state tax law
In addition to the rules set by the IRS for nonprofits that need to pay federal taxes, each state handles nonprofit organizations slightly differently in terms of taxes. A local lawyer can give advice about Tennessee tax regulations for nonprofits.
Getting additional info from a local law firm
USAttorneys.com is available to help anyone who is looking for the right lawyer in their area. Those who need a referral to a local attorney can call 800-672-3103 for assistance.
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