Achieving Tax Exempt Status for Pittsburgh Tails

Goals

To understand the requirements for Pittsburgh Tails, an organization focused on public education and promoting animal welfare, to become a tax-exempt organization. To determine the proper steps to take at the local, state, and federal level to achieve this tax-exempt status. To understand specifically how a small organization with limited financial activity achieves tax-exempt status as compared to a larger organization.

Early Findings

501(c)3 organizations are non-profits that are exempt from federal income taxes. To qualify for 501(c)3 status. There are eight broad categories of organizations that fit into the 501(c)3 category according to the federal government, two of which are educational organizations and organizations focused on prevention of animal abuse; Pittsburgh Tails fits well in these categories. Pennsylvania also includes a list of organizations eligible for nonprofit status that includes animal welfare and education.

There are important steps Pittsburgh Tails must take at the federal level and state level to become a tax-exempt 501(c)3. A selection of these steps will be discussed here.

Organization's Preparation for Becoming Tax-Exempt

Actions to Take at the State Level

  • In terms of official action with the State of Pennsylvania, the first step an organization will take towards becoming a nonprofit will be to file its Articles of Incorporation with the Pennsylvania Department of State Bureau of Corporations and Charitable Organization.
  • Notice of the filing of the Articles of Incorporation must be published in two newspapers of general circulation.

Actions to Take at the Federal Level

  • One of the first steps at the federal level an organization applying for tax-exempt status will take is applying for a Federal Employee Identification Number. A FEIN (sometimes referred to as EIN) is used for purposes of tax administration.
  • After the organization has taken the steps at the state level, it can apply to officially become a tax-exempt 501(c)3 organization. There are two forms that can be filled out. One option is Form 1023 to apply for tax-exempt status, which is a long process. However, if organizations meet certain requirements, they may be able to apply for tax-exempt status with Form 1023-Z Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code developed in 2014. These requirements include anticipating less than $50,000 a year for the first three years.

Actions to Take at the Local Level

  • The initial research did not find specific restrictions from Allegheny County, Pennsylvania.

Summary

Initial research finds: there are important internal steps for Pittsburgh Tails to prepare for incorporation; there is specific action to be done at the state level, such as filing the Articles for Incorporation; and it is likely Pittsburgh Tails will be able to file Form 1023-Z to achieve tax-exempt status.

Proposed next steps:

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