How can a nonprofit organization acquire tax-exempt status?

In North Carolina, a nonprofit organization can acquire tax-exempt status by filing Form CD-405 with the North Carolina Department of Revenue. The organization must be organized for charitable, religious, educational, or other exempt purpose as provided by law. The organization must not be organized to benefit private interests and must not engage in prohibited acts such as participating in political campaigns, lobbying, and certain business activities. The form must be completed accurately and signed by the organization’s principal officer. Additionally, the organization must provide the department with proof that it is exempt from federal income tax. This may be done by providing a copy of the IRS’s determination letter that the organization is exempt from federal income tax under Internal Revenue Code Section 501(c)(3). If the organization meets the necessary requirements, the department will review the application and may grant the organization tax-exempt status. The organization should also inquire with the IRS about additional tax-exempt status, such as exemption from state sales tax. Once granted, the organization should renew its tax-exempt status every five years by submitting Form CD-405. It is important to note that North Carolina is a two-tier taxing system and the nonprofit must register with the North Carolina Secretary of State for additional exempt status. Nonprofit organizations should consult with a lawyer or tax advisor for assistance with filing.

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How can a nonprofit organization acquire tax-exempt status?

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