Tax Exempt Certificate Form

A tax exempt certificate is a document used by the Internal Revenue Service to grant a tax exempt status to certain non-profit or charitable organizations.

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What is a tax exempt certificate?

A tax exempt certificate is a document used by the Internal Revenue Service to grant a tax exempt status to certain non-profit or charitable organizations.  This certificate means that the organization is exempt from paying certain income taxes. The certificate must be presented to the organization or institution in order for them to be recognized as tax exempt.

Only certain individuals, nonprofit organizations, and institutions will quality for a tax exempt certificate. Some of these parties include veterans, non-profit or charitable organizations, educational institutions, and some religious organizations. Someone seeking a tax exempt certificate must apply with the correct forms through the IRS. They will need to also provide extensive documentation outlining their organization. This allows the Internal Revenue Service to determine if they qualify for tax exemption.

How to get a tax exempt certificate

To obtain a tax exempt certificate, you must establish a legal business entity, obtain a tax identification number (TIN), and apply for tax-exempt status.

  • Establish a Business Entity - A business entity is a corporation or a limited liability company (LLC).  Both corporations and LLCs are eligible for tax-exempt status. These entities are formed by completing the appropriate business formation paperwork with the secretary of state.  The founder of the business can prepare the paperwork directly or use an attorney or business creation vendor to complete the paperwork. An application to form a business will require a unique business name, the founders’ personal information, a business mailing address, initial bylaws, and articles of incorporation.  The mission statement and the bylaws of this entity should demonstrate a charitable purpose.
  • Obtain Tax Identification Number - Once a company has been approved by the secretary of state, it will receive state entity paperwork that allows it to go to the IRS website and apply for a TIN.  The applicant must use Form SS-4 Application for Employer Identification Number (EIN). Online processing is immediate, faxed applications can take up to two weeks, and paper applications can take up to five weeks.
  • Apply for Tax-Exempt Status - Once a company has received an EIN, it may apply for Exempt Organization (EO) status.  There are many different types of organizations that qualify for tax-exempt status. Most charitable, religious, and educational organizations fall under the 501(c)(3) status.  Applying for a 501(c)(3) status is accomplished by completing Form 1023.

External Resources

  1. https://www.irs.gov/charities-non-profits/applying-for-tax-exempt-status
  2. https://www.irs.gov/charities-non-profits/frequently-asked-questions-about-applying-for-tax-exemption
  3. https://www.tax.ny.gov/pubs_and_bulls/.../exemption_certificates_for_sales_tax.htm

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