For federal requirements, please visit the USA Tax and Auditing Requirements page.
Here are the steps you must take to obtain tax-exempt status:
To obtain federal tax-exempt status from the IRS, you will need to complete and file IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. This long and detailed form asks for lots of information about your organization, including its history, finances, organizational structure, governance policies, operations, activities, and more. For line-by-line instructions on how to complete the Form 1023, see How to Form a Nonprofit Corporation, by Anthony Mancuso (Nolo).
Smaller nonprofits may be eligible to file Form 1023-EZ, Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code. This is a much simpler, shorter form that is filed online. Only smaller nonprofits–those with projected annual gross receipts of less than $50,000 and total assets of less than $250,000–are eligible to use the streamlined 1023-EZ application.
See the IRS website for more information on the Form 1023 and Form 1023-EZ filing requirements.
To obtain exemption from New Jersey corporation business tax, you need to send an exemption letter request to the New Jersey Division of Taxation with a copy of your articles, bylaws, and an affidavit stating that your corporation is a non-stock nonprofit corporation that does not operate for the pecuniary profit or benefit of any shareholder or individual. See the Division of Taxation website for details on how to submit your exemption request. For exemptions from other state taxes, including sales and use tax, see the publication, Tax Treatment of Nonprofit Organizations and Government Entities. You are not required to file a copy of your federal Form 990 with the state.
Depending on your activities and the size of your organization, you may need to register with the state before doing any fundraising activities. Check with New Jersey’s Department of Law & Public Safety, Division of Consumer Affairs, for information and rules about fundraising requirements for nonprofits.
Every New Jersey corporation acquires a taxable status beginning either on the date of its incorporation, or on the first day of the month following its incorporation if so stated in its Certificate of Incorporation. Every corporation which incorporates, qualifies or otherwise acquires a taxable status in New Jersey must file a Corporation Business Tax return, Form CBT-100 in addition to Federal Taxes. A tax return must be filed for each fiscal year, or part thereof, beginning on the date the corporation acquired a taxable status in New Jersey regardless of whether it had any assets or conducted any business activities.
In general, corporations required to file the CBT-100 include:
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