Which Entities are specifically Tax-Exempt?
According to the IRS, "Nonprofit organizations that do not distribute profits can be exempt from federal income tax if organized expressly for public purposes."
It is important to remember that though many types of nonprofits qualify as tax-exempt, the IRS has stated that "only 70 percent also qualify to receive tax-deductible contributions, through their status as organizations of "charitable purpose," defined under section 503(c)(3) of the tax code.
The 503(c)(3) code section defines charitable purpose as being "religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition [or]...the prevention of cruelty to children or animals."
What constitutes a Tax-Exempt Organization?
Tax-exempt organizations include any diverse group of organizations that can be classified into 9 major groups. These are as follows;
1. Arts, culture, humanities
Examples include the Various Art Museums and Historical Societies.
Examples include private schools, universities, parent-teacher (PTA) associations.
3. Environment and animals
Examples includes the Humane Society or Save the Wildlife Organization.
Examples include nonprofit hospitals, the American Cancer Institue and Lung Association,
5. Human services
Examples include both the Girl and Boys Scouts and the YMCA.
6. International and foreign affairs
An Example includes the International Committee of the Red Cross.
7. Public society benefit
Examples include the Rockefeller Foundation, civil rights groups and the United Way.
Examples include interfaith coalitions and religious societies.
9. Mutual membership or benefit
Examples include nonprofit credit unions or labor unions.