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Incorporating and Filing for
Tax-Exemption
Stacia Davis Le Blanc, Esq.
Feldesman Tucker Leifer Fidell LLP
2001 L Street NW, 2nd Floor
Washington, DC 20036
(202) 466-8960
www.ftlf.com
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
NOT Incorporating in D.C.
Benefits
 No formal accounting requirements
 No tax filings
 No required meetings
 No officers, agents, etc.
Drawbacks
 Exposure to liability
 Unlikely to be able to accept a grant directly
 No tax deductibility advantage for other contributors (vendors, etc.)
 Not able to operate independently of other organizations
 Reliance on other organizations to accept funds and manage fiscal
responsibilities
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
Incorporating in D.C. as a
Non-profit
Benefits
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Easier to obtain federal and other funding
More recognition/status for NGP before OMB
Many prefer “formalized” organizations
*Limits Individual liability
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
Incorporating in D.C. as a
Non-profit
Drawbacks
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Must have formalized meetings (w/specific
officers)
Must file Articles of Incorporation
Must file 990 each year
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
Incorporating in D.C. as a
Non-profit
Requirements
– Must file Articles of Incorporation ($70)
– 3 Members of Board of Directors/ 3 Officers (Pres., VP, and
Sec’y.)
– Registered office and agent in DC ($300 if use agent service)
– Must keep correct and complete books and meeting minutes
– Can not authorize or issue shares of stocks or dividends
– No loans between corporation and directors
– Obtain a FEIN (can be done online)
– Complete Business Tax Registration
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
Yearly Requirements
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One Meeting per year
File 990 tax return annually
Must file D.C. report every two years
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
Filing as a 501(c)(3)
Generally
 Must be organized and operated
exclusively for religious, charitable,
scientific, or educational purposes
Benefits
 Tax-deductible contributions
 Tax exemptions
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
Filing as a 501(c)(3)
Generally
 Must be organized and operated
exclusively for religious, charitable,
scientific, or educational purposes
Benefits
 Tax-deductible contributions
 Tax exemptions
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
Filing as a 501(c)(3)
Drawbacks
 Can only engage in “insubstantial” lobbying
 Must file Form 1023 (lengthy) for exemption from
Federal taxes
– Costs:
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If gross receipts > $10,000 then $750
If gross receipts < $10,000 then $300
– Time/Burden:
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Must provide financials and narrative regarding organization
80+ hours
IRS takes about 1 year for approval
Difficult to establish IRS requirements for
“charitable” purpose
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
Filing as a 501(c)(4)
Generally
 Civic leagues or organizations not organized
for profit but operated exclusively for the
promotion of social welfare
 Local associations of employees…devoted
exclusively to charitable, educational, or
recreational purposes
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
Filing as a 501(c)(4)
Benefits
 Tax exemption
 Can engage in lobbying
Drawbacks
 Must file Form 1024 for exemption from Federal
taxes
– Not as lengthy as Form 1023
– Costs:
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If gross receipts > $10,000 then $750
If gross receipts < $10,000 then $300
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
Filing as a 501(c)(6)
Generally
 Business leagues, associations,… boards of
trade…which are not organized for profit and no
part of the net earnings of which inures to the
benefit of any private shareholder or individual
Benefits
 Must file Form 1024 for exemption from Federal
taxes
– Not as lengthy as Form 1023
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
Filing as a 501(c)(6)
Benefits
 Tax exemption
 Can engage in lobbying
Drawbacks
 Must file Form 1024 for exemption from
Federal taxes
– Not as lengthy as Form 1023
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If gross receipts > $10,000 then $750
If gross receipts < $10,000 then $300
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
Membership Fees
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Membership fees to a professional
organization are allowable under A122
(c)(4) & (c)(6)
– Only that portion not devoted to lobbying
are allowable
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(c)(3)
– Arguably, all is allowable
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com
Donations
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Personal Tax Deduction Contributions
– (c)(3): Yes
– (c)(4) & (c)(6): No
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Sponsorship Payments from a vendor,
etc. are deductible to the vendor as a
business expense
– (c)(3): Yes
– (c)(4) & (c)(6): Yes
Feldesman Tucker Leifer Fidell LLP © 2007 www.ftlf.com