Nonprofit Taxation

The Nonprofit Taxation section was drafted by Alston & Bird LLP, Lex Mundi's member firm for Georgia.

Although there is increased use of the for-profit model for achieving positive social change, most social sector entities are organized as nonprofit corporations or nonprofit LLCs (state law permitting) and prefer to be exempt from federal income taxation.

The following is intended to provide a brief overview of the federal exemption provisions likely to be applicable to nonprofit organizations devoted to social change, how to qualify for exemption and the implications of tax-exempt status on the operation of the organization.

It should be emphasized at the outset that taxation of nonprofit organizations is a highly technical subject; that federal tax law is always subject to change; and that generalities cannot be applied safely without close attention to the factual nuances of each specific situation. LawForChange strongly recommends that nonprofit organizations seeking to qualify for exemption obtain advance guidance and advice from experienced professional tax advisors. Finally, it is important to understand that federal tax-exempt status does not automatically confer exemption from state and local taxes. State and local income and franchise taxes are not addressed in the following section but they are discussed briefly in Forms of Organization under the relevant state.

Please select a nonprofit taxation issue from the menu below:

• Section 501(c)(3) Exemption—charitable/educational/religious/scientific
• Grants by 501(c)(3) Organizations
• Section 501(c)(4) Exemption—social welfare 
• Unrelated Business Income Tax (UBIT)
• Obtaining Tax-exempt Status
• Substantiation of Contributions and Disclosures to Donors
• Excess Benefit Transactions
• Annual Returns and Inspection Rights
• Resources

Download the information in pdf form here: Nonprofit Taxation.