Acquiring and Maintaining Tax‐Exempt Status

There often is much discussion about the substantive law of nonprofit and tax-exempt organizations-and little focus on the technicalities of the process by which exempt status is acquired. A great myth is that the internal revenue service (IRS) grants tax-exempt status. The public policy doctrine has a major impact on private colleges and universities. The federal income tax exemption is available to organizations that satisfy the appropriate criteria stated in applicable provisions of the Internal Revenue Code. The IRS promulgates rules by which a determination letter or ruling as to recognition of exemption of a nonprofit organization is to be sought. These rules are updated annually, with the IRS reserving the right to modify or amplify them more frequently. The group exemption basically is maintained by the central organization making an annual filing with the IRS. Controlled Vocabulary Terms Income tax; Internal revenue code; Internal revenue service; nonprofit organization; Tax exemption