Steven Besly assists boards in navigating the IRS, Texas Comptroller and Secretary of State when determining which type of non-profit and what exemption to file under.
Experienced counsel allows the structuring of the non-profit properly prior to application for exemption which is crucial for the organizations success. Pursuant to IRS Publication 557 (rev January 2024) there are many 501(c) exemptions
Most equate non-profit with exemption 501(c)(3) a charitable organization for a scientific, religious, or educational purpose. Charitable entities must further file as public charities or private foundations the life cycle of both options involves hundreds of filings, reports, audits and dealings with regulators. A missed or improper filing can lead to the loss of the exemption which makes each donor liable for filing an improper tax return in which a charitable exemption was claimed.
The process starts with organization pursuant to local state law. When organizing in Texas Steven Besly helps a board decide between incorporated and unincorporated association as defined by the Secretary of State as detailed below
http://sos.state.tx.us/corp/nonprofit_org.shtml
Not all non-profit organizations are filed with the Secretary of State. Many, but not all, non-profit organizations chose to incorporate. A nonprofit corporation is created by filing a certificate of formation with the secretary of state in accordance with the Texas Business Organizations Code (“BOC”). “Nonprofit corporation” means a corporation no part of the income of which is distributable to members, directors, or officers [BOC, Section 22.001(5)]. A nonprofit corporation may be created for any lawful purpose, or purposes permitted by the BOC. Not all nonprofit corporations are entitled to exemption from state or federal taxes.
Unincorporated Nonprofit Associations: Section 252.001 of the BOC defines an unincorporated nonprofit association as an unincorporated organization consisting of three or more members joined by mutual consent for a common, nonprofit purpose. All unincorporated nonprofit associations, whether or not the entities are tax exempt, are subject to the provisions of the Uniform Unincorporated Nonprofit Association Act, Chapter 252 of the BOC. The Act addresses a limited number of major issues relating to nonprofit associations; namely, the authority of the nonprofit association to acquire, hold and transfer property in its own name; the authority to sue and be sued as a separate legal entity; and the contract and tort liability of an association’s officers and its members. If you need further information regarding these provisions or how they might affect your association, you should contact your own legal counsel.
An unincorporated nonprofit association may, but is not required to, file with the secretary of state a statement appointing an agent authorized to receive service of process on behalf of the nonprofit association. The filing of the statement does not represent the creation of the nonprofit association; it simply provides a method for a nonprofit association to receive notice of any lawsuit brought against it.