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Non Profit Taxes - Essay Example
Pages 2 (502 words)
A non-profit organization is an organization whose main objective is to support issues or matters of private or public concern for purposes that are not commercial. Non-profit organizations can be involved in a number of areas relating to charities, arts, education, religion, politics, research, or some other enterprise.
Non-profit organizations do not operate to bring about profit, a characteristic widely deemed to be the crucial aspect of such organizations. Still, a non-profit organization can accept, hold and pay out money and other items of value. Non-profit organizations may also legally and morally trade at a profit. The degree to which it can produce income may be constrained, and the use of those profits is doubtless restricted. Therefore, nonprofits are characteristically funded by donations from the public or private sector, and generally have tax exempt status. Private donations are sometimes tax deductible.
In several countries, non-profit organizations may apply for tax exempt status. This allows financial donors to claim back any income tax paid on donations and, furthermore, the organization itself can be exempt from income tax. In the United States, Tacoma Washington included, following a recognized legal entity that has been created at the state level, it is traditional for the non-profit organizations to ask for tax exempt status with respect to income tax.
That is achieved by applying to the Internal Revenue Service (IRS). The IRS reviews the application to ensure the purpose of the organization. If certain conditions are met then the organization is given the status of a tax exempt organization (example: a charity). ...
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