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Abstract: 

The IRS has issued a number of rulings denying tax-exempt status to organizations pursuing exemption. These rulings shed light on the issues that can trip up new organizations intended to qualify for exemption. Practitioners should take care to help their clients avoid these traps when setting up new IRC §501(c)(3) organizations. Among the lessons from these recent rulings explored in this article: be sure the organization’s activities qualify as charitable; don’t unduly limit the class of those to be helped; don’t let private benefits knock out tax exemption; make sure to serve a covered class; be consistent in your articulation of exempt purpose; and seek exemption under the proper provision of the tax law. Analyzes more than 20 PLRs, including PLRs 201824012, 201831012, 20133019, 201832019, 201832019.

Keywords: Private Letter Rulings on Non-Profit Startups

Affiliations:  1: Clark Hill Strasburger.