What is 501(c)(3) status?

Section 501(c)(3) of the US Internal Revenue Code allows for federal tax exemption of nonprofit organizations, specifically those that are considered public charities, private foundations or private operating foundations.

Proving 501(c)(3) status

Nonprofit organizations, including school booster clubs, must have 501(c)(3) tax-exempt status to:

  • Participate in fundraising programs like grocery scrip, Disney and ESPN grant programs.
  • Receive donations that are tax-deductible on the donor’s tax return.
  • Be exempt from paying federal (and sometimes state) income tax on their earnings.
  • Apply for exemption from state sales tax.
  • Qualify for state gambling licenses to operate bingo and other games of chance.

How does PBUSA make 501(c)(3) status so easy?

the approval
  • We have an IRS group exemption.
    When we approve a new member, that member is immediately recognized as having 501(c)(3) tax-exempt status under our group exemption.1
  • There is no need for you to file IRS Form 1023.
    Our members do not need to file IRS Form 1023EZ or 1023, and they do not have to pay the IRS filing fees normally associated with applying for tax-exempt status.
  • We report your tax-exempt status to the IRS.
    We update the IRS with any new members to add to the IRS' official list of tax-exempt organizations found on TEOS, Guidestar, and in the IRS Business Master File (BMF).
1
IRS rules indicate that you are recognized as tax-exempt the moment we add you to our official subordinate listing. It can take around a year or sometimes longer for organizations to appear in the IRS Business Master File (BMF). Some less flexible donors may be unwilling to issue grants or donations until this time. See more on proving your exemption.