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RE: [newtech-1] LLC + 501c3 question

From: Ryan F.
Sent on: Tuesday, March 19, 2013 11:09 PM

Hi Alyssa

 

Sorry I was not clear.  I would agree you need tax exempt status both at the state and federal level.  But it does not have to be 501(c)(3) status.  There are a lot of small nonprofits out there that have never applied for 501(c) status but the IRS still considers them a nonprofit.  Think of smaller nonprofit that file the 990 post card filing.

 

Cheers

Ryan

 

 

From: [address removed] [mailto:[address removed]] On Behalf Of Alyssa Martina
Sent: Tuesday, March 19,[masked]:02 PM
To: [address removed]
Subject: Re: [newtech-1] LLC + 501c3 question

 

Hi Ryan,

 

I'm a little confused. No, you don't need 501(c)3 status but you do need 501(c)status of some sort (I think that there are over[masked](c) classifications) in order to qualify for the exemption.  One may be exempt from paying state taxes from filing with the appropriate state agency but to get federal exemption, you must file with the IRS for one of the 501(c) exemptions. Filing with the state alone is not sufficient for federal exemption. And yes, I do believe that most tax exempt organizations are 501(c)3's.

 

Alyssa

On Tue, Mar 19, 2013 at 10:48 PM, Ryan Finnesey <[address removed]> wrote:

I would not say that most tax exempt organizations are 501(c)(3)s.  I would say that at the federal level they all fall under section 501(c) of the tax code.  But a lot of nonprofits within the technology space are 501(c)(6)s. 

 

In NYS the Department of State's Division of Corporations is the only body you can go to  and form an entity the Department of Education may license your “business” but has nothing to do with the formation.

 

Cheers

Ryan

 

 

From: [address removed] [mailto:[address removed]] On Behalf Of Stuart Dambrot
Sent: Tuesday, March 19,[masked]:13 PM
To: [address removed]
Subject: RE: [newtech-1] LLC + 501c3 question

 

While that’s true (see list below), most tax exempt 501(c) organizations are 501(c)(3)s and  the discussion here has been focused on 501©(3) status.

 

Moreover, educational institutions are incorporated under the Department of Education, whereas the non-profit businesses being discussed here are would be incorporated under the Department of State, in which tax ex/emption is associated with 501(c)(3) status.

 

501(c)(1) — Corporations Organized Under Act of Congress (including Federal Credit Unions)

501(c)(2) — Title Holding Corporation for Exempt Organization

501(c)(3) — Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations

501(c)(4) — Civic Leagues, Social Welfare Organizations, and Local Associations of Employees

501(c)(5) — Labor, Agricultural, and Horticultural Organizations

501(c)(6) — Business Leagues, Chambers of Commerce, Real Estate Boards, etc.

501(c)(7) — Social and Recreational Clubs

501(c)(8) — Fraternal Beneficiary Societies and Associations

501(c)(9) — Voluntary Employee Beneficiary Associations

501(c)(10) — Domestic Fraternal Societies and Associations

501(c)(11) — Teachers' Retirement Fund Associations

501(c)(12) — Benevolent Life Insurance Associations, Mutual Ditch or Irrigation Companies, Mutual or Cooperative Telephone Companies, etc.

501(c)(13) — Cemetery Companies

501(c)(14) — State-Chartered Credit Unions, Mutual Reserve Funds

501(c)(15) — Mutual Insurance Companies or Associations

501(c)(16) — Cooperative Organizations to Finance Crop Operations

501(c)(17) — Supplemental Unemployment Benefit Trusts

501(c)(18) — Employee Funded Pension Trust (created before June 25, 1959)

501(c)(19) — Post or Organization of Past or Present Members of the Armed Forces

501(c)(21) — Black lung Benefit Trusts

501(c)(22) — Withdrawal Liability Payment Fund

501(c)(23) — Veterans Organization (created before 1880)

501(c)(25) — Title Holding Corporations or Trusts with Multiple Parents

501(c)(26) — State-Sponsored Organization Providing Health Coverage for High-Risk Individuals

501(c)(27) — State-Sponsored Workers' Compensation Reinsurance Organization

501(c)(28) — National Railroad Retirement Investment Trust

501(c)(29) — Qualified Nonprofit Health Insurance Issuers

 

Stuart

 

From: [address removed] [mailto:[address removed]] On Behalf Of Ryan Finnesey
Sent: Tuesday, March 19,[masked]:31 PM
To: [address removed]
Subject: RE: [newtech-1] LLC + 501c3 question

 

You can be tax exempt and not have 501(c)(3) status. 

 

From: [address removed] [mailto:[address removed]] On Behalf Of Stuart Dambrot
Sent: Sunday, March 17,[masked]:48 PM


To: [address removed]
Subject: Re: [newtech-1] LLC + 501c3 question

 

Tony,



You likely know this, but a not-for-profit without 501(c)(3) status is not tax-exempt.

Sent via DroidX2 on Verizon Wireless™



-----Original message-----

From: Anthony Zeoli <[address removed]>


To:
[address removed]
Sent:
Mon, Mar 18,[masked]:33:43 GMT+00:00


Subject:
Re: [newtech-1] LLC + 501c3 question

Jeffrey,

 

I've been looking also into L3C status, which is now available in North Carolina.

 

To your examples, I know that the Wordpress Foundation is inspired by Mozilla. The WPF is a 501(c)3 and Automattic, Inc is a for profit. I don't know any more than that, but if WPF is a non-profit, then I'd like to model what I do after what they do.

 

I understand that I would be the "organizer" and not an "owner." I didn't know that MF owns MF Corporation and that the profits flow up to MF to fund it after taxes are paid.

 

Automattic accepted investment from the NYTimes and I'm sure there are US citizens who contribute to Wordpress outside of any grants they receive.

 

My goal is to accept donations or grants to help pay the staffers who support the open source project for the Netmix.org Foundation. I'd like to run Netmix Media as the for profit, in the same way Automattic, Acquia or RedHat support their clients using each respective open source software.

 

Tony




 

On Sun, Mar 17, 2013 at 12:29 AM, Jeffrey Altman (SecureEndpoints) <[address removed]> wrote:

Tony,

There are no fast and hard rules that state when the IRS must approve a
not-for-profit corporation as a public benefit charity, 501(c)(3).  If
all you want is not-for-profit status that does not require the blessing
of the IRS.

I think a fundamental question to answer is "what are your goals for the
NFP organization?"

Are you looking to have control and if so, over which entity?

There are a number of different models.  For example, the Mozilla
Foundation is a NFP that owns Mozilla Corporation and all profits of the
for-profit corporation flow to the Foundation after taxes are paid.

The OpenSSL Foundation is simply a for-profit corporation that collects
money to help support the income of the core developers:

  https://www.openssl.org/support/funding/support-faq.html#General4

The primary benefit of 501(c)(3) status is the ability to accept
charitable donations from U.S. citizens or grants from other 501(c)(3)
organizations.  If you expect that most of your donations would come
from corporations or non-U.S. citizens or U.S. citizens that don't care
about the tax deduction, I wouldn't bother.

Jeffrey Altman








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