UNINCORPORATED ASSOCIATION

$750.00

What is the difference between 501(c)(3) and 508(c)(1)(A)?

What is the difference between 501(c)(3) and 508(c)(1)(A)?

Section 501(c)(3) of the Tax Code is the section that describes
charitable organizations that are exempt from paying federal income
tax.  Section 508 of the Code requires any organization created after
October 9, 1969 that seeks 501(c)(3) charitable exemption to notify the
Internal Revenue Service and apply to obtain an official recognition,
but exempts from the filing requirement those organizations described in
Section 508(c). 

Section 508(c)(1) exempts in subsection (A) churches, their
integrated auxiliaries, and conventions or associations of churches,
while subsection (B) exempts charities that are not private foundations
and normally have gross receipts of not more than $5000 a year.

The religious organizations mentioned in (A) are also exempt from
filing an annual Form 990 series tax information return.  The small
nonprofits that don’t have to file for recognition of exemption under
508(c)(1)(B) nevertheless have to file a tax information return,
normally the Form 990-N electronic postcard.  They will automatically
lose their exempt status (even though the IRS may not know that they
exist) if they fail to file for three consecutive years.

The
508(c)(1)(a) Faith Based Organization (FBO) is a religious, non-profit,
tax exempt organi-zation.  The 508(c)(1)(a) FBO is separate and
distinct from a 501(c)(3) charity and unincorporated FBO’s.  The
508(c)(1)(a) is applicable in all 50 states and recognized
internationally under the Hague Convention of the United Nations
Charter.

Since
its inception in 1954 with the Johnson Amendment, the 501(c)(3) has
been promoted and advertised by many as the only option to organizing a
FBO. This is fatally incorrect.  Federal law, IRS publications, and
court cases all confirm and establish the rights and protection of the
508(c)(1)(a) FBO. 

The
508(c)(1)(a) FBO enjoys a “mandatory exception” from all the
restrictions a 501(c)(3) FBO has including free speech restrictions, IRS
reporting requirements, rules and regulations that the IRS may from
time to time prescribe and providing testimony under oath.

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