Nonprofit Tax Services in Florida
Non-Profit Tax Preparation Services
If you are a nonprofit organization in Florida, it is important to ensure you comply with all state and federal tax laws. We understand that navigating the tax laws and regulations for nonprofits can be overwhelming and confusing, so we offer our expertise and support to help ensure your organization is in compliance and maximizing its tax benefits. Our team is knowledgeable and experienced in all aspects of nonprofit tax services, from filing tax returns to guiding fundraising strategies. We believe that nonprofits play a vital role in our communities, and we are passionate about helping them succeed. Contact us today to learn more about how we can help your organization with tax preparation.
Although the Internal Revenue Service (IRS) awards nonprofit status to most organizations in the United States, those organizations are not required to pay taxes in most cases.
However, there are several instances in which they are required to pay taxes. In most instances, when nonprofit organizations are subject to taxation, they are required to pay the unrelated business income tax (UBIT) on income that is not substantially connected to the organization’s exempt objective.
What is Non-Profit Tax-Exempt?
The goals that drove the formation of nonprofit organizations are advanced through utilizing the organizations’ profits, funds, and other resources. There is no obligation placed on the tax-exempt organization to become a corporation. However, most opt to do so if they intend to apply for tax-exempt status from the Internal Revenue Service.
It is required that the articles of incorporation of a nonprofit organization specify that the organization was established to provide charitable services or that its activities be limited to those authorized by the Internal Revenue Service (IRS).
The United States Internal Revenue Code’s Section 501(c) outlines the tax-exempt status of 27 distinct types of nonprofit organizations. However, according to Section 501(c), the vast majority are exempt, which provides a tax exemption to charitable organizations and permits contributors to deduct the number of their charitable contributions.
Common examples of activities that are typically exempt from taxation because they are linked to the mission of a nonprofit organization are as follows:
- Work that is carried out almost completely by unpaid volunteers.
- Proceeds from the sale of items that were donated.
- The leasing or trading of donor mailing lists for various purposes.
- In exchange for financial contributions, giving small gifts as tokens of appreciation to donors.
Analysis of Data from Nonprofit Organizations
Filing an annual IRS Form 990, 990EZ, or 990-N is required of all organizations that fall outside of the categories of religious and political groups. The forms serve as the IRS’s principal method of data collection, compliance promotion, and tax-exempt organizations’ education regarding their legal responsibilities.
These papers give the IRS an overview of the organization’s operations, allowing them to verify that funds are being spent only on activities directly linked to the organization’s stated objective. Donors and others interested in a nonprofit’s financial activities can see the data reported on Form 990.
Can a Tax Be Imposed On a Nonprofit For Related Work?
The federal government does not tax the profits of tax-exempt corporations, provided such profits are used to further the organization’s stated mission. However, many organizations must still pay additional federal, state, and local taxes even while carrying out activities that are in line with the reasons they were established.
When a nonprofit has employees, it is responsible for paying its share of federal taxes like Medicare and Social Security. For the most part, states require nonprofits to collect and remit sales tax on all purchases and to remit the tax to the state from all sales. When it comes to sales tax exemptions, states that do so often only exempt things directly related to the exempt purpose of the organization.
Consult a local attorney if you need help keeping your nonprofit’s tax-exempt status with the IRS or if the potential tax repercussions of doing unrelated business activities worry you. An attorney with relevant experience will know how to protect a nonprofit’s tax-exempt status and avoid having it revoked by the IRS.