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My non profit will sell products to the poor at cost. What criteria must clients meet for me to have tax exempt status?

Fort Lee, NJ |

For my non profit to get tax exempt status my clients must be considered under privileged. What criteria must they meet . I.E. income level, minority status, disabilities menta/physical, elderly, single mothers, Homeless, orphaned , ETC????

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Attorney answers 4

Posted

I am a little confused, as the requirements in general for nonprofit or "exempt" status do not include that an organization's clients, or those you assist, be "underprivileged."

Your question makes me believe that you really don't know who you are seeking to serve, as you list a great many demographics, without any statement of what you plan on doing for them.

If, however, your mission and purpose entail serving the "underprivileged" or the "poor," I would suggest finding out the poverty threshold in your community, or perhaps what the "living wage" is in your town, and perhaps start with a purpose of serving those individuals and/or families with whatever services you hope to provide.

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Posted

I believe you have posted at least a few other related questions about this potential entity. It is truly in your best interest to sit down with a local business attorney to get all of your questions answered and make sure you do things correctly from the start.

Attorney Inga Stevens is licensed in Maine. She provides general information on Avvo.com. No attorney-client relationship arises out of the information given here.

Posted

Your question is far too complex for a site like avvo. The process of obtaining an exemption from IRS depends on many factors about your planned charity. I have attached a link to IRS Form 1023 that you can review yourself to gain an understanding of what the IRS needs to know in order to grant that which you seek -- tax exemption. See -- http://www.irs.gov/pub/irs-pdf/f1023.pdf

My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a licensed attorney in your State should be obtained.

Posted

A review of private letter rulings for example similar situations can give guidance to you and the IRS determination specialist that processes the IRS Form 1023 application for tax-exempt recognition about what criteria are appropriate for the clients.

Writing out for the IRS the criteria the organization will apply in a clear way (as part of the Form 1023 application for tax-exempt recognition) should be a reliable determination for the future. Then when conditions change on the future, advise the IRS before making changes about the criteria.

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