The Internal Revenue System

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Society labels organizations that perform services to aid mankind in a variety of ways, as being a nonprofit organization. These organizations are also labeled as being a tax-exempt organization. In the eyes of the Internal Revenue Service (IRS) these two terms are completely separate. According to the IRS, a non-profit organization is separation from a tax-exempt organization; however one organization can in fact be can fall into one of these two categories or even both (Internal Revenue, 2014). As defined by the IRS, non-profit refers to the corporation status of an organization, which is issued by the individual state; whereas, the term tax-exempt is a status issued by the IRS under the government s tax code (2014). The code in general states that in order to qualify for tax-exemption under section 3 (i.e. 501(c)3) organizations must abide by all the regulations under said code. The official definition of an eligible organization as defined by the IRS and the Internal Revenue Code (IRC) is “an organization must be organized and operated exclusively for exempt purposes set for in the section 501(c)(3), and none of its earnings may inure to any private shareholder or individual” (2014). There are additional requirements such as the organization cannot be defined as an action organization, which is seen as engaging in political and lobbying activities (Internal Revenue, 2014). However, the political activity regulation is limited to involvement that is associated with
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