Does a non-profit pay taxes? How do I make contributions tax deductible?

Although forming a nonprofit corporation is the first step to creating a tax exempt organization, no nonprofit is automatically exempt from federal and state taxes. The IRS requires nonprofits that wish to be tax exempt to complete a Form 1023. Once approved, the IRS will issue a determination letter confirming the nonprofit’s exempt status. This letter can be presented to third parties, such as grant-making organizations and donors, as evidence of the nonprofit’s exempt status. In Pennsylvania, once a nonprofit has federal tax exempt status, it is automatically exempt from Pennsylvania tax. Form REV-72 must be filed with the Pennsylvania Department of Revenue.


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