What are the tax issues of a not for profit organization?

Question

I am on the board of a user group, and we have the need to be a legal entity, yet we do not have the inflow of cash to pay accountants / legal representation to deal with tax issues and other stuff.

Is there an organization clasification that make this easier. Are there any limitation?

Note that we are planning on distributing media, and may need to cover processing and distribution costs.

Answer 1

This is a complicated subject. Here is a basic overview and where you can go to get detailed information.

This type of non-profit or not-for-profit organization is called a 501(c)3 corporation and is governed by IRS regulation. It is permissible for it to earn a profit, but that profit cannot be distributed to the owner. Secondly, the org must meet the requirements of 501(c)3 organzations.

See IRS Publication 557 (3/2005), Tax-Exempt Status for Your Organization @ www.irs.gov. Go to forms and publications and scroll to the Pub557

Good Luck.