Contact Us

Offices Located At:
326 Walt Whitman Road, Suite 205
Huntington Station, NY 11746

Mailing Address:
PO Box 575
Northport, NY 11768

Phone & Fax:
Office:631.262.7400
Fax:631.262.7422
Toll Free: 1.800.437.8833 

 Tax Exempt Charities

 

Dan Engstrand has written and lectured extensively in the area of charitable foundations.  In addition, he is corporate counsel to a number of prominent 501(c)(3) organizations on Long Island over the past decade. 

An organization may qualify for exemption from federal taxes under IRC §501(c)(3)  if it is set up and operated exclusively for one

or more of the following purposes:

  • ·        Religious
  • ·        Charitable
  • ·        Scientific
  • ·        Testing for public safety
  • ·        Literary
  • ·        Educational
  • ·        Fostering national or international amateur sports competition
  • ·        Prevention of cruelty to children or animals

Typically, these organizations are set up as not-for-profit corporations under New York’s Not-For-Profit Corporation Law.  However, trusts, community chests, funds and foundations can qualify.  Individuals and partnerships will not qualify.

If the IRS grants your application for tax exemption, contributions are deductible on the donor’s tax return as charitable contributions. 

Not-For-Profit Incorporation

When incorporating under New York’s Not-For-Profit Corporation Law, it is imperative that the certificate of incorporation state that the organization’s purpose is one or more of those described above.  In addition, the IRS looks to see that the certificate of incorporation specifically states that in the event of dissolution, the assets of the organization will be will be distributed for an exempt purpose, as set forth above, or to the Federal, state or local government for a public purpose.  The assets cannot be distributed to members of the organization or to any private individual.  This is because the IRS wants to insure that no part of the earnings of the organization will benefit or be distributed to its members or any private person, except for reasonable compensation for services rendered.     

Normally, the IRS will not grant your organization tax exemption status if it attempts to influence legislation.  The exception is for public charities that file a Form 5768 election to be subject to the limits on lobbying expenditures.

Once the NYS Division of Corporations accepts for filing the organizations certificate of incorporation, then the organization must then file a Form 1023  application with the IRS to get tax exempt status.  

Churches

Churches, although they do not have to file a Form 1023 to be exempt, may still do so if they want to insure that donations made to them are tax deductible.  Church organizations do not incorporate under the Not-For-Profit Corporation Law with the NYS Secretary of State.  Instead, they incorporate under the Religious Corporation Law and file with the County Clerk's Office in the county where they are located. 

Veterans' organizations 

Veterans’ organizations occupy a special place in the world of exempt organizations. Not only are most veterans’ organizations exempt from tax, contributions to them may be deductible, and some are permitted to set aside amounts that are used to provide insurance benefits for members. This combination - tax-exempt status, deductibility of contributions and the ability to pay benefits to members - is relatively rare and is evidence of Congress’s intent to provide special tax treatment for veterans’ organizations. Unlike most 501(c)(3) organizations, veterans' organizations are allowed to engage in both lobbying activities and political activities.  , it is fair to say that veterans’ organizations are unique in the tax-exempt sector.  Veterans' organizations file a Form 1024 with the IRS to get their tax exempt status approved.

Real Property Tax Exemption

We can also assist in helping the organization obtain real property tax exempt status for its property holdings.  These filings are done at the local level, typically at the town tax assessor's office.  In these tough economic times, rather than lose property tax revenue, our firm has seen some local tax assessors routinely and wrongfully deny the charitable organization's request for a real property tax exemption.  If that happens to your organization, bring it to our attention, immediately.

Article 78 Proceedings and Class Actions

Under the law, you have four (4) months in which to contest that denial by commencing an Article 78 proceeding in NYS Supreme Court.  Our firm is experienced in these special types of expeditied proceedings.  In addition, we routinely demand under the Freedom of Information Law (FOIL) that the local tax assessor provide us with the basis for their denial and a listing of all tax-exempt organizations that have been denied a real property tax exemption in the past.  The information obtained from this FOIL demand can, if appropriate, be used to bring a class action against the local tax assessor.  Remember, local municipalities typically have their own in-house legal departments to defend against individual lawsuits.  However, class actions pack the added punch of having the local municipality pay the attorney's fees if the class action is successful.  Such actions usually are a wake-up call to the local municipality to quickly reassess their wrongful denial of a real property tax exempt request. 

These are just some of the types of charitable organizations that our firm deals with.  We can assist in organizing IRC §501(c)(3) not-for-profit public charities and private foundations. We provide nonprofits with a full range of services including advising the boards of directors of public charitable organizations, director and officer liability, code of ethics, conflicts of interest, misrepresentation, fraud, malfeasance, breach of fiduciary duty, dissolution, and distribution and transfer of assets.  In addition, we can assist in obtaining NYS Sales Tax Exemptions and registering with the NYS Attorney General's Charity Bureau.