Donating to a non-profit organization is a great way to give back to the community. However, it's essential to understand the requirements and qualifications that must be met before donating in Maricopa County, Arizona. It's a common misconception that all non-profit organizations are automatically exempt from Transaction Privilege Tax (TPT) and use tax. In reality, Arizona does not provide a general exemption from transaction privilege tax for nonprofit organizations.
Non-profit organization status is a concept of state law, not a concept of federal income tax. Non-profit organization status can make an organization eligible for certain state benefits, such as state sales, property, and income tax exemptions. While most federal tax-exempt organizations are nonprofit organizations, organizing as a not-for-profit organization at the state level does not automatically grant the organization exemption from federal income tax. To qualify as exempt from federal income tax, an organization must meet the requirements set forth in the Internal Revenue Code (IRC).
See Publication 557 for more information. A non-profit corporation shall have the officers described in its statutes or bylaws or appointed by the board of directors in accordance with the statutes or statutes. An employee can also consult an organization's exemption letter, which indicates the section of the Code that describes the organization and indicates whether contributions made to the organization are deductible or not. The Arizona Corporation Commission provides a warning for non-profit organizations that intend to be tax-exempt organizations. Some organizations that qualify as nonprofit organizations under the Internal Revenue Code must ask the department for an annual exemption letter. To be eligible for exempt transactions, the qualified organization must provide the seller with the annual exemption letter along with a properly completed Arizona Form 5000HC for each location, certifying that the organization uses tangible personal property directly and exclusively in training, job placement, rehabilitation, or testing programs for people with mental or physical disabilities. An organization that provides rehabilitation programs for people with mental or physical disabilities is one that meets the requirements of section 501 (c) () of the United States Internal Revenue Code and that dedicates and uses such assets exclusively in programs for people with mental or physical disabilities if the programs are exclusively for training, work placement, rehabilitation, or testing. Upon approval, the organization will receive an annual exemption letter that exempts them as a customer from certain business classifications and their use is limited only to providing educational and charitable services related to health and medicine.
A tax-exempt organization must provide copies of their three most recent informational statements, their exemption letter, and their approved request along with supporting documentation free of charge (other than a reasonable fee for reproduction and shipping costs), to individuals who request copies (with certain exceptions), unless they have made these forms widely available by publishing them on the Internet in accordance with IRS regulations. To qualify for federal income tax exemption, a nonprofit corporation must be organized for one or more of the purposes set forth in the IRC. Generally, if a corporation submits its request within fifteen months after the end of the month in which it was formed and if the IRS approves it, then their effective date of Section 501 (c) (state) of the corporation will be retroactive to when they were formed. Every nonprofit corporation formed in Arizona or qualified to do business in Arizona must have and maintain a legal agent located in Arizona. To meet all requirements for exempt transactions, qualified organizations must provide sellers with their annual exemption letter along with a properly completed Arizona Form 5000HC for each location. This form certifies that tangible personal property purchased or leased by that location will be used only to provide educational or charitable services related to health and medicine. Staff members take pride in serving Maricopa County's community and working with these types of organizations.
However, it's important to understand all requirements before donating to ensure everything is done correctly.