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A Group Exemption Letter or (GEL) is a special letter that is issued by the United States Internal Revenue Service (IRS). [1] A GEL pertains to organizations that have been recognized by the IRS as tax exempt organizations. [2] Many organizations in the United States maintain a GEL and obtaining one can be of benefit to an organization. [3]
Tax exemption does not excuse an organization from maintaining proper records and filing any required annual or special-purpose tax returns, e.g., 26 U.S.C. § 6033 and 26 U.S.C. § 6050L. Prior to 2008, an annual return was not generally required from an exempt organization accruing less than $25,000 in gross income yearly. [ 11 ]
An organization must meet certain requirements set forth in the code. Some organizations must also file a request with the Internal Revenue Service to gain status as a tax-exempt non-profit charitable organization under section 501(c)(3) of the tax code. A non-exhaustive list of organizations that may meet the Federal requirements are as follows:
This limiting of the powers is crucial to obtaining tax exempt status with the IRS and then on the state level. [12] Organizations acquire 501(c)(3) tax exemption by filing IRS Form 1023. [13] As of 2006, the form must be accompanied by an $850 filing fee if the yearly gross receipts for the organization are expected to average $10,000 or more.
Contributions will remain tax deductible as long as the donors are able to establish that the Church meets the requirements of section 501(c)(3)." [15] Churches do not need a tax-exempt determination letter to receive all of the benefits of tax-exempt status. [16]
The benefits of 501(c)(3) status include exemption from federal income tax as well as eligibility to receive tax-deductible charitable contributions. In 2017, there were a total of $281.86 billion in tax-deductible donations by individuals. [64] To qualify for 501(c)(3) status, most organizations must apply to the IRS for such status. [65]
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Page from the Congressional Record containing a transcript of the passage of the amendment. Paragraph (3) of subsection (c) within section 501 of Title 26 (Internal Revenue Code) of the U.S. Code (U.S.C.) describes organizations which may be exempt from U.S. Federal income tax. 501(c)(3) is written as follows, [4] with the Johnson Amendment in bold letters: [5]
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