Form 990 for Social Welfare Organizations

Do social welfare organizations need to e-file IRS Form 990?

Yes! And we’re here to cover the bases.

What Is a Social Welfare Organization?

In order to be considered a social welfare organization classified as tax exempt under Internal Revenue Code (IRC) section 501(c)(4), an organization must not be organized for profit and must be operated exclusively to promote social welfare.

What Is the Purpose of a Social Welfare Organization?

Well, basically they need to operate primarily to further the common good and general welfare of the people of the community. This is usually by bringing about civic betterment and social improvements.

What Is the IRC Section 501(c)(4)?

The Internal Revenue Code section 501(c)(4) provides for the exemption of two very different types of organizations with their own distinct qualification requirements. They need to be social welfare organizations or local associations of employees.

What Differs Between Community and Private Benefit?

Basically, the earnings of a section 501(c)(4) organization may not benefit any private shareholder or individual. If the organization earns excess profits with a person having substantial influence over the organization, an excise tax might be imposed on the person or organization.

There is one exception, though. If an organization is seeking legislation germane to their program, it is a permissible means of attaining more income for social welfare purposes.

This allows a section 501(c)(4) social welfare organization to further its exempt purposes through lobbying without jeopardizing its exempt status.

If you have any questions about your social welfare organization and e-filing Form 990, reach out to our customer service experts by phone at 704.839.2321 or by email at Support@ExpressTaxExempt.com.

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How to Start a Nonprofit: The Road to 501(C)(3)

It’s human nature to want to help your fellow man. And maybe you’ve been fostering an idea of how you can help, but don’t know what to do. There are a few ways to approach this. One way is to jump right in and do it, without much of a plan. Your other option is to treat the whole process like you’re starting a business.

So take your idea for a nonprofit or tax exempt organization, and ask yourself—what are my next steps? What is my plan?

Ask Yourself, Is This Necessary?

Your first step is to explore the necessity for your nonprofit. Is this organization idea unique enough to have legs? Are there existing organizations that already cover this need? Do people really need this charitable service? How are needs being overlooked? Would this be better as a business instead of a nonprofit? Once you’ve covered your bases, you can move forward.

Next, you want to create the logistics of your nonprofit. This includes a mission statement, a business plan, and your governing board. These will help you communicate your organization's mission, plan the details of this venture, and create the basic roles within your team. Structuring your organization will give your nonprofit credibility, limit liability, and create organized documentation and policies which will make your IRS filing easier.

Apply for Nonprofit Status With Form 1023

Next, you need to file Form 1023 to get 501(c)(3) nonprofit status.

There are a few key requirements for an organization to be exempt from federal income tax under section 501(c)(3):

• First, the nonprofit organization must be organized as a corporation, trust, or an unincorporated association, with its organization document defining the organization's purpose(s), and the organization must also permanently dedicate its assets to exempt purposes.
• It must also be operated to further one or more of the exempt purposes stated in its organization document.

Organizations that are eligible to file Form 1023 for recognition of exemption under section 501(c)(3) of the Internal Revenue Code range from churches to schools and even hospitals.

After that, you simply need to keep organized, perform your charitable duties, and stay compliant!

Staying Compliant With Form 990

How do you stay compliant? Well, ExpressTaxExempt is the simplest solution for e-filing Form 990, Form 990-EZ, and Form 990-N (the e-Postcard). With our bulk uploading feature, multi-user accessibility, and the ability to share your return for review, we have the most bang for your nonprofit’s buck.

How do you e-file your Form 990? Watch this!




If you run into any problems e-filing your 990 series return, our friendly customer support team is ready to answer your questions! You can reach them by phone at 704.839.2321, or by live chat on our site.

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Section 501(c)(3) Applications

Even if you have a successful nonprofit operation going on within your community, you just can’t proclaim yourself as a tax-exempt organization. Like many other things leading to a classification or a title, there is a process that has to occur. Think about it… your nonprofit didn’t spring up overnight; it took a process and is probably still in progress. 

The success of your organization definitely is a process; one of the things you have to figure out is what works and what doesn’t work. To begin the process of becoming a tax-exempt organization, you have to complete and a file a section 501(c)(3) application.

A section 501(c)(3) application, also known as Form 1023, is required from organizations that are applying for exempt recognition from federal income tax. If your organization is approved, the IRS sends you written confirmation of your tax-exempt status, and its qualifications for tax-deductible, charitable contributions.

A Form 1023 is listed as the Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code. You can obtain tax exemption by filing a Form 1023. Your organization must follow the two key requirements in order to be exempt from federal income tax.

Requirement #1
Your organization must be organized as a corporation, trust, or an unincorporated association with documents specifying your purpose, and assets that are permanently dedicated to exempt purposes.

Requirement #2
Your organization must operate to fulfill one or more exempt purposes that’s listed in its documents.

If you’re tax-exempt under section 501(c)(3), you’re normally recognized as a charitable organization. And your organization will be classified further as either a public charity or a private foundation.

Make the process of becoming tax-exempt as quick and easy as possible by preparing your section 501(c)(3) application with the all-new service from ExpressTaxExempt. Your exempt application is filled with our simple “Q&A” format, reviewed by our automated error checks, and you can access your information at any time with our convenient cloud computing.

Once your Form 1023 has been completed, you can download and print your application to mail to the IRS. ExpressTaxExempt even has you covered if you need further assistance. Our live, support experts are available to help Monday through Friday from 9 a.m. to 6 p.m. EST. Give us a call at (704) 839-2321, or send us an email to support@expresstaxexempt.com. You can even live chat with us at www.expresstaxexempt.com.

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Tax-Exempt Qualifications

We all may have ideas about an organization, a company, or even a nonprofit. And while you may have a rock-solid business plan, proper funding, and an amazing cause, that doesn’t necessarily mean your corporation will qualify for tax-exempt status.

Under the Code Section 501, the most common exemption is Section 501(c)(3). For your corporation to be eligible for tax-exempt status, your activities must be limited to legitimate tax-exempt purposes. These purposes can be considered as:

• Literary
• Scientific
• Religious
• Charitable
• Educational
• Public safety testing
• Promotion of the arts
• Prevention of cruelty to children or animals
• The supporting of national or international competitive sports for amateurs

With each of these tax-exempt purposes, there follows a core of legal meaning that explains what each category means. Based on the regulation of the Treasury, for instance, the word “charitable” can be defined as the:

• Growth of religion
• Advancement of social welfare
• Growth of education and science
• Reduction of governmental burden
• Aid of the poor, distressed, or underprivileged
• Construction or preservation of public buildings, monuments, or works

Each purpose is specifically explained as such; so if you have a new or original idea for your corporation, it’s best to double-check and make sure it can be categorized under at least one of the tax-exempt purposes.

Another qualification for tax-exempt status is that your organization must assist an adequately large and broad charitable class. As the saying goes, “charity ends where certainty begins,” which is why fundraising for a specific person, a tech company, or even donating all of your profits to a Section 501(c)(3) organization, doesn’t qualify your organization for tax-exempt status.

One more quick rule when qualifying for tax-exempt status is that it’s not about the proceeds, but what activities your organization is doing, and if those activities can be classified under any of the tax-exempt purposes.

For more information about gaining exemption status, check out the following blogs:

Non-Profit vs. Tax-Exempt Organizations

Becoming a Nonprofit or Tax-Exempt Organization

Once your organization becomes tax-exempt, you can preserve your status by e-filing your yearly, required tax returns with Express990. We support service for Form 990, Form 990-EZ, Form 990-N (e-Postcard), and Extension Form 8868. Failure to file for three consecutive years will result in the loss of your exemption status. We work closely with the IRS to provide you a safe and secure e-filing experience that will save you time and money.

For any assistance with e-filing our available 990 forms, you can contact our live professionals by phone (704-839-2321, Monday through Friday from 9 a.m. to 6 p.m., Eastern Standard Time), by email (support@expresstaxexempt.com), or by live chat (www.expresstaxexempt.com).

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Tax-Exempt: How An Organization Applies For Tax Exempt Status

The process of applying for tax exempt status consists of 2 applications. Really only 1 if you already have an EIN, but we will get to that in a moment. First, you should know the difference between non-profit and tax-exempt status. Yes, there is a difference between non-profit and tax-exempt - who knew?

What is the difference?
Non-profit status is a state law concept. Non-profit status may make an organization eligible for certain benefits, such as state sales, property, and income tax exemptions.  

• Important: Although most federal tax-exempt organizations are non-profit organizations, organizing as a non-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 requirements set forth in the Internal Revenue Code (IRC). - Side thought - The way the IRS talks about the Internal Revenue Code is reminiscent of how pirates refer to the Pirate Code in Pirates of the Caribbean; always stick to the code (insert dark ominous music). Moving on...

How does an organization become tax-exempt?
To be recognized as EXEMPT from federal income taxation, most organizations are required to apply for recognition of exemption. For Section 501(c)(3) organizations, listed in the IRC - aka The Code - the law provides only limited exceptions to this requirement. Applying for recognition of exemption results in formal IRS recognition of an organization's status, and may be preferable for that reason.

Organizations applying for tax-exempt status must submit 2 application:

1. If an organization has not previously received an EIN, they must apply for one.
2. To be recognized as exempt under section 501(a), most organizations must file an application for recognition of exemption with the IRS. Most organizations applying for exemption under section 501(a) (other than section 501(c)(3)) use Form 1024. Form 1024 has instructions and checklists to help you provide the information required to process your application. 
• To be recognized as exempt under section 501(c)(3) use Form 1023. There is an interactive version that includes helpful hints and links to help applicants submit a complete application.

The IRS will recognize an organization as tax-exempt if it meets the requirements of the IRC.
See Types of Tax-Exempt Organizations and Publication 557, Tax Exempt Status for Your Organization for more info.

The IRS sometimes recognizes a group of organizations as tax-exempt if they are affiliated with a central organization. This avoids the needs for each organization to apply for exemption individually. A group exemption letter has the same effect as an individual letter except that it applies to more than one organization.

*The information listed above came from IRS.gov. If you are considering applying for tax-exempt status, be sure to consult your tax professional to help you navigate the Internal Revenue Code.

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