Section 501(c) of the Revenue Code lists all requirements to become a recognized tax exempt charitable organization. Section 501(c)(3) list exempt status for organizations including charitable, religious, educational, scientific, literary, and testing for public safety. There are 22 different types of organizations including charities that are eligible for tax exempt status. The IRS Publication 557 provides further information for these organizations including charitable organizations. In order to operate as a non-profit charitable organization, the IRS should approve and grant a tax exempt status to the charity. Without this status any organization will be subject to Federal tax regulations.
The Section 501(c)(3) status gives two main advantages to a charity. It makes donations tax deductible to the donor and makes the charity eligible for grants from foundations. Generally they are non-profit associations or corporations and are tax-exempt unless they have unrelated business income which is subject to income tax. Before filing for a tax exempt status with the IRS using Form 1023, a charity must establish a corporation under its domicile state. The IRS publication 557 explains all required forms and other submittal requirements to obtain a tax exempt status including charities.