If you want to take your car on big highways and drive farther, more rules apply.
This is also true for nonprofit organizations who want their revenue to be exempt from federal income tax and want to be eligible to receive tax-deductible contributions. For organizations applying to the IRS for tax-exemption and those who have received 501(c)(3) tax-exempt status, understanding the associated federal laws and tax rules is essential. Board members need to be aware of and comply with federal tax rules outlined for 501(c)(3) organizations. If federal laws and rules are not followed, an organization may face legal or financial penalties including having its tax-exempt status revoked. If your nonprofit does not have tax-exemption as a 501(c)(3) organization, it will not have to comply with the following federal tax rules.