Non Profit Organizations

Non Profit Organizations - 501(c)(3)

Our firm understands the legal and financial difficulties imposed on private foundations and public charities by recent developments in statutory regulations. We advise Texas nonprofits of all sizes on issues including formation, tax compliance, employment, oversight, and corporate transactions. Tax exempt entities face heightened scrutiny and complex regulatory guidelines. We guide Texas nonprofit organizations around potential land mines while at the same time ensuring that foundational objectives remain in focus.

Affordable Legal Counsel for Texas Non Profits

We can assist with all organizational, tax planning and tax compliance matters for non profit organizations in Texas, including the following:

• Nonprofit Formation
• Governance of Nonprofit Organizations
• Nonprofit Fundraising
• Tax-Exempt Law
• Nonprofit Organizational Structuring

Texas Nonprofit Laws

In order to be exempt from income and other common taxes, Texas nonprofits have to comply with applicable Texas and federal laws. With the exception of charitable trusts, tax exempt businesses in Texas must be formed as either nonprofit corporations or nonprofit associations. Most tax exempt organizations that do not file a certificate of formation with the secretary of state are, by default, classified as nonprofit associations.

This structure is rarely advised, however, as corporations provide a liability shield for members and are looked upon more favorably by the Internal Revenue Service when reviewing tax exemption applications. The Texas Attorney General has become more active over the past decade in reviewing information filed by Texas nonprofit organizations and members of unincorporated associations leave themselves open to liability by not taking advantage of the corporate structure.

Federal laws regarding tax exemptions for nonprofit entities are generally considered to be both vague and strict. Proper interpretation of those statutes and United States Tax Court holdings is critical to eliminate audit risks and financial penalties. Our nonprofit tax lawyers help organizations navigate the frequently complex tax exemption application process (IRS Form 1023) and fulfill annual information filing requirements (IRS Form 990) required for tax-exempt entities.

Private Foundations

Section 501(c)(3) organizations can be divided into two groups, private foundations and public charities. By default, most tax exempt organizations are classified for federal income tax purposes as private foundations.

In order to maintain tax exempt status as a private foundation under Section 501(c)(3), an organization must meet certain requirements regarding restraints on self-dealing, yearly income distributions for charitable purposes, limits on investments and holdings in private businesses, and reviews to ensure expenditures are in line with a company’s charitable purpose. Our nonprofit attorneys help private foundations comply with these and other explicit requirements to keep our clients’ tax exempt statuses intact.

Public Charities

Private foundations enjoy favorable tax treatment, but public charities are endowed with both heightened exemptions and reduced reporting requirements. Organizations which qualify as Section 501(c)(3) public charities generally include churches, conventions, hospitals, and some governmental units. Public charities receive most of their funding from the public at large and therefore have more flexibility regarding fundraising limits.

Obtaining a public charity exemption ordinarily requires comprehensive and extensive pre-filing planning. We help organizations acquire recognition as tax exempt public charities and provide legal counsel to Texas nonprofits regarding operating safely within the structural confines of that protected class.

Helping groups establish and maintain successful nonprofit organizations is a passion of our law firm. As such, our firm offers legal services in these matters at a discounted rate. We believe in supporting positive change in and around Texas.

If you are an aspiring or established nonprofit organization in need of legal counsel but unable to afford big firm rates, we encourage you to give us a call at (972) 712-1515 or submit the form from the Download Center and inquire about our special program for struggling, but devoted tax exempt entities.

Do you have questions or do you want to make an appointment in this area?

Call us at (972) 712-1515 or use our contact form.