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Organizations can exempt you

What is tax exemption? This is what we would refer to a monetary exemption which would then reduce taxable income. Your tax exemption status could then provide complete relief from taxes, reduced rates, or tax on only a portion of items depending on your case or instance. Examples include exemption of charitable organizations from property taxes and income taxes, veterans organizations as well.

Tax exemption is then generally something which then refers to a statutory exception to a general rule rather than the mere absence of taxation in particular circumstances, otherwise known as an exclusion. Tax exemption also refers to removal from taxation of a particular item rather than a deduction. So the basic definition which is all you need to remember is the fact that it is an exemption from the tax rule and now some organizations would allow you to be exempted from these taxes. A good example of this would of course be the very well known shopping place for basically everything foreign which is duty free. the known international duty free shopping may be termed “tax-free shopping”. This is what I choose to use as an example. In the supposed tax-free shopping, the goods are permanently taken outside the jurisdiction, thus paying taxes is not necessary whatsoever. Tax-free shopping is also found in ships, airplanes and other vessels traveling between countries which varies in taxes. Tax-free shopping is usually available in dedicated duty-free shops. Unfortunately, any transaction may be duty-free, given that the goods are presented to the customs when exiting the country. In such a scenario, a sum equivalent to the tax is paid, but reimbursed on exit. This is basically more common in Europe, and tax-free is less frequent in the United States, with the exception of the state of Louisiana though. This a simple example tax exemption.



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exemptions for orgs



Tax exemptions actually come in many forms, but one the thing they all have in common is they either reduce or entirely eliminate your obligation to pay tax. Most taxpayers are actually entitled to an exemption on their tax return that reduces your tax bill in the same way a deduction does. Federal and state governments frequently exempt organizations from income tax entirely when it serves the public, such as with charities and religious organizations.


Personal exemptions

If you are one who is not claimed as a dependent on another taxpayer’s return, then you can claim one personal tax exemption. This is a fixed amount that would generally increases each year. The exemption reduces your taxable income just like a deduction does, but has fewer restrictions to claiming it. If you are married and file a joint tax return, both you and your spouse each get an exemption.

Dependent exemptions

The IRS also allows you to take additional exemptions for each dependent you claim. Frequently, the source of these exemptions are the children who would be the ones who have lived with you for more than half the year, are under 19 years old, or under 24 if a full-time student and who don’t provide more than half of their own financial support during the tax year. Some of your relatives can also qualify to be your dependents if they live with you and even your parents who don’t.

Tax-exempt organizations

For an organization to receive tax-exempt status, it must satisfy all IRS requirements. Generally, these are organizations that would not operate for profit and provide valuable services to the community such as a charity. If an organization receives tax-exempt status it’s not required to pay federal income tax, but must maintain accurate records to keep its status. Donations you make to these organizations usually entitle you to claim a charitable contribution deduction if you itemize.



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Tax-Exempt Organizations

Qualified tax exempt organizations are usually listed by state in the SOI (Store Operating Income) Tax Stats – Exempt Organizations Business Master File Extract or also known as the EO BMF. To double check an organization’s status, call the IRS at their hotline which could be found online.

You may be able to look up tax exempt organizations qualified to receive tax-deductible contributions using the Exempt Organizations Select Check. One thing to remember is that a delay of up to a month before new or reinstated organizations get on the list. Again, you can double check an organization’s status by calling the IRS at their ever so famous hotline.

Until the year 2012, qualified tax exempt organizations were qualified to receive tax deductible contributions which were then listed in Publication 78, Cumulative List of Organizations. The list was available and could be viewed on the IRS website and published in print each September, this would include supplements listing new additions but not revocations which are published quarterly. To find out more, you can call the IRS hotline or search the Internal Revenue Bulletins to find the notices announcing additions and revocations to Pub 78. You may also search entries regarding the irs.

For the exemption Rulings and Adverse Determination Letters, you need to remember that when the IRS determines that an organization qualifies for tax exempt status, the IRS Exempt Organizations Technical Division would issue a letter, usually a form letter stating that the organization has qualified for tax exempt status and can accept tax deductible donations as well. You can search for these letters in the FTX-EXEMPT database on Westlaw which include information from the years 1994 to the present date. They are provided in PDF format and are attached to news stories on the Tax Analysts website. To know about this, go to the Exempt Organizations section and search “Exemption Rulings” or the name of the organization that include the years 2008 to present.

If the IRS determines that an organization does not qualify for tax exempt status, they will then send the organization an adverse determination letter which is explaining why the exemption request was denied and providing instructions on how to appeal the adverse determination and how they will not get denied the next time.The IRS has posted over 2000 redacted adverse determination letters at Tax Analysts and instructions as well.

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Ways to make a tax exempt org

A 501(c)(3) nonprofit corporation is basically a type of charitable organization that the Internal Revenue Service would recognize as tax exempt. This type of corporation would not exactly pay income tax on its earnings or on the donations it receives. Also, any time a taxpayer makes a donation to a so called or more known as 501(c)(3) nonprofit, they can reduce their taxable income by the amount of their donation if they are able to itemize their deductions on their federal income tax return. This incentive encourages private charity and makes it easier for nonprofits to raise money for their own rightful benefit.

The best reason to form a 501(c)(3) nonprofit corporation is because you have basically determined that it is the most effective way for you to pursue a charitable goal which is easy for you. Maybe there is a need that is not really being fulfilled by existing organizations or maybe you think you have a better idea that will meet a need which is more effective than what any existing organization is doing. You need to think about whether you will best be able to meet your goals by forming and running a new organization or maybe whether you could do more good by donating your time and/or money to any existing organization which you may know off. Once you have been able to determine that you want to proceed and you have also determined that your organization roughly meets the IRS requirements, then you would know that it is time to start dealing with the red tape. Decide if you want help since you may hire a lawyer if you have the resources, you can even use a do it yourself legal service like (a popular site for this) if you do not. A lawyer can actually provide you personalized guidance if you were to choose and help you avoid costly mistakes, but there are some people who do manage on their own. To add to that, following the official required steps, it is not a bad idea to make a business plan or plan out your moves, just like you would if you were starting a for profit business. Although your organization will be a nonprofit organization, you will still have to operate in the dark or back seat if you want to keep your organization running. Nonprofits are allowed to be profitable as well. They just need to be able to use those profits to further the organization’s public purpose. In an effect to contrast that, a private corporation exists to enrich its employees, managers and shareholders as well.

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Women still Taxed

Japanese are known for many things. As of now, Japan is one of the leading first world countries, and is also idolized for their advancement in technology and other things which some other countries have been held back from. Unfortunately, Japan is not very proud of their past as many know that during world war II, there was a rise in something called Japan comfort women. What exactly are these comfort women? These are the women who basically forced into slavery by the Japanese imperial army. These comfort women are very unfortunate, since unlike regular day prostitutes, these women were not given a choice but to be slaves of sexual sorts. “Comfort women,” as Japan refers to them, are the females who were forced into sexual servitude for the nation’s wartime forces, and they have also been a constant source of controversy since the early 1990s, when the media started to take a serious look at their ordeal. Although for those survivors who have stayed quiet all these years to the harsh treatment of the government and Japanese army, these women are now speaking up and making a name for themselves.
These comfort women have recently again become a focus of debate in Japan, helping to fuel a diplomatic row with South Korea amid speculation that Prime Minister Shinzo Abe might be trying to rewrite history. The women are trying their best to get back or at least seek justice for all that have been done to them.

There has now been a foundation put up called the WCCW or the Washington Coalition for Comfort Women Issues, who believe that the Japanese Government must clearly acknowledge and take responsibility over what they have done to these Japanese comfort women. Also that the government should apologize and have a fund for these women alone. All donations to the WCCW are tax deductible. This is because of it being a foundation that cares for not only women’s rights but justice as well. Also this organization is tax deductible, since it had been considered as a charity, meaning all donations are seen as gifts to charity, allowing them to be tax deductible. Comfort2

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Understanding tax exempt organizations

There are rules to be followed by citizens in any society. To help things run smoothly, rules have been set to benefit a community as a whole.

Others help us learn and abide by these rules as individuals and as we grow. In our young age, we were taught that we are to pay for a chocolate bar we want in a candy store. That we cannot just take what we want when there is a tag price attached to it. We know that at the age of 18 we can register and vote. And we’ve learned that come April, we need to fill out those agonizing forms. But we also know where we can go for help if doing it for the first time. Terms such as “total taxable income” and “earned income” can be perplexing for a first timer.


These two terms are not the same. But are related. Many non-profit organizations long to be tax exempt and this sometimes causes confusion when referring to the 2 terms being talked described here. Charitable organizations more often than not, described as  nonprofit organizations and therefore are tax exempted and this is recognized by the federal government. There are processes in becoming non-profit or tax-exempt.  This are done at different times and by different government agencies. Generally, by applying for the status, an organization can become tax-exempt but this entails a long process. There is approximately 30 pages to application form (Form 1023 for 501(c)(3) organizations; Form 1024 for others) is approximately 30 pages, and the IRS suggests that it (1023) to begin with and this can take about eight hours to completed. A status is granted after several months.

Once status has been granted. A “letter of determination” is sent by the IRS. This letter can now be used by your organization as proof of your tax-exempt status on a permanent basis. The letters will come of use when he need arises to show foundations during application for grant. It can also be used whe applying for state tax-exemption.

There are 2 additional ways of securing tax-exempt status. They are: automatic recognition and a fiscal conduit.


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Tax exemption and rules

For you to be able to avail for a tax exempt status, non stock, and non profit organizations are required to be able to secure confirmatory rulings or things such as certificates of tax exemption which should come from the Bureau of Internal Revenue or more known as the BIR. The tax exemption privileges which are of these organizations are not really absolute if that is what you are thinking, and this is because it does not cover all types of income and activities as well. Now for tax exempt corporations which are usually found or listed under Section 30 of the 1997 National Internal Revenue Code, as amended, are the exempt from income tax, this is apart from those whose income was earned from activities and were conducted for profit. However, the tax exemption which is granted under the law is also not exactly automatic and absolute, which is what people usually mistake.

Now to add, the RMO is the one that provides the following causes of revocation of the tax exemption certificate or ruling. Some of these are if there are material changes in the character, in the purpose, or in the method of operation of the corporation or of the association which are more or usually inconsistent with the basis for income tax exemption and which are confirmed in the tax exemption ruling. Next would be the on renewal and non revalidation of the tax exemption certificate. And lastly if the corporation which has been issued a tax exemption ruling fails to file something known as an annual information return. There are also several different approaches which are supposed to be used in granting exemption to organizations. Different approaches may be used within a jurisdiction or especially within sub-jurisdictions. Some jurisdictions usually grant an overall exemption from taxation to organizations which usually are meeting certain definitions. The United Kingdom, as an example, would provide an exemption from rates or property taxes, and income taxes for entities governed by the Charities Law. Lastly, the overall exemption may be somewhat limited by something known as the limited scope for taxation by the jurisdiction. Some jurisdictions may levy or rely only a single type of tax exemption from only a particular tax.


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Taxes and Exemptions

TAX exempt corporations which are all found under the Section 30 of the 1997 National Internal Revenue Code, as amended, are exempted from the income tax, except of course for those whose income was earned from activities conducted for mainly profit. However, the tax exemption granted under the law is not automatic and not absolute as well. For you to be able to to avail tax exempt status, non-stock, and non-profit organizations are required to secure confirmatory rulings or certificates of tax exemption from the Bureau of Internal Revenue or also known as the BIR. The tax exemption privileges that these organizations have are not absolute since it does not exactly cover all types of income and activities.

To be able to properly implement the tax exemption of non-stock, nonprofit corporations, the BIR recently issued Revenue Memorandum Order (RMO) No. 20-2013. This is what prescribes the policies and guidelines for the applications for your tax exemptions, re validation of your tax exemption certificates and application for confirmatory BIR rulings. RMO No. 20-2013 lists a series of documentary requirements as well which is to be submitted by qualified non-stock, non-profit corporations. This is don together with their respective applications for tax exemption or re validation with the Revenue District Office where they are supposedly registered. Furthermore, the RMO is what provides the following causes of revocation of the tax exemption certificate or ruling. First if there are material changes in the character, purpose, or method of the operation of the corporation or any association which are inconsistent with the basis for income tax exemption confirmed in the tax exemption ruling. Next is the Non-renewal and non-re validation of any of your tax exemption certificates. Lastly is if the corporation, which has supposedly been given a tax exemption ruling fails to file an annual information return. The tax exemption rulings or certificates which are provided prior to June 30, 2012 shall only be valid until Dec. 31, 2013 and this is pursuant to the new rules of the RMO. As for those issued after June 30, 2012, the certificate shall continue to be valid but only for the next three years from issuance date. This is only unless you sooner revoked or cancelled it.


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Philippines estate tax

Philippines Estate Taxes



It is always good to know about estate taxes. For the Philippines, whether or not you are a resident of the country, the estate tax would be payable upon any transfer of the net estate of every decedent. This would not follow however if the decedent of the Philippines at that time of his or her death, there will only be a portion of the estate in the Philippines which will be provided or included in the taxable estate. A good example would be if a decedent was a resident of the United States and the was able to become a naturalized United States citizen before his or her death,  then only the properties owned in the Philippines will be subjected to the estate tax. All the properties which were or are owned in the United States would not be subjected to the estate tax. So the next question would be the basis of the net estate tax. How is this computed for? This is where the law is to come in. According to the law, the estate tax is to be appraised at it’s so called “fair market value” depending on the time of death. This would be either the fair market value being determined by the commissioner, including the “zonal value” and the “assessed value”. This all depends on which value would come out at a higher rate. Most of the time, the zonal value would come out at a higher rate compare to the assessed value. It even happens that oftentimes, the zonal value would approximate the high market price, given that many properties are being sold based on their zonal value. Of course it should be pointed out that at that time, the fair market value is what was prevailing during that time of the decedent’s passing. Now we always have to remember the deadline that will be given to file the estate tax return, which would be all told 6 months from the death of the decedent. There are ways to extend this deadline. If ever the commissioner were to notice that the payment would impose hardship on the estate or the heirs, this could be extended to not later than 5 years.

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Requirements for exemption: Veterans Organization

Requirements for Exemption : Veterans Organization



As we talk about Veterans Organizations, there are some requirements which one has to meet in order to qualify for an exemption in taxes. One would include the fact that the post or the organization of either past of present have members of the United States Armed Forces or better known as the USAF. Next would be an auxiliary of the unit and society of such the post or organization this would also include the trust or foundation would be for such a post or organization as well. By obtaining all of these, you will be exempted of your taxes under the revenue code section 501( c )(19). This applies generally. Now let us revert back to the Veterans organizations and their requirements in order for them to be able to meet the tax exemption requirements. It and all of it’s possessions must be organized in the United States itself. Another would be the fact that at least 70% of it’s members must have been or still currently is a member in the United States Armed Forces. With that said, at least 97.5% of it’s members must be members previously or presently of the USAF, having the position of Cadets (even college students who may have an ROTC program), spouses, widowers, ancestors, or lineal descendants should also be cadets. The organization must then be operated for the following purposes only:


–          Being able to promote social welfare to the community, mainly for the common good and welfare of the people in the community.

–          Assisting the war veterans and seniors who are needy and members of the USAF as well.

–          Providing entertainment or care to the veterans who are hospitalized or are members of the USAF as well.

–          To have programs which will promote the life of the veterans who have passed and were possibly members of the USAF

–           Conducting religious programs or charitable programs or anything which relates to educational processes.

–          Sponsor and take part in patriotic activities

These are just a few of the requirements for the Veterans organization to pass for tax exemption.


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