When it comes to determining whether churches are nonprofit or not for profit organizations, many individuals are frequently perplexed. Both are free from paying taxes, however there is a difference between the two, which causes confusion.
A nonprofit organization, sometimes referred to as a 501(c)(3) organization, is a form of tax-exempt business that is set up and run solely for charitable, educational, scientific, or literary purposes. Churches are included in this category as they are regarded as religious institutions. The IRS must receive an application from nonprofits before they may be designated as 501(c)(3) organizations.
On the other hand, the IRS does not recognize a not-for-profit organization as a distinct tax-exempt entity. As a result, they are ineligible for tax-exempt status and other advantages enjoyed by nonprofit organizations. Organizations that are not for profit are frequently started with social, recreational, or other similar goals in mind.
It is important to remember that while not all churches are nonprofit organizations, all churches are. Churches are special in that, even if they don’t apply, the IRS automatically classifies them as 501(c)(3) organizations. Churches are naturally benevolent and religious, which explains why.
There are 501(c)(4), 501(c)(6), and 501(c)(3) organizations in addition to 501(c)(3) organizations. A 501(c)(4) organization is a social welfare group committed to advancing the general well-being of the neighborhood. A business association that is committed to advancing a shared corporate interest is known as a 501(c)(6) organization.
Let’s go on to the following query now: A 503(c)(3) organization: what is it? The truth is that a 503(c)(3) organization does not exist. When referring to a 501(c)(3) organization, this error is common.
A 503(c) organization, on the other hand, is a tax-exempt institution that is not a private foundation. These groups are frequently local employee associations, social welfare organizations, or civic leagues.
Do you need to collect sales tax in Indiana, to finish? Most of the time, sure. Sales tax must be collected from customers in Indiana if you are selling products or services. There are a few exceptions to this, including specific foods and medications. It’s critical to confirm with the Indiana Department of Revenue whether your company is exempt from having to collect sales tax.
Churches are nonprofit institutions that the IRS automatically classifies as 501(c)(3) entities because they are nonprofit. Organizations that are not for profit are often created for social or recreational reasons and are not recognized by the IRS as a separate tax-exempt corporation. A 503(c)(3) organization does not exist, but a 503(c) organization does. Finally, with few exceptions, most companies in Indiana are compelled to charge their clients sales tax.
Your query has nothing to do with what the article’s title claims. But to answer your question, yes, Indiana does compel out-of-state retailers to gather sales tax on purchases made from residents of the state provided they meet the criteria for economic nexus as defined by the state’s economic nexus statutes. This implies that the seller may still be required to collect and submit Indiana sales tax on any transactions made to residents of Indiana, even if the vendor is based elsewhere.