Welcome to CPA at Law, helping individuals and small businesses plan for the future and keep what they have.

This is the personal blog of Sterling Olander, a Certified Public Accountant and Utah-licensed attorney. For over eight years, I have assisted clients with estate planning and administration, tax mitigation, tax controversies, small business planning, asset protection, and nonprofit law.

I write about any legal, tax, or technological information that I find interesting or useful in serving my clients. All ideas expressed herein are my own and don't constitute legal or tax advice.

How Certain Organizations Can Self-Declare Tax-Exempt Status

There are dozens of tax-exempt organizations under the Internal Revenue Code; the IRS has a list of these on its website, along with the application form that each one files (usually Form 1023 or Form 1024). However, most of these organizations are not actually required to submit an exemption application to the IRS: "[Certain] organizations may self-declare their tax exempt status by operating within the requirements of the applicable code section and filing the required annual returns or notices." In other words, the tax-exempt status of a new organization can often be established simply by filing its first tax return.

Self-declaration is available to cooperative associations, social and recreation clubs, and business leagues, to name a few of the more popular ones. A 501(c)(9) and 501(c)(17) organization may not self-declare. While a 501(c)(4) organization is still not required to file an application (historically with Form 1024 but now with Form 1024-A), a 501(c)(4) can no longer simply self-declare by filing the first tax return. In a future post, I will describe how to form a 501(c)(4) organization. Finally, some 501(c)(3) organizations do not need to file an application or self-declare, whereas all others with gross receipts in excess of $5,000 generally may not self-declare and must apply for exemption.

Self-declaring tax-exempt status has its downsides, most notably that the organization will not receive a determination letter from the IRS. This means that, among other things, the organization will not be publicly recognized as tax-exempt and may not be able to qualify as exempt from certain state taxes. If a self-declared tax-exempt organization does not operate within the requirements of the applicable section of the Internal Revenue Code, it could be vulnerable to an audit by the IRS. Thus, another significant benefit of formally applying for tax-exempt status is giving the IRS notice of how the organization intends to operate and providing an opportunity for the IRS to notify the organization that it is not operating as required by the Code.

Establishing tax-exempt status by self-declaration is generally only advisable for small organizations, such as those eligible to file the Form 990-N (e-Postcard) version of the Form 990. After forming a nonprofit entity under state law and obtaining an EIN from the IRS, a representative of the organization must call the IRS at 877-829-5500 and ask that the organization be allowed to file Form 990-N and then file the form. This is all that is required for a small, eligible organization to be classified as tax-exempt.

50 States' Free Individual Income Tax Return E-Filing

Tax season is coming up, and most people in the U.S. will file a federal and state income tax return. Federal income tax returns can be e-filed for free through the IRS website. While most people do not use this option, all of the popular tax preparation services offer free federal and, in many cases, free state income tax e-filing for lower income families.

If you don't meet the income limitations, however, finding a way to e-file your return for free, particularly your state income tax return, is more difficult. One new option that includes free e-filing for federal and state tax returns is creditkarma.com; however, it is not as robust as other services, as this review has noted.

Fortunately, the department of revenue of many states allows free e-filing directly from the department's website. Since most state income tax returns rely heavily on the taxpayer's federal return, you will need to have already completed your federal return in order to use these services. Linked below are state government websites where state individual income tax returns can be e-filed. This post will be updated as better sources become available; please comment below if you come across broken links or better options than what I currently have:

 Alabama  Illinois  Montana^  Rhode Island^
 Alaska*  Indiana^  Nebraska  South Carolina^ 
 Arizona^  Iowa^  Nevada*  South Dakota*
 Arkansas^  Kansas  New Hampshire#  Tennessee#
 California  Kentucky^  New Jersey  Texas*
 Colorado  Louisiana  New Mexico  Utah
 Connecticut  Maine  New York^  Vermont
 Delaware  Maryland  North Carolina^  Virginia^
 District of Columbia^   Massachusetts^  North Dakota^  Washington*
 Florida*  Michigan^  Ohio  West Virginia^
 Georgia^  Minnesota^  Oklahoma^  Wisconsin
 Hawaii  Mississippi  Oregon  Wyoming*
 Idaho^  Missouri^  Pennsylvania   

* State does not have an income tax
^ State does not offer free online filing directly through the state revenue department's website
# State has an investment income tax in lieu of a traditional income tax