One of the primary benefits offered to nonprofit corporations is the opportunity for tax exemption under state and federal law. But, with very few exceptions, nonprofit corporations are not automatically tax exempt simply by virtue of being nonprofit corporations. Instead, a nonprofit corporation generally must apply for tax exemption and be recognized as exempt by the appropriate taxing agency. At the state level, this agency is the Indiana Department of Revenue.
Some of the tax benefits available to nonprofit corporations recognized as exempt by the Indiana Department of Revenue include:
exemption from income tax (see, the Indiana Department of Revenue's Information Bulletin #10 Sales Tax)
exemption from sales tax for sales of tangible personal property by qualified nonprofit organizations carried on for a total of not more than 30 days in a calendar year and engaged in as a fundraising activity to raise funds to further the qualified nonprofit purposes of the organization (see, the Indiana Department of Revenue's Information Bulletin #10 Sales Tax)
exemption from sales tax for purchases of articles used for the same purpose as that for which the organization is exempt, where the transaction is invoiced directly to the nonprofit corporation and paid directly via the corporation's funds (see, the Indiana Department of Revenue's Information Bulletin #10 Sales Tax )
Applying for Recognition as a Tax Exempt Corporation
Applying for recognition as a tax exempt corporation is accomplished at the same time the corporation applies for its Indiana Taxpayer Identification Number by submitting a completed Form NP-20A, found at the Indiana Department of revenue's Nonprofit forms page. Note that Indiana Code section 6-2.5-5-21 requires this application to be filed within 120 days of the corporation's formation date (the date it filed its Articles of Incorporation with the Indiana Secretary of State, or a later date specified in the corporation's Articles of Incorporation) if the exemption is sought for a nonprofit corporation engaging in sales of food and food ingredients to confined or hospitalized persons.
Also note that the Department of Revenue instructs that all nonprofit corporations seeking tax exemption must file Form NP-20A within 120 days of the dates of their formation (see Indiana Department of Revenue Information Bulletin #17 Income Tax).
Nonprofit corporations may also be eligible for property tax exemptions. To apply for a property tax exemption, Form 136 Application for Property Tax Exemption must be filed with the County Assessor of the county in which the property is located. There is no filing fee for this form. Additional information regarding the property tax exemption is available on the form.
Information Bulletin #17 Income Tax from the Indiana Department of Revenue (discussing Indiana's taxation of, and filing requirements for, nonprofit corporations)
Information Bulletin #10 Sales Tax from the Indiana Department of Revenue (discussing the application of Indiana sales tax to nonprofit corporations)