Not-for-profit and tax-exempt are not synonymous. An organization can be organized under state law as a not-for-profit organization, but must still meet specific requirements in order to be considered tax-exempt under section 501(c)(3) by the IRS. Failing to follow these requirements could cause an organization to lose its tax exempt status.
Just because an organization is classified as a charitable organization, does not mean it is automatically considered tax-exempt by the IRS under the Internal Revenue Code Section 501(c)(3). IRS Publication 557 entitled “Tax-Exempt Status for Your Organization” lays out the requirements for an organization to be considered tax-exempt.
First and most importantly, the IRS will automatically revoke an organization’s tax-exempt status if the organization fails for three consecutive years to file an IRS Form 990. Depending on the organization’s size, you may qualify to file a Form 990-EZ or Form 990-N. Private foundations must file Form 990-PF.
Here are some other requirements from the IRS:
A violation of any of the above requirements could cause an organization to lose its tax-exempt status under IRC Section 501(c)(3). For more information, check out the IRS Publication 557, “Tax-Exempt Status for Your Organization” which is available on the IRS website at http://www.irs.gov.