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What TAXES do you PAY if you are Tax EXEMPT 501(c)3 NON-Profit Organization?

A fully exempt nonprofit may be exempt from most federal income taxes and some state taxes, such as sales and property taxes. Also, its donors may be able to take a tax deduction for their donations to the organization.

As you may know, our organization was under attack last year. We had a theory to who was creating so many issues. And that theory was confirmed this week. It made me think.

Think back to a few months back when the family we thought to have been causing so many headaches were sharing our social media profiles with their family, friends, and even some neighbors who actually touch our property. They were trying to convince people that we were ripping the government off.

They tried to convince everyone that we DO NOT pay taxes.


First, we do PAY TAXES!

I do not pay some taxes. Because I do not work and never have. I have always been able to give my time to the community I live in.

Ken pays income tax for any dollars he makes throughout the year off of the farm. He gives 100% of his time to the Crazy Critters organization and has never taken a penny in pay.

He has been self-employed since 2001. This means we pay State taxes, self-employment tax, Medicare tax, and we pay sales tax on any item purchased for use in the jobs that he does.


Second, we pay property taxes. Ken’s family has lived on this farm since 1968. The land tax has been paid ever since. Ken and I have paid taxes here since 1999.

We have the right to file for a reduction on property tax because of the fact we use the land for the Non-profit care of animals. Yet, we have not opted to file for this yet. So we PAY these taxes.

Added, with the war against the CUP and Lake County, we were not able to file for our agriculture exemption in 2018. Because it was insisted by the counties caseworker that we needed this thing called a Conditional Use Permit. And we were told that agriculture exemption and a CUP cannot be issued on the same parcel. As of 2019, we do get a SLIGHT deduction for the area the greenhouses are located.


We do NOT pay tangible taxes. Because we are a non-profit. We are exempt from these. What is Tangible Personal Property?

Tangible Personal Property is everything used in a business other than items of Real Estate. Known as Business Personal Property, it includes machinery, equipment, furniture, fixtures, signs, window air conditioners, supplies, leased, loaned, borrowed, or rented equipment and manufactured home attachments on rented land (cabanas, carports, etc.).Who is required to File?

Every person, firm, corporation,etc., owning, leasing, managing, having control or custody, direction or supervision of any tangible personal property in Lake County, Florida is required to file a Return. When do you need to File?

All tangible personal property returns must be filed prior to April 1st of each year to avoid penalties.Penalties

Penalties may be imposed for failing to file, or improper or late filing of a Tangible Return.

  1. Failure to file – 25% penalty
  2. Filing after due date – 5% per month.
  3. Failing to properly file – 15% of corrected value.

Failure to file a return or to otherwise properly submit the property for taxation does not relieve the taxpayer of any requirement to pay all taxes assessed against the property.


We would pay employment taxes if we actually had employees. But since Ken and I donated 100% of our time, we do not have these types of taxes. If your business or organization is not tax-exempt you would owe:

Federal income tax

  • FICA tax (Social Security taxes and Medicare taxes)
  • State and local taxes
  • Employers match the employee’s contribution to FICA tax. Also, employers must pay Federal Unemployment Tax Act tax (FUTA) and State Unemployment Tax Act tax (SUTA).

Tax-exempt organizations are still required to withhold, file, and remit employee payroll taxes. The only payroll tax you are not obligated to pay with 501(c)(3) status is FUTA.

Another words, just because your organization is a “nonprofit corporation,” does not make it “tax-exempt.” Since they are completely different concepts, it’s important to understand the difference.


Nonprofit status refers to status under state law.

Tax-exempt status refers to federal income tax exemption under the Internal Revenue Code (the “Code”) and to certain state taxes. There are 29 types of nonprofits in the federal tax code, not all of which are tax-.

For instance, your local Chamber of Commerce probably is a 501(c)(6), which is tax exempt. Your recreational club may be a 501(c)(7), which is also tax exempt. And your child’s daycare is likely a 501(k).

The most well-known tax organization for charitable non-profits are 501(c)(3) organizations under the U.S. tax code. These organizations receive income tax exemption and their donors may take a tax deduction for their donations.

Are All 501(c)(3) Activities Exempt?

Some activities that a charitable non-profit could be taxed, typically as an unrelated business activity. That could occur when a nonprofit runs a business venture to supplement its income and when that activity is not related to the nonprofit’s core mission.

Likewise, individuals can only take a tax deduction when they donate to a charity if they itemize their deductions on their tax return.

Charitable nonprofits must apply to the IRS for 501(c)(3) status. It is not conferred automatically. Some charitable activities and groups choose not to apply because they are small or temporary.

Some charitable organizations choose to be unincorporated nonprofit associations which often do not apply for tax exemption. Churches and religious organizations or faith-based nonprofits are treated a little differently than “public” charities.

WE PAY SALES TAX!!!

Does this surprise you? We pay sales tax on any plant that is purchased at our nursery in the retail setting. We do have many clients who have a resale certificate or non-profit status. In which case, we do not charge or pay sales tax.

However, we have clients that are sole-proprietors and they are going to resale the plant. Yet, they do not have a resale certificate because they just occasionally sell at a flea market or what not. This is ok. We pay sales tax on these purchases. So the Revenue Department is just fine with that. At the end of the day, they just want that sales and use tax submitted.

When I say WE PAY… I mean we pay. Ken and I pay sales tax for each plant sale out of our own pocket. Since we charge the same price to wholesale buyers as any supporter coming into the plant fundraiser. We have opted to pay sales tax for all plants. It is so much easier than making people count out change.

This ends up being a form of a monetary donation from Ken and I. It does not add up to more than a couple thousand dollars a year. We do this to show how much we appreciate the support of our community. You have to remember, we raised over $40,000 last year.

Charitable nonprofits that wish to become 501(c)(3) tax-exempt must meet three tests:

The Organizational Test
Tax-exempt nonprofits must be organized for a lawful purpose in one of these categories:

Educational
Religious
Charitable
Scientific
Literary
Testing for public safety
Fostering certain national or international amateur sports competitions
Preventing cruelty to children or animals

The Political Test

Organizations seeking 501(c)(3) status must state explicitly in their organizing papers that they will not participate in any political campaign on the behalf of any candidate or make expenditures for political purposes. There are 501(c) groups that can engage in these activities, but not 501(c)(3) organizations.

The Asset Test

A nonprofit’s charter must state that it prohibits distribution of assets or income to individuals (except as fair compensation for their services). The organization must also explicitly state that it will not be used for the personal gain or benefit of its founders, employees, supporters, relatives, or associates.

If a nonprofit organization engages in activities that are unrelated to their basic purpose, they are required to pay income taxes on that money. For example, if nonprofit organization ABC was formed to provide shelter for the homeless and it makes some money selling bicycles, that income may be eligible for income tax purposes.

Nonprofits are also exempt from paying sales tax and property taxes. While the income of a nonprofit organization may not be subject to federal taxes, nonprofit organizations do pay employee taxes (Social Security and Medicare) just like any for-profit company.

Additional Information

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