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Is “Nonprofit” the Same as “Tax-Exempt”?

Absolutely not. Being formed as a Nonprofit Corporation does not automatically mean that the corporation is tax-exempt for federal and, in some instances, state income tax. A “tax-exempt” Corporation is a distinctive entity that has gained an exemption from income tax liability. A Nonprofit Corporation is not eligible for exemption from income tax liability until it applies for and has been approved by the IRS for tax-exempt status.