Legal Definitions - exempt organization

Definition: An exempt organization is a group or entity that is either partially or fully exempt from paying federal income taxes. These organizations are typically non-profit and serve a specific purpose, such as charitable, religious, educational, or scientific.

Examples:

• A church that is exempt from paying federal income taxes because of its religious affiliation.
• A non-profit organization that provides free medical care to low-income individuals and is exempt from paying federal income taxes.
• A university that is exempt from paying federal income taxes because of its educational purpose.

These examples illustrate how exempt organizations are typically non-profit and serve a specific purpose that benefits society. In exchange for their tax-exempt status, these organizations are subject to certain regulations and restrictions to ensure they are using their resources for their intended purpose.