How do organizations get tax-exempt status?

New York’s attorney general is investigating the National Rifle Association to determine whether it has violated its tax-exempt status. Federal law clearly regulates the steps an organization can take to become tax-exempt (that is, exempt from paying certain taxes, including income tax). Once an organization gets this designation, it isn’t for life. Although revocations are not common, an organization can risk its tax-exempt status if it is involved in illicit activities or pays its executives too much, for example.

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