Tax Exempt Letter

A tax exempt letter is written by an individual or a group, usually running an organization, which is deemed as a public charitable organization, and not earning profits in any way (in some countries, even private institutions which happen to be academic in nature like schools, colleges and universities, happen to be eligible for tax exemption).

The letter for tax exemption is written to an authority in the income tax department or properly addressed to the income tax department itself, with the specifications that the organization in question is indeed a public charity in nature, collecting funds only for the benefit of the community or a needy section of the community, as opposed to a profiteering full fledged business run for personal monetary gain.

In order to do so convincingly, one needs to provide documents- be they financial records, transactions of bank loans, references and recommendations from trustworthy sources, and documents and certificates pertaining to the integrity and validity of the organization, and the people behind it. These papers should be enclosed along with the letter.

Template for Tax Exempt Letter

For your guidance, we have provided you with a template for a tax exempt letter-

• First comes the receiver’s address at the right hand side (if it is an e-mail or printed letter sheet), followed by a telephone number (if any), and finally, the date of the day the letter has been written on. The date should preferably be in the following format - Day/Month/Year
• Next comes the sender’s address, preceded by the sender’s name, and finally his or her phone number. As he or she is writing on behalf of an organization for a tax exempt letter, the name of the organization should be written immediately after the sender’s name.
• Address the person you are writing to with "Respected". If you do not know who is going to read your letter, address it to "Whomsoever It May Concern"
• Keep your letter short, not more than 180 to 200 words in content. Mention only the specifics of your request, but do so in a clear, precise manner.
• Mention that you are enclosing the reference documents at the end of the letter.
• At the end of your letter, under your signature, see to it that you mention the name of your organization, as you are writing on behalf of it, preceded by your designation

Sample for Tax Exempt Letter

To help you further understand this concept more clearly, here is a sample of the tax exempt letter-

Income Tax Department(Hanover Branch),
2348 Lincoln Street,
Hanover, MD 08102,
(609)- 537-9566

Date: 16th April, 2012

Helen S. Cave,
The Reach Out Foundation for the Homeless,
2397 Columbia Boulevard,
Hanover, MD 21076,
(410)- 493-5419

To Whomsoever It May Concern,

I am writing this letter to request for a tax exemption for the operations of the Reach Out Foundation for the Homeless, on the grounds of it being a non-profit organization aimed at providing shelter for the homeless of Columbia Boulevard.

Under sec 501(c): Internal Revenue Code, it clearly states that any non-profit charitable institution is perfectly eligible to be exempted on tax. As I do not stand to gain monetarily from running the Reach Out Foundation, the organization stands a valid chance of being exempted from Income Tax.

About "Reach Out": I founded the "Reach Out organization for the Homeless" from my own finances about two years back. The main goal was to provide asylum for the homeless living on the pavements of Columbia Boulevard and so far, we have succeeded to do so for twenty-four individuals, now rehabilated in six rented shelters located all over Hanover.

Along with the letter, I have enclosed all the financial documents and bank account photocopies showcasing the transparency of the "Reach Out" dealings and how the entirety of the collected funds go behind paying the rents for the shelters. Also attached are references to the integrity of the organization as well as my own character, coming from reliable sources like the landlords of the rented shelters and my previous employers.

Hoping you consider my case in the soonest time possible.

Sincerely yours,
Helen S. Cave

[Signature]
Founder and President, The Reach Out Foundation for the Homeless

And here is the template for the reply letter from the income tax officer-

Helen S. Cave,
397 Columbia Boulevard,
Hanover, MD 21076
(410)-493-5419

Date: 20th February, 2012

James W. Miller,
Income Tax Department (Hanover Branch),
2348 Lincoln Street,
Hanover, MD 08102,
(609)- 537-9566

Dear Helen,

In regards to the letter you wrote dated April 19th, 2007, where you requested you should be exempted from Income Tax, under Sec 501(c): Internal Revenue Code on the grounds that your organization "Reach Out" is a public non-profit organization (NPO)/ charity firm as being a private business institution.

Based on the evidence you have given, backing your claim- from your financial records to your references and credentials, it has been determined that your institution is indeed a non-profit charity organization, and therefore, be exempt from income tax.

For further reference, you may seek out the statements written into the publication 986, to help you understand your responsibilities, duties and powers which come with being adjudged a tax exempt organization. Announcements and particulars provided on our official site will also assist you in the same.

You are strongly requested, to treat the declaration in this letter as sensitive, confidential information.

Sincerely,
James W. Miller,
(Signature)
Income Tax Department

A tax exempt letter is fairly easy to write provided you invest a little time for writing one. Rest assured that the outcome of putting your time and effort into framing such a letter will be highly rewarding. Also, you can look Tax Receipt Letter and Tax Representation Letter for more example of letters.