The US Internal Revenue Code lists a number of entities eligible for tax exemption. The funds saved can thus be used for other purposes. In order to be eligible for the exemption, the firms or individuals usually have to apply for tax exemption with the IRS, and wait for the application to be approved. Until then, such parties are obligated to pay tax and file tax returns as usual. One can therefore not neglect doing this even if they are among the parties that are eligible for tax exemption.
When applying for tax exemption status, the first step in the process would be to figure out if the party is eligible. The IRS Code is very clear about the requirements for tax exemption, and these need to be fulfilled before an individual can then file for exemption. It would be important to have a tax attorney interpret the law for you so that you can then figure if you are eligible. If not, one can then take steps to make sure that they comply with the requirements.
Once this is done, the filing process can then begin. The application process usually requires the entity to submit a wide variety of forms, certificates and other clearances before being granted the tax exemption status. This process can be complex particularly if a business with a complex structure is doing the application.
If the exemption is granted, it could vary from one case to another. For instance, some companies such as charitable funds may not require to pay any taxes, while some businesses may be exempt from only a few categories of tax. In addition to that, the duration for exemption is also likely to be indicated.