This document discusses tax exemption under IRC Section 501(c)(3) and related tax issues for nonprofit organizations. There are over 1.5 million nonprofit organizations exempt from federal income tax, including nearly 1 million public charities and under 100,000 private foundations. Choosing the right organizational structure and obtaining 501(c)(3) status provides various tax advantages. The key requirements to qualify for 501(c)(3) status are that the organization operates exclusively for exempt purposes, with no private inurement or substantial lobbying or political campaigning. Public charities have fewer restrictions than private foundations. The document reviews filing requirements, interaction with the IRS, and recordkeeping for grants.