How does the IRS determine if an organization is a nonprofit or not for tax purposes?

The short answer is: Yes. 501(c)(3) organizations must apply to the IRS to obtain tax-exempt status.

The long answer is a bit more complicated. The IRS uses a two-part test to determine if an organization is a nonprofit for tax purposes. The first part of the test is whether the organization has a charitable purpose. To meet this part of the test, the organization must be organized and operated for one or more of the following purposes:

-Religious
-Educational
-Charitable
-Scientific
-Literary
-Testing for public safety
-Fostering national or international amateur sports competition
-Preventing cruelty to children or animals