A 501(c)(3) organization is a non-profit corporation formed to carry out a charitable, religious, literary, educational or scientific purpose that is recognized by the Internal Revenue Service as tax exempt. A 501(c)(3) non-profit corporation does not pay federal or state corporate income tax on profits it makes from events carried out in. In essence, this is because both state and federal taxing authorities believe that the benefits the public receives from these organizations entitle them to this advantageous tax exempt status. These corporations are known as 501(c)(3) non-profit corporations because they are granted tax exemptstatus from Section 501(c)(3) of the Internal revenue Code.