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Nonprofit Law/non-profit in mexico/US-Mexico Income Tax Convention


In your response on 6/2/2011, in reference to a question about establishing a non-profit in Mexico, you mention that "If you want donors to be able to deduct donations and not to have your sales income, if any, taxed as long as you comply with fundraising guidelines for 501(c)(3) organizations, you would need to establish a charitable trust, incorporate under a state's nonprofit corporation law, or set up an unincorporated nonprofit association."

I have a few questions about a Mexican non-profit set up by a Mexican citizen, with a US citizen sitting the the board of directors.

My questions are these:

1) If the non-profit organization is set up by a Mexican citizen and is considered a tax-exempt organization in Mexico after following the appropriate legal rules and regulations in Mexico (see US-Mexico Income tax Convention Article 22 section 2), is it then automatically recognized in the United States as a tax exempt organization?  If so, is the organization's status changed in any way if a US citizen sits on the board of directors?

2) Is it possible (legal?) to solicit donations/apply for grants from US citizens and inform them that their contribution is tax-deductible under Article 22 of the 1994 United States-Mexico Income Tax Convention WITHOUT setting up one of the three organizations mentioned above?  

Thank you for your time.  I do understand that these questions could be out of the scope of your free advice on this forum, but I do hope that perhaps you could give some guidance as to where to find the answers to these questions if that is the case.  

IMPACTO organization

 As to charitable deductions for U.S. taxpayers, see IRS Publication 526 "Charitable
Donations"  which is available at: on page 3 in the middle column:
--- Start of Excerpt ---
Mexican charities. Under the U.S.-Mexico in-
come tax treaty, a contribution to a Mexican
charitable organization may be deductible, but
only if and to the extent the contribution would
have been treated as a charitable contribution to
a public charity created or organized under U.S.
law. To deduct your contribution to a Mexican
charity, you must have income from sources in
Mexico. The limits described in Limits on Deduc-
tions, later, apply and are figured using your
income from Mexican sources.
---End of Excerpt---

1.  It is not relevant that a U.S. citizen is on the board of the Mexican charity but the Mexican charity is still treated as above indicated in Publication 526.

2.  Not unless you specify that only their income from sources in Mexico is effected. That is the federal (IRS) rule.  You would also need to consider the charitable solicitation regulations of states in the U.S. where you solicit donations.
has links to the state offices that regulate charitable
organizations and charitable solicitations.

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic


I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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