Final answer:
When applying for not-for-profit status, organizers and directors are primarily subject to state tax regulations that govern qualifications for not-for-profit entities. Compliance with both state and federal regulations is mandatory for the maintenance of not-for-profit status and its associated tax exemptions.
Step-by-step explanation:
When organizers and directors apply for not-for-profit status from a state, they are subject to state tax regulations. This involves adherence to specific legal requirements imposed by the state to ensure compliance with tax exemptions and other rules pertinent to not-for-profit organizations. While federal tax regulations, the organization's bylaws, and donor restrictions are also important aspects to consider for the operation and governance of a not-for-profit, it is the state's regulations that dictate the initial conditions for qualifying as a not-for-profit entity within that jurisdiction.
Not-for-profit organizations must also navigate compliance with federal guidelines, especially if they seek tax-exempt status under IRS rules, which involves yet another layer of regulatory adherence. The complexities of these regulations require considerable effort and attention to detail to ensure ongoing compliance and to maintain the benefits afforded by not-for-profit status, without which the organizations may face financial and legal liabilities.