Can someone tell me how people setup charities that own and operate businesses so that they dont have to pay taxes. How are people doing this legally?

Thats called tax fraud. The penalty is back taxes and jail. Let me know how it goes for you.

A lot of people are setting up non-profits so that they dont have to pay taxes. The problem with it is that you have to report to the IRS and the local attorney general - the activities of the non-profit and you will be continually monitored. If it looks like most of the profits are benefiting a group of people or the on-profit is an alter ego, then the entity will loose its tax exempt status. In addition, a non-profit can not be "sold" and the profits from any merger can not inure to the benefit of an employee or board member.

Thanks for your response. I'm not sure why everyone, include CPAs are recommending non-profit status as the best way to do business. I think there is a disconnect between what you are claiming and why everyone is doing it.

I love these get rich schemes. I best people setup non-profits all the time and pocket the cash. What a scam

If you want to setup a non-profit and pocket the profit, call me to represent you when you get indicted for fraud.