A government unit is defined as any federal, state, county, city, town, school district or political subdivision and instrumentality of the foregoing or any combination thereof. A political subdivision or instrumentality is an organization or department which has been delegated certain functions of a government body. Examples of government units are county water conservancy districts, state universities, city fire departments, associations of county governments, etc. Indian tribes are not governmental entities included in this definition.
The term nonprofit organization refers only to organizations exempt from income tax as described in Section 501(c)(3) of the Internal Revenue Code. Some examples are organizations operated exclusively for religious, charitable or educational purposes. The Internal Revenue Service (IRS) issues a letter of exemption to exempted organizations. A copy of this letter is required by the Department to allow a nonprofit organization to elect to become a reimbursable employer and to be given recognition for their nonprofit status.