Apply For Tax Exemption

To apply for tax exemption, your organization must file Form 1023. Form 1023 is an application for recognition of exemption under section 501(c)(3) of the Internal Revenue Code


How We Can Help

The bottomline is that applying for tax exemption is an arduous task. We specialize in helping charitable organizations just like yours.
We carefully review all required documentation and prepare your form 1023 or tax exemption application to ensure approval. We deal with the IRS on a daily basis, so we know exactly what is required. We submit a completed application that meets required standards. If the IRS examiner requires additional information, we will take care of it!

Eligibility to File Form 1023

Organizations that may qualify for exemption include corporations, unincorporated associations and trusts, and limited liability companies.
To qualify to be recognized as a tax-exempt entity, your application must be accompanied by exact copies of your organization’s organizing documents. Depending on your type of organization, you must submit:
  • Articles of incorporation if you are filing as a corporation
  • Articles of organization for a limited liability company
  • Articles of association or constitution for an association
  • A declaration of trust or trust agreement for a trust
You must be registered with a state before you submit your form 1023 to the IRS.
It is important to make sure that your organization is legally formed before you apply for an Employee Identification Number (EIN). Once you apply for an EIN, the IRS assumes that you are legally formed, triggering the start time for when your information return or form 990 is due. Failure to file your form 990 in a timely manner will have negative implications on your organization.

IRS Form 1023-EZ

Form 1023-EZ, is the streamlined application for recognition of exemption under Section 501(c)(3) of the Internal Revenue Code. Form 1023-EZ is a shorter and simpler application that only smaller nonprofit organizations with less than $50,000 in annual receipt and $250,000 in total assets can file.

Application For Tax Exemption FAQs

1How can an organization become tax-exempt?
In order for an organization to benefit from federal income tax exemption, it must apply for recognition of exemption under section 501(c)(3) of the IRC.
2What are tax-exempt requirements for 501(c)(3) organizations?
To be tax-exempt under section 501(c)(3) of the IRC, an organization must be organized and operated for the sole purpose set forth in section 501(c)(3). It must not be organized nor operated for the benefit of private interest. None of its earnings may go to any stakeholder.
3Does my nonprofit status mean that my organization is tax-exempt?
State Laws govern a nonprofit's legal status, while Federal Law govern its tax-exempt status or exemption from federal income tax. Organizing as a nonprofit organization at the state level does not automatically grant your organization federal tax-exemption.
4Is there a fee for applying for tax-exemption?
Yes, you are required to pay applicable fees. These car vary from $275 to $600 depending on whether the organization files form 1023-EZ or Form 1023.
5Where do I submit my application for tax-exemption?
As of January, 31, the IRS now requires all applications to be submitted electronically.
6How long does an application for tax-exemption take to be approved?
Assuming that there are no errors or missing documents in your application, and applicable fees have been paid, the IRS says that you should expect to hear from them within 180 days after submitting your application.
7Can my application for tax-exemption be expedited?
It is possible if there are compelling reasons such as a pending grant, where failure to secure the grant will have adverse impact on your organization’s survival, etc.
8Are partnership eligible for tax-exemption?
No, only corporations , LLCs, and unincorporated associations and trusts are eligible for federal tax-exempt status.
9When does federal tax-exempt status take effect?
If an organization files its application for tax-exemption within 27 months of the date of its incorporation, then if granted, tax-exempt recognition will be effective as of the date of its incorporation. However, if an organization files for exemption after 27 months from the date of incorporation, then if granted, tax-exempt recognition, will be effective from the postmarked date of the application for tax exemption.
10Why does Form 1023 ask for information about an organization applying more than 27 months after the month it was legally formed?
An organization must file its application for exemption within 27 months from the end of the month in which it was formed, to be recognized as exempt back to the date of formation. However, if it files its application for exemption after the 27-month deadline, the exemption status will be recognized from the filing date forward. An exception may apply in cases of automatic revocation of tax-exempt status where there is an option for the organization whose tax-exempt status was automatically revoked, to request an earlier effective date than the submission date.
 

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