For each Form Letter that the IRS uses in connection with Advance
Rulings, I have briefly described the letter below, and then
suggested appropriate actions an organization can take.

If you receive a letter from the IRS, check for a form letter number
in the lower right hand corner. (The number could also be in the
upper right hand corner, or right after the signature on the letter.)
The list below (in numerical order) may help you understand the
purpose of the letter.

Note: [DO] on a form letter indicates that it was issued by an IRS
District Office, [NO] indicates the IRS National Office, and [SC]
indicates a service center; [CG] on a form letter indicates that it
is a computer generated letter. Ignore any "DLN number" on your
letter - it stands for Document Locator Number, and is strictly for
IRS internal use.

Form Letter 1045 - Your organization’s Advance Ruling Period begins

What it means:

Form letter 1045 is a favorable 501(c)(3) determination letter with
an Advance Ruling on the applicant's public charity status. An
Advance Ruling does not mean that your group's 501(c)(3) status is
temporary. It's the subcategory, the public charity/private founda-
tion part of your status, that is still up in the air. The IRS has
agreed to treat the organization as a public charity for an initial
five year period while giving the organization a chance to raise
enough public support to show that it is, in fact, publicly sup-
ported.

Actions you should take:

1. Check your determination letter for errors. 

When you initially receive your 501(c)(3) letter, check it for
errors. Is the name of your organization spelled correctly? Do they
have your organization's EIN right? Are there typos in the address
that could cause future IRS mailings to go astray? If your organiza-
tion claimed an exemption from filing Form 990 (other than the
<$25,000 exception) your letter should confirm that the annual
return is not required.

Form Letter 1045 lists the beginning and ending dates of your
organization’s Advance Ruling. The date your advance ruling begins
should be the same as the date your organization was incorporated or
formed (unless you have agreed to a different date because, for
example, you missed the 27 month deadline). The date your advance
ruling ends should be the last day of your organization's chosen
accounting period that is more than four but less than five years
later.

If there are errors in your letter, call 1-877-829-5500 and ask for
a corrected letter. Once you have a correct letter, make copies for
your accountant, your attorney, and everyone else who might have a
use for it. Put the original in a very safe place. The IRS does not
usually replace these letters - the best you can hope for is
probably a letter confirming that their database shows your group as
exempt.

2. Keep the IRS informed if your organization’s name or address changes. 

The IRS normally contacts organizations during the last month
of the Advance Ruling period, but a lot can happen in five
years. Organization officers change, names change, addresses
change, and important mail can go astray. If your organization
does not hear from the IRS, you should take the initiative, and
remind the IRS that the Advance Ruling period has ended. Write
to: Internal Revenue Service Attn: E.O. Advance Ruling Follow-Up
P. O. Box 2508 Cincinnati, Ohio, 45201.

3. Keep good records. 

In addition to basic information about your group’s income,
the IRS will want to know detailed information about larger
donations your organization receives. It may be helpful for
your accountant, bookkeeper, or treasurer, to review Form 8734
in order to be aware of the information that will be needed,
and to create a system for retrieving these details.

Some organizations receive little or no cash support during
their early years. If you anticipate this will be true of your
group, do your best to capture every scrap of information about
the support your group receives. This means that your organiza-
tion’s books and records should reflect donation income when
folks pay expenses on your behalf (annual filing fees, long
distance phone, etc.) and when mundane items (used office
furniture, coffee supplies, stamps, etc.) are donated.

Although you will not need a record of volunteer hours to
complete IRS Form 8734 at the end of your advance ruling
period, this is still information you should record. If your
group falls short of 33 1/3% support, the amount of volunteer
time your group has received is a "Fact & Circumstance" you can
point out to the IRS. 

Showing the IRS that your organization has received enough
public support will do little good if other 501(c)(3) require-
ments are overlooked. Get a copy of IRS Publication 4221,
Compliance Guide for 501(c)(3) Tax-Exempt Organizations, or
refer to the "Keep the IRS Happy" page of this website. Make
sure your board of directors is aware of all the 501(c)(3)
requirements and takes steps to keep the organization in compliance.

5. Keep your corporation in good standing. 

If your group is incorporated, keep your corporation in good
standing. Your corporation is the legal entity that the IRS has
"recognized" under section 501(c)(3). If the corporation goes
out of existence, so does the exempt status.

Form Letter 1046 - Your organization’s Advance Ruling Period ends

What it means:

This is the form letter sent out at the end of an organization’s
Advance Ruling. The IRS is requesting the information needed to
make a final determination of the organization's public charity status.

Actions you should take:

1. Complete and submit IRS Form 8734, which the IRS normally sends
out with Form Letter 1046.

2. If necessary, prepare 10% Facts & Circumstances or Exclusion of
Unusual Grants arguments in support of your organization’s public
charity classification.
(NOTE: These are discussed in detail in Prepare Your Own Advance
Ruling Follow Up)

3. Take this opportunity to make sure your organization’s name,
address, and other contact information is up to date in the IRS
database.

Form Letter 1048 - Your organization’s temporary public charity
status ends

What it means:

Tax law allows the IRS to assume that your organization is NOT
publicly supported if they do not hear from you at the end of the
advance ruling period. Form Letter 1048 is the "Presumptive Private
Foundation" letter. Your organization has not responded at some
stage of the Advance Ruling process, so the IRS assumes the organi-
zation does not meet the public support tests.

Actions you should take:

1. (Actions you should take if you received this letter because your
organization did not submit IRS Form 8734, or did not respond to IRS
questions about the information submitted on Form 8734, are discus-
sed in detail in Prepare Your Own Advance Ruling Follow Up.)

2. You should not receive this letter if you submit all information
requested by the IRS. If you have answered all their questions, but
have not been able to meet a public charity test, you should receive
a customized letter that gives you an opportunity to agree (by
signing form 6018) and briefly describes your appeal rights if you
do not agree. See Adverse Private Foundation Letter, below.

Form Letter 1050 - Your organization’s temporary public
charity status is now permanent

What it means:

This is the favorable letter issued when review of Advance Ruling
financial data indicates that the organization meets the applicable
public support tests. Do not be alarmed by this wording in the
middle of the letter: 

Grantors and contributors may rely on this determination unless
the Internal Revenue Service publishes notice to the contrary.
However, if you lose your section 509(a)() status, a grantor or
contributor may not rely on this determination if he or she was
in part responsible for, or was aware of, the act or failure to
act, or the substantial or material change on the part of the
organization that resulted in your loss of such status, or if
he or she acquired knowledge that the Internal Revenue Service
had given notice that you would no longer be classified as a
section 509(a)() organization.

The "act or failure to act" and loss of status referred to are
purely hypothetical.

Actions you should take:

Check your determination letter for errors. Is the name of your
organization spelled correctly? Do they have your organization's EIN
right? Are there typos in the address that could cause future IRS
mailings to go astray? Is the public charity status specified in the
letter the status you were expecting? If there are errors in your
letter, call 1-877-829-5500 and ask for a corrected letter.

This letter, along with your initial letter (FL 1045) are your proof
of exempt status. Make copies for your accountant, your attorney,
and everyone else who might have a use for it. Put the original in a
very safe place. The IRS does not usually replace these letters -
the best you can hope for is probably a letter confirming that their
database shows your group as exempt.

Form Letter 3369 - The IRS has questions about your Advance Ruling
information

What it means:

This is the letter the IRS uses if they need additional information,
or clarification of your group’s Form 8734.

Actions you should take:

Simply provide the information the IRS specifies.

Adverse Private Foundation Letter

Final adverse private foundation letters are customized for your
organization's specific circumstances, and do not usually have a
form letter number, although Form Letter 2243 is sometimes used for
organizations that reported no support during the advance ruling
period.

Actions you should take:

If you agree with the findings of the IRS as set forth in the
letter, sign the Form 6018 the IRS provides and seek professional
advice to help your organization comply with IRS requirements for
private foundations.

If you do not agree with the conclusions the IRS has reached, you
can appeal. This would probably also be a good time to seek
professional assistance.

If you sign the Form 6018 agreeing to classification as a private
foundation, you cannot provide additional information at a later
date to overturn the private foundation determination. Once the
organization has agreed to private foundation classification, the
only way out is through a 507(b) termination, best done with
professional help.