Q. Is it true that the IRS is now so backlogged that they are taking
8-12 months?
A. According to the director of the IRS Exempt Organizations
Division, most exemption applications are handled in one of three ways:
1. "If the application is complete and everything we need is in there, we
can close the case right then and there. They get closed pretty quickly
and a large number get closed that way."
(If your application is "merit closed" you could receive your determina-
tion letter in less than a month.)
2. "...we found...there were a large number that didn't quite make it
through the screening, but they didn't really need the full-fledged de-
velopment by one of our staff people. So we send them off to what we
call accelerated processing. That enables us to hand off the responsi-
bility to get a couple of pieces of information to a lower level staff
person so that the agents can continue working the other cases that are
coming in."
(The turn-around on these is not much longer than #1 above.)
NOTE: Around 50% of the applications the IRS currently receives are pro-
cessed as described in #1 and #2.
3. "Cases that have to be developed because we don't have the appro-
priate information or something is confusing or there's a question have
to go and stand in line and wait for an agent who's available to deal
with the case."
As of June, 2007, it was taking around 6 months for these cases to be
assigned to an agent. Depending on the individual agent's workload,
it may take several more months to complete a case once it has
been assigned. The IRS is beginning to catch up on their backlog, but
some applications may still take up to a year to process.Q. Please send forms for 501(c)(3) to above address.
A. I am glad to provide the information in this website as a public ser-
vice, but I do not maintain a supply of IRS forms to mail out.
You can obtain IRS Forms and Publications:
- By visiting your local Federal Building.
- By calling 1-800-829-3676 (1-800-TAX-FORM).
[TTY/TDD 1-800-829-4059]
- By Fax. From a fax machine, dial (703) 487-4160 and follow
voice prompts.
- Over the Internet at www.irs.gov
CAUTION: Not all Forms and Pubs are available through all means listed.
Q. What can you tell me about the number that the IRS gives to a
charity once its been approved?
A. This is a common misconception. In fact, the IRS does NOT issue a
special number to recognized charities. The ID numbers the IRS uses for
charities and other tax exempt organizations are the same as the numbers
the IRS uses for taxable corporations, etc - the Federal ID number. This
number is known by several different names - TIN, EIN, FEIN (short for
taxpayer ID number, employer ID number, or Federal Employer ID number).
The EIN does not indicate in any way whether an organization is tax ex-
empt. No additional "tax exempt number" is assigned when an organization
gets 501(c)(3) or other tax exempt status. The only proof an organiza-
tion has that it is tax exempt is the letter from the IRS saying so.
Q. I am starting a 501(c)(3). Do I need to incorporate first and then
apply for tax-exempt status or can I just apply for tax-exempt status?
Which comes first??
A. When the IRS recognizes tax exempt status, it is specifically for a
named entity - usually a corporation, sometimes a trust or association.
If the corporation does not exist yet, it cannot submit a 501(c)(3) ap-
plication. You need to incorporate first.
Q. Is it realistic for me to fill out my own application, or would you
suggest that we hire an attorney?
A. Tens of thousands of do-it-yourselfers file successful 501(c)(3) ap-
plications every year. (In 2002, one IRS official estimated that 85% to
90% of the exemption applications submitted were from organizations not
represented by attorneys, accountants or other tax professionals. The
IRS approved about 80% of the applications they received that year.)
Whether it is realistic for you to try to do it yourself depends on a
variety of factors, such as the time you have available to devote to
this, and whether or not you are fairly comfortable with government pa-
perwork. Looking at the Form 1023 on the IRS website might also help
you decide.
In my opinion, the following activities or circumstances make a
"Do-It-Yourself" application inappropriate.
1. If your organization is one of the following:
• limited liability company or other less common type of organization
• hospital, other medical care facility, or co-operative hospital
service organization
• college, university, or cooperative service organization for an
operating educational organization
• 509(a)(3) supporting organization
• private foundation or private operating foundation
• home for the aged or handicapped
• successor to a for-profit entity
• charitable risk pool
• governmental unit described in section 170(c)(1)
• communal religious organization described in section 501(d)
2. If you plan to engage in any of the following activities:
• candidate nights, voter registration, or publishing of voting records
• tax exempt bond financing
• low income housing
• joint ventures
• consumer credit counseling
• downpayment assistance
• compensation through non-fixed payments
3. If your group is not different in any way from an organization de-
scribed unfavorably in a Revenue Ruling.
4. If you are interested in obtaining a group ruling for your organization's
affiliates.
Q. We recently sent in our completed 1023, and now want to know if
there is any way to contact the IRS for notification that they received
the application, and how far along they are in the processing. Do you
know of any email address or phone number?
A. If you paid your "User Fee" with a personal check, you can watch your
bank statements. When the IRS cashes your check, you can be certain they
received your application package.
You could also call IRS Customer Service for Applications. The number is
1-877-829-5500. They should be able to tell you whether your application
was received, and whether it has been assigned to an agent. In some
cases, they may be able to give you the name and phone number of the IRS
person handling your case.
Q. We just received the letter approving us for not for profit status.
We applied for a 501(c)(3), yet they approved us for a 509(a)(1). Do we
say that we are a 501(c)(3) or do we say that we are a 509(a)(1)? What
is the difference?
A. When you file a 501(c)(3) application, you are actually asking the
IRS to decide not only whether your group qualifies under 501(c)(3), but
also whether or not it is publicly supported.
The first sentence of your letter from the IRS probably says, "Based on
information you supplied...we have determined you are exempt...as an or-
ganization described in section 501(c)(3)." So you can say that your
group is a 501(c)(3).
509(a)(1) is sort of like a subcategory of 501(c)(3). If your letter
says 509(a)(1)/170(b)(1)(A)(vi), it means your group is (or is expected
to be) publicly supported because at least one third of its support is
(will be) from gifts, grants and contributions from the general public.
Q. What if our situation changes in the future? Would we be required to
make any amendment to Form 1023?
A. If your application is approved by the IRS, the 501(c)(3) letter they
send will say something like:
"If you change your sources of support, your purposes, character or
method of operations, please let us know so that we can consider the
effect of the change on your status."
You just send in this supplemental information, either separately to
Cincinnati, or to Ogden, Utah, as an attachment to Form 990 or 990-EZ.
You do not "amend" the Form 1023.
Q. Our tax determination letter for our 501(c)(3) status is over 30
years old and is difficult to photocopy. Who may I contact to obtain a
replacement letter?
A. The IRS does not "replace" determination letters. You can, however,
ask for a letter confirming that their records show that your organiza-
tion is tax exempt. Send your request, signed by a board member or
officer, to:
Internal Revenue Service
Attn: Exempt Organizations
P. O. Box 192
Covington, Kentucky 41012-0192
Using IRS Fill-in Forms:
Caution, newer IRS forms may work differently...
I encourage you to type your application. A handwritten application is
almost always harder for the IRS agent to read, and therefore does have
a slight disadvantage.
In addition, the application will represent your organization to the
world for years to come. Once the IRS has approved your 501(c)(3)
status, your organization is required to make a copy of the application
available to anyone who asks. Watchdog groups currently publish the
annual IRS returns of 501(c)(3) organizations on the Internet; they may
decide to post applications as well some day. A little time invested now
can give you the advantage of a good "first impression" for years to come.
To type your application using the IRS Fill-In Forms:
1. If the links to Forms shown below do not work, go to the IRS website
(www.irs.gov) and click on "Forms and Publications" just above the word
"Contents." Scroll down to "Fill-in Forms." In the selection box, scroll
down until you find the form you need. Highlight the form or forms you
want, and then click on "Review Selected Form." On the page that comes
up, click again on the form you want, and wait for the pdf file to load.
(You must have Adobe Acrobat Reader, which is free, on your hard drive.
The IRS website has instructions on how to download this if you need it.)
2. The Form 1023 file that comes up includes an image of every page of
the Form 1023. You will not need them all.
3. Make sure you have selected the "hand tool," and go to the area of
the form where you want to make an entry. Click to change the hand tool
into a blinking cursor. (You may need to experiment, moving the hand
tool around a bit, to get this change.)
4. Begin typing. As far as I can tell, you cannot change the font, size,
or color if you are using the free version of Adobe Acrobat.
The IRS website has links to Fill-in Form Instructions, and Fill-in
Forms Tech Support. CAUTION! Depending on the version of Adobe you
are using, you may not be able to save your work.
