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: The Exempt Organizations
Fiscal Year 2011 Work Plan indicates
that 56% of the applications it received in 2010 were processed 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 August, 2012, the IRS website says that these more complex
applications are being assigned to an agent about 8 or 9 months after receipt.
Depending on the individual
agent's workload, it may take several more
months to complete a case once it has been assigned. 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)
• nonprofit newspaper
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.
5. If your organization's exempt status was automatically revoked, you are
seeking retroactive reinstatement and your group must show reasonable cause
for missed returns because it does not qualify for transitional relief.
6. If you receive a difficult inquiry letter, or a denial letter.
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. IRS Form 4506-A, allows members of the public to inspect copies
of exempt organizations' applications for
exempt status, and may provide a
way to get a copy of your original determination letter.
When you complete the form, write, "Organization has lost its original
letter of determination," in item 4, Reason for Request. If the IRS has
the original determination letter,
they will send you a copy of it. (Non-
commercial requesters do not have to pay a fee for the first 100 pages
of records.)
This technique may not work for older
applications. For these groups,
the best you can hope for is a letter confirming that the IRS database
shows
your organization is exempt.
(I, personally,
have had mixed experience with Form 4506-A. The IRS has
sometimes been prompt and thorough, sometimes otherwise.)
If your organization's name has changed, and you want
a letter from the IRS
that reflects the new name, send a written request that includes proof of the
name change.
They will send a confirmation-type letter reflecting your
organization's new name. Send your request, signed by
a board member
or officer, to:
Internal Revenue Service
Attn: Exempt Organizations
P. O. Box 12192
Covington, Kentucky
41012-0192
