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What is a 501c3 Application?
A 501c3 application is a legal document that nonprofit organizations submit to the Internal Revenue Service to qualify for tax exemptions. Even though an approved application allows nonprofit organizations to have tax exemptions federally, a further state-level process must also be completed to maintain 501c3 status. These processes are called the Charitable Solicitations Registration and the State Corporate Tax Exemption.
501c3 Application Process
The 501c3 application process can be lengthy and time consuming. Applicants use a special form called a Form 1023-Series application to submit for 501c3 status. Organizations must file the Form 1023-Series application within 27 months of the end of the first month that the organization was formed.
This Form 1023-Series application is 28 pages long and requires additional documentation to be submitted; this documentation often makes 501c3 applications 100 pages or longer.
Here are a few examples of documentation that the IRS requires to be submitted along with their Form 1023-Series application:
- Detailed financial information (past and present)
- Past, present, and future proposed activity information
- Language and currency details
- Organizing document
- Rules of operation and any applicable corporate bylaws
- Power of Attorney or Declaration of Representative (if applicable)
- Supplemental information (if response fields in applications are not long enough to record a full response
- Organization name and Employee Identification Number (on each page of supplemental information provided)
- Employment tax or benefit plan returns
- Optional expediting request
501c3 tax exemptions can applied for by foreign organizations in the same way that domestic organizations apply. These exemptions only apply to income earned within the United States.
Canadian organizations that have a Notification of Registration from the Canada Revenue Agency are automatically granted 501c3 status in the United States and are not required to submit a 501c3 application for tax exemptions.
Learn more about the 501c3 application process.
How to Create a 501c3 Application – Step-by-Step
Creating a 501c3 application can be a time-consuming process, but it does not have to be a difficult one. The key to completing the application process is to stay organized to ensure all information is readily available. The Internal Revenue Service (IRS) provides specific instructions on how to use this information to complete an application.
Here is an easy step-by-step process that you can use to complete the 501c3 application for your organization:
Step One: Obtain Status with the Internal Revenue Service
In order to be approved for 501c3 status, an organization must be formally registered with the IRS under one of the following:
Step Two: Establish Exempt Purpose
The IRS requires each organization to state a specific exempt purpose that would qualify them for 501c3 status. Here are the acceptable exempt purposes for this portion of the application:
- Testing for public safety
- Fostering national or international amateur sports competition
- Preventing cruelty to children or animals
Step Three: Complete 501c3 Application
Complete your 501c3 application, Form 1023-Series application for review by the IRS. Make sure to complete each field in its entirety; if additional room is needed to answer a question, continue your answer on an attached sheet labeled “supplemental information.” It’s also important to make sure you attach required additional documentation, such as your organization’s organizing documents, financial statements, and any applicable power of attorney certifications as well.
Step Four: Review and Edit Application
In order for a 501c3 application to be approved, it must be completed accurately. Here are a few things questions to answer when reviewing and editing your application to ensure it is complete and all applicable documentation is attached:
- Is the organization’s Employee Identification Number (EIN) present in Part I, on page one of the application and on every page of supplemental information provided?
- Are exact copies of the organization’s organizing documents attached?
- Are all applicable financial statements attached?
- If applicable, is information about the organization’s power of attorney attached?
Step Five: Complete and Submit Form 1023-Series Application
Completing the Form-1023 Series application is the most important step towards achieving 501c3 status with the IRS. Applicants should complete and submit their signed and dated application along with the applicable user fee , which is $275 for organizations. The user fee must be submitted via check or money order in U.S. dollars and made payable to the United States Treasury.
Get more information about how to create a 501c3 application and the Form 1023-Series application here .
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501c3 Organization Requirements
In order for an organization to be granted 501c3 status, the Internal Revenue Service (IRS) requires them to meet a few major requirements. The IRS vigorously reviews all application information, so it is vital that organization information and documentation is as accurate as possible. This ensures that only eligible nonprofit organizations can benefit from the federal tax exemption.
Here is a complete list of 501c3 organization requirements:
- Must be a trust, corporation, or association formally registered with the IRS
- Must have an acceptable exempt purpose such as charitable, religious, or educational
- Must request an Employee Identification Number or EIN (even if there are no employees)
- Must submit a complete Form 1023-Series application with supporting documents and user fee to the IRS
- Must apply within 27 months of the last day of the month following when the organization was formed
- Must make approved application, all supporting documents, and previous three annual information returns available for public review without a charge
For more a more in-depth look at 501c3 organization requirements, check out this article .
How Long Does It Take for a 501c3 to be Approved?
Since the Internal Revenue Service (IRS) reviews all 501c3 applications in-depth before approval, the processing time varies widely. The amount of time it will take for a 501c3 application to be approved is affected by the size and tenure of an organization, the length of the Form 1023-Series application and even the volume of nonprofit applications in process at the IRS at any given time. In general, organizations can expect to wait anywhere from 3-12 months for approval.
How to Expedite 501c3 Approval
While the IRS’s standard timeline for processing your 501c3 application can’t be rushed, there are a few things you can do to secure 501c3 status for your organization as quickly as possible:
- Ensure Application Accuracy: If any details of your application are inaccurate or any necessary forms aren’t provided, the IRS will request additional information, which will slow down the approval process.
- Look for Internal Errors: If your application is delayed due to internal errors within the IRS, they will usually expedite your approval for free.
- Cite any Special Circumstances: If tax exempt status is needed for a special circumstance such as disaster relief, the IRS may agree to expedite approval of the 501c3 application.
Find out more about how long it takes for a 501c3 application to be approved here .
Get Help with a 501c3 Application
Are you ready to get started on your 501c3 application and want help from an expert to walk you through the process? Post a project today on ContractsCounsel to get help from nonprofit lawyers who specialize in 501c3 applications.
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