How to apply for 501(c)(3) tax-exemption?
To apply for 501(c)(3) tax-exempt status for your nonprofit organization, you will need to follow these general steps:
Determine Your Eligibility
Before applying for 501(c)(3) tax-exempt status, an organization should determine whether it meets the IRS requirements. Eligible organizations may include those organized for charitable, religious, educational, scientific, literary, and other purposes described in Section 501(c)(3) of the Internal Revenue Code. Certain organizations and activities are not eligible for 501(c)(3) status.
Establish Your Organization
Your organization must be properly organized under applicable state law and have an appropriate legal structure and governing documents. Depending on your structure and state, this may include forming a nonprofit corporation and preparing articles of incorporation and bylaws. The organization's organizing documents must contain provisions that meet applicable IRS requirements for 501(c)(3) status.
Obtain an Employer Identification Number (EIN)
An EIN is a unique identification number issued by the IRS and is generally required before submitting an application for 501(c)(3) recognition.
Prepare and File Form 1023 or Form 1023-EZ
Most organizations seeking recognition of 501(c)(3) tax-exempt status apply using Form 1023. Certain smaller organizations that meet the IRS eligibility requirements may be able to use the streamlined Form 1023-EZ.
Form 1023 requires detailed information about the organization's activities, finances, governance, and proposed operations. Depending on the organization and application, supporting information and documents may also be required.
Pay the IRS User Fee
The current IRS user fee is $600 for Form 1023 and $275 for Form 1023-EZ. These fees are paid directly to the IRS through Pay.gov and are separate from any professional service fees.
Wait for an IRS Determination
After your application is submitted, the IRS reviews the information provided and may request additional information or clarification. Processing times vary depending on the type of application and whether additional review is required.
Maintain Your Tax-Exempt Status
After receiving recognition of 501(c)(3) status, organizations have ongoing federal tax and reporting responsibilities. Depending on the organization's circumstances, this may include filing an annual Form 990, Form 990-EZ, or Form 990-N and maintaining appropriate records of the organization's activities and finances.
Need Help With the Process?
Applying for 501(c)(3) tax-exempt status can be a detailed process. 501c Solutions provides nonprofit formation and tax-exemption consulting services, including assistance with nonprofit formation, EIN applications, governance document templates, and preparation and submission of Form 1023 and Form 1023-EZ.
Our goal is to make the process easier to understand and help you move through each step with confidence.