Blog

How to Complete the Streamlined Application for 501(c)3 Non-Profit Status

Yes, it’s possible to get 501(c)3 non-profit status for your organization!

First off, it is important to note that in order to complete the streamline application for 501(c)3 status your non-profit must meet certain criteria.  Typically, the streamlined application is for smaller non-profits with limited yearly income of less than $50,000.

To determine whether you’re eligible to file for tax exemption using this form, review the Form 1023-EZ Eligibility Worksheet.

The 501(c)3 Streamlined Filing Process

The stream-lined application form for 501(c)3 status can be filed electronically at IRS.gov/Form1023-EZ or Pay.gov. If you’ve passed the eligibility test, begin by checking the box at the top of Form to attest to your eligibility. Checking the box also confirms that you have read and understood your responsibilities as a tax-exempt entity.

With that done, you can then begin filling the form. For purposes of simplicity, the form is divided into six parts;

Part 1: Identification of Applicant

This part deals with the basics of the organization. Some of the information you’ll be asked to provide include; the organization’s full name, mailing address, Employer Identification Number (EIN), the month your tax year ends, the person to contact if more information is needed, a contact telephone number, a fax number, the fee you paid for the application, and the names, titles, and mailing addresses of all your directors, officers, and/or trustees.

Part 2: Organizational Structure

Only three types of organizations are eligible for tax exemption under section 501(c) (3); certain corporations, unincorporated associations, and trusts. Section 2 begins by asking that you indicate where your organization falls and then asks for necessary organizing documents (for proof). After that, you also have to provide the organization’s formation date, state (jurisdiction), and purpose. You’ll round off by disclosing the organization’s activities (if any) that may not be tax-exempt.

Part 3: Specific Activities

Here you’ll be asked to provide details about the past, present, and future activities of your organization. You’ll;

  • Briefly explain your mission in 255 characters or less
  • Select a National Taxonomy of Exempt Entities (NTEE) code, and
  • State your exempt purposes

The NTEE is a 3-digit code that summarizes the organization’s purpose. You’ll be picking from a list. The rest of the section deals with matters such as attempting to influence legislation, paying of officers and directors, and donating funds to individuals.

Part IV: Foundation Classification

All organizations formed under section 501(c) (3) fall into one of two categories;

  • Public charities
  • Private foundations

The difference between is that public charities generally have a broad base of support while private foundations receive support from a small number of donors. You’ll be asked to state where your organization falls.

Section V: Reinstatement after Automatic Revocation

This section should only be completed if you’re requesting reinstatement after your non-profit’s tax-exempt status was initially revoked for failure to file required returns or notices.

Section VI: Signatures

The final part of the application, in this step, an authorized officer, director, or trustee of the organization listed in Section One electronically signs the form. This is done by checking the “penalties for perjury” box in Part VI, typing the signer’s name on the line provided, and indicating the title/authority of the signer and the signing date.

The IRS’s Decision

If the application is successful, the IRS will issue a Letter of Determination recognizing the nonprofit as tax exempt. Otherwise, you might be asked to provide additional information in writing, or the application might be rejected outright.

For successful applications, if you filed your form within 27 months of filing the organization’s articles of incorporation, exemption takes effect on the date when the articles of incorporation were filed. For filings done after that period, without a good reason, your tax-exempt status will take effect on the date you filed your Form 1023-EZ.

That’s it!  It’s a fairly straightforward process for smaller non-profits to submit for the helpful 501(c)3 status.  Want someone to do it for you?  Reach out to me to discuss!