Fried & Davis - Acquiring Tax Exempt Status

Home | Nonprofit Forum | Acquiring Tax Exempt Status

What is the procedure for applying for tax exempt status?

An organization seeking recognition of exemption as a charitable organization should file a Form 1023 with the IRS. This detailed form includes a description of the purposes and activities of the organization, the composition of its board of directors, how it compensates its employees, its fundraising plans, and other financial information. The organization's articles of incorporation and bylaws must also included with the application.

How long does it take to prepare an application for tax exemption?

The IRS estimates that the estimated average time required to keep records so as to be able to prepare the application is 89 hours and 26 minutes. The IRS estimates that figuring out the form takes 5 hours and 10 minutes, and preparation of the form takes 9 hours and 39 minutes.

What does the IRS charge for processing an application for recognition of tax exemption?

Under the current fee schedule, the fee for processing an application is $500 where the applicant has gross receipts that annually exceed $10,000. The fee is $150 for organizations with receipts less than $10,000.

Do churches need to file an application for tax exemption with the IRS?

Generally no, churches (including synagogues and mosques), interchurch organizations, local units of a church, associations of churches and auxiliaries of churches do not need to file an application for tax exemption.

How long does it take for the IRS to process an application for exemption application?

Our most recent application (with no issues) took 5 months from the time the application was submitted until the determination letter was received.

How long does an exemption ruling remain in effect?

Forever, so long as there is not a change in the law, or a substantial change in the character, purpose or methods of operation for the nonprofit organization.