• How does an organization become tax-exempt?
• How can an application for tax-exempt status be expedited?
• How can I determine if a particular organization is tax-exempt?
• How can I obtain copies of Form 990, Package 1023, or Package 1024?
• How do I obtain a copy of the organization's exemption letter?
• Can I get a list of donors to an organization?
• What should I do if a § 501(c) organization will not let me see its Form 990 returns?
• Do individual members of a group ruling have to file separate Form 990 returns?
• What happens if the Form 990 is incomplete?
• Can penalties for filing Form 990 late be abated?
• What is the difference between not-for-profit and tax-exempt?
• Can tax-exempt organizations endorse candidates for public office?
• Can my organization engage in a certain activity?
• Where do I send complaints about the activities/operations of tax-exempt organizations?
• Why is it taking so long to process an exemption for application?
• What is an advance ruling period and what are we required to do?
• May a subordinate of a group ruling file its own returns?

How does an organization become tax-exempt?

To be exempt from federal income tax, an organization must be described in one of the sections of the Internal Revenue Code providing for exemption. See Types of Tax-Exempt Organizations or download Publication 557, Tax-Exempt Status for Your Organization for more information. Most organizations seeking recognition of exemption from federal income tax must use application forms specifically prescribed by the Service. Two forms currently prescribed by the Service are Package 1023, Application for Recognition of Exemption, (for charitable organizations) and Package 1024, Application for Recognition of Exemption, (for other tax-exempt organizations). A few types of organizations are not required to submit specific application forms. The application your organization is required to submit is specified in Publication 557.

How can an application for tax-exempt status be expedited?

Requests for expedited treatment of an application must be made in writing and must contain a compelling reason why the case should be worked ahead of its normal date order. Generally, expedited treatment will be granted in the following circumstances:

• A grant to the applicant is pending and the failure to secure the grant may have an adverse impact on the organization's ability to continue operations;
• The purpose of the newly created organization is to provide disaster relief to victims of emergencies such as flood and hurricane;
• There have been undue delays in issuing a letter caused by problems within the Service;
• Any other situation where the IRS feels expedited service is warranted.

How can I determine if a particular organization is tax-exempt?

Publication 78 provides a listing of organizations that have been recognized by the Service as eligible to receive tax deductible contributions. Tax-exempt organizations that are not eligible to receive tax deductible contributions are not included.

For information concerning other organizations that have been recognized by the IRS as tax-exempt organizations, you may call IRS Customer Service.

How can I obtain copies of Form 990, Package 1023, or Package 1024?

These forms are available in Forms and Publications. See Tax-Exempt Organizations Tax Kit for a list of forms and publications of interest to tax-exempt organizations. You may also request these forms by calling 1-800-TAX-FORM (1-800-829-3676).

How do I obtain a copy of the organization's exemption letter?

As a result of the recent enactment of regulations pursuant to the Taxpayer Bill of Rights 2, a tax-exempt organization will be required to provide one or more copies of its three most recent information returns, its exemption letter, and its approved application with supporting documentation without charge (other than a reasonable fee for any reproduction and mailing costs) to persons requesting copies (with certain exceptions), unless it has made these forms widely available by publishing them on the Internet in accordance with the regulations. For more information, see our frequently asked questions, the final regulations published in Internal Revenue Bulletin 1999-17, or download Disclosure Requirements.

You may also contact the local Disclosure office of the IRS, or send requests to IRS, Chief, FOIA Branch, c/o Ben Franklin Station, P.O. Box 795, Washington, DC 20044. A fee is charged for reproduction and mailing costs.

Can I get a list of donors to an organization?

Information about donors is specifically excluded from the information available for public inspection, except for donors to private foundations. The annual information return (Form 990) and its attachments (except donor lists), and the approved application for recognition of exemption and supporting documents, and any letters issued to the organization can be inspected at the organization's place of business.

What should I do if a § 501(c) organization will not let me see its Form 990 returns?

Write to the IRS Customer Service Provide the name and address of the organization that refuses to allow public inspection or provide copies of its return, and request that the return be made available for public inspection. The Tax Exempt/Governmental Entities Division of the IRS will contact the organization and arrange a time during which the return may be inspected. If the organization fails to provide the return at the agreed upon time, statutory penalties will start to be assessed. For more information, see our frequently asked questions, the final regulations published in Internal Revenue Bulletin 1999-17, or download Disclosure Requirements.

Do individual members of a group ruling have to file separate Form 990 returns?

If the parent organization files a group return on behalf of the subordinate members of the group, the subordinate member organizations included in the group return are not required to file a separate Form 990. However, if the individual member of a group ruling is not included in a group return filed by the parent organization, it is required to file a separate Form 990 unless it otherwise meets an exception to the filing requirements. See Filing Requirements for more information.

What happens if the Form 990 is incomplete?

Under § 6652(c) of the Code, a tax-exempt organization required to file a Form 990 that files an incomplete return may be subject to a $20 a day penalty up to a maximum of $10,000 (or 5% of the organization's gross receipts, whichever is less) for returns for taxable years ending on or after July 30, 1996. The penalty increases to $100 per day up to a maximum of $50,000 for organization whose gross receipts exceed $1,000,000. No penalty will be imposed if the incomplete return is due to reasonable cause.

Can penalties for filing Form 990 late be abated?

Failure to timely file the information return, absent reasonable cause, can give rise to a penalty under § 6652 of the Code. Generally, the reasonable cause exception to the penalty will be determined on a case-by-case basis taking into account all relevant facts and circumstances. The regulations provide that an affirmative showing of reasonable cause must be made in the form of a written statement, containing a declaration by the appropriate person that the statement is made under the penalties of perjury, setting forth all the facts alleged as reasonable cause. The request for abatement may be made by using Form 4571, which may be obtained by calling 1-800-TAX-FORM (1-800-829-3676), and should include supporting documentation.

When requesting reasonable cause, your letter should address the following items:

• The reason the penalty was charged. The daily delinquency penalty may be charged for either a late filed return, an incomplete return or both.

• Show how the event prevented the organization prevented the organization from requesting an extension of time to file their return.

• Explain how the situation prevented the organization from complying with the law.

• Show the organization was not neglectful or careless, but exercised ordinary business care and prudence.

• Explain what steps have been taken to prevent the same situation from occurring in the future.

What is the difference between not-for-profit and tax-exempt?

Non-profit and not-for-profit are state law concepts. Most states have laws whereby an entity can be incorporated as a non-profit or not-for-profit organization. However, the mere fact that an entity is organized as a non-profit or not-for-profit organization does not indicate that it is exempt from federal income tax. To qualify as a tax-exempt organization, an entity must meet requirements set forth in the Internal Revenue Code. See Types of Tax-Exempt Organizations or Publication 557 for more information.

Can tax-exempt organizations endorse candidates for public office?

Whether a tax-exempt organization may endorse candidates for public office without jeopardizing its tax-exempt status depends upon the type of tax-exempt organization it is. For example, § 501(c)(3) organizations may not engage in political activity, including endorsing candidates, but other organizations, such as § 501(c)(4) organizations, may engage in political activity so long as that is not their primary activity. However, § 501(c) organizations that make expenditures for political activity may be subject to tax under § 527(f). For more information, download Election Year Issues.

Can my organization engage in a certain activity?

The activities that a tax-exempt organization may engage in without jeopardizing its tax-exempt status vary depending upon the nature of its exemption. See Types of Tax-Exempt Organizations or Publication 557 for more information. You may also request a ruling regarding the effect of a proposed transaction on your organization's tax-exempt status.

See Rev. Proc. 2000-4, 2000-1 I.R.B 115, for the procedures to request a ruling and Rev. Proc. 2000-8, 2000-1 I.R.B. 230, which explains the user fee charges for such rulings. Both of these revenue procedures are available in 2000-1 Internal Revenue Bulletin.

Where do I send complaints about the activities/operations of tax-exempt organizations?

Complaints about the activities or operations of tax-exempt organizations that are inconsistent with exemption should be sent to the TE/GE Customer Service. The complaint should contain all relevant facts concerning the alleged violation of tax law.

The IRS cannot advise you of any action it has taken or may take in response to a complaint because the confidentiality and disclosure provisions of the Internal Revenue Code, which were enacted by Congress to protect the privacy of all taxpayers, preclude it from discussing matters relating to any activity it might undertake regarding the tax-exempt status of an entity, other than with principal officers or authorized representatives of that entity. The IRS does maintain an active examination program to insure that tax-exempt organizations, as well as taxpayers, meet the requirements imposed on them by the Internal Revenue Code.

Why is it taking so long to process an exemption for application?

There are many reasons why it may take some time to process a particular application. These range from simple administrative errors on the application to issues concerning the qualification of the organization for exemption. See the Top Ten Reasons for Delay in Processing Applications.

What is an advance ruling period and what are we required to do?

An organization normally may be granted an advance ruling period of five taxable years, allowing it to operate as a public charity rather than as a private foundation. Ninety days after the end of the advanced ruling period, the organization may submit Form 8734 (Support Schedule for Advance Ruling Period). Failure to submit Form 8734 results in the organization automatically being reclassified as a private foundation required to file Form 990PF.

May a subordinate of a group ruling file its own returns?

Yes, a subordinate of a group may file its own return. It must make sure to use its own EIN, not the parent's EIN or the group number. The parent's EIN is used to file the parent's individual return. The group number is used to file a group return covering those subordinates that elect to use a group filing. From 990-T can not be filed on a group return.