Applications are processed as soon as possible. The process can be delayed, however, for reasons ranging from simple errors on the application to issues concerning the qualification of the organization for exemption.
Top Ten Reasons for Delays in Processing Exempt Organization Applications
Number 9. In what month does the annual accounting period end? Applications should indicate the end of their fiscal year. It is a good idea to check for consistency. Does the fiscal year ending date stated on the application agree with the fiscal year ending date stated in the by-laws, on the financial statements, and on any prior returns filed?
Number 8. Did you provide the required information on the principal officers and board of directors? Applications should list the following information concerning the governing officials:
- mailing addresses,
- titles and positions,
- annual compensation.
Number 7. Did you provide enough information on the activities to show us how your exempt purpose will be achieved? Please don’t restate your purpose, but explain the specific activities you will carry on to achieve that purpose. You should consider a “who, what, when, where and why” approach. You should explain past, present, and planned activities. If you haven’t started an activity yet, develop your plans well enough that we can have a clear understanding of how it will operate. You are not required to describe activities that are merely speculative at this time.
Number 6. Did you complete all required schedules? You should check the line items on the financial statements. Some lines require supporting schedules.
Number 5. Did you complete all required pages? To make a determination, the information contained on the pages and schedules of Form 1023 and Form 1024 is necessary. On Form 1023, there are various schedules and pages that must be filled out for churches, schools, hospitals, scholarships, supporting organizations, and certain other organizations.
Number 4. Did a director, trustee, principal officer, or other authorized individual in a similar capacity sign the Form 1023 or Form 1024? Generally, a principal officer is the president, vice president, secretary, or treasurer. The person signing the application must indicate his or her title or other authority to sign. A taxpayer’s representative may not sign the application. Neither a stamped signature nor a faxed signature is permitted.
Number 3. If you have adopted by-laws, did you submit a copy? You need to provide a copy of your by-laws, code of regulations, or any other document that sets out the organization’s rules of operation, but only if adopted.
Number 2. Did you attach a complete copy of your organizing document and all amendments? If the applicant is a corporation, this would be a copy of the articles of incorporation that shows it has been filed with and approved by the state. If the applicant is not incorporated, it should have a similar organizing document. This could be a constitution, articles of association, or by-laws. Whatever the document is called, it must at the minimum state: the legal name, the purposes, and the date of adoption. The document should be signed by at least two members of the organization. A trust document must be signed by the trustees and show the date of formation. For section 501(c)(3) applicants, the organizing document must comply with the organizational test for exemption.
The Number 1 reason for delays in processing exempt organization applications is . . . INCORRECT OR NO USER FEE!
See our user fee page for more information.
Now that you know the ten most common pitfalls in the EO application process, we hope you can avoid them. If your application is completed correctly initially, and sent with all required documents and schedules, there is a good chance your organization could be recognized as exempt with no further contact. If there is contact, the agent can address the technical issues that need to be resolved without taking up your time trying to just get a complete application.
Answering all questions completely and submitting all required items will help agents reviewing your application do so as quickly as possible. Completing the procedural checklist on the last page(s) of Form 1023 or Form 1024 will help you submit a complete and error-free application.
Where Is My Exemption Application?
Sometimes, representatives of exempt organizations and practitioners question why certain applications for tax exemption are processed faster than others. Not all applications are the same. While many are complete when received and involve straight-forward scenarios, others may be incomplete or involve complex issues that require further development. This web page describes the application process and provides information on how to determine the status of an application.
EO Determination Application Process: Upon receipt, exemption applications accompanied by the required user fee are initially separated into four categories: (1) those that can be approved immediately based on the information submitted, (2) those that need minor additional information to be resolved, (3) those that are submitted on obsolete forms or do not include the items specified on the Procedural Checklist, and (4) those that require development.
If your application falls within one of the first three categories, you will receive either your determination letter or a request for additional information, via phone, fax, or letter, within approximately 90 days of the date the application was submitted.
If your application falls within the fourth category, you will be contacted once the application is assigned to an EO agent for further development. Because these applications may experience some “wait time” before they are assigned, we regularly publish the receipt date for applications currently being assigned, to help you track your application.
To contacted by the IRS about your application, you may can use the toll-free Customer Account Services number by calling 877-829-5500. You will need the following information when calling:
- The name of the organization on whose behalf the request was submitted;
- The organization’s employer identification number (EIN);
- The document locator number assigned to the request (if you have received one); and
- A proper power of attorney submitted with the exemption application, unless you are an officer or director and legally authorized to represent the organization.
Chart illustrating the EO Determination Application process.
Exemption applications – additional information
Requests for rulings or determination letters – additional information
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DISCLAIMER: This information is not intended to provide legal or accounting advice, or to address specific situations. Please consult with your legal or tax advisor to supplement and verify what you learn here