Tax Tip 2019-153: Organizations take these easy steps to apply for tax-exempt status

Internal Revenue Service (IRS) sent this bulletin at 10/31/2019 11:21 AM EDT

IRS Tax Tips

October 31, 2019

Issue Number: Tax Tip 2019-153

Organizations take these easy steps to apply for tax-exempt status

Some taxpayers think simply creating a nonprofit automatically means an organization is tax exempt. There’s more to it than that.

To become a tax-exempt nonprofit, there are few things the group must do up front. An organization must determine whether it’s a trust, corporation or association. They then must apply for tax-exempt status with the IRS and be approved. This process includes these steps.

1. Gather documents about the organization

An organization applying for tax-exempt status must have organizing documents. Each application must be accompanied by an exact copy of the organizing documents, except for Form 1023-EZ filings.

These documents include:

Articles of incorporation for a corporation
Articles of organization for a limited liability company
Articles of association or constitution for an association
Trust agreement or declaration of trust

If the organization’s name is legally changed by an amendment to these documents, also attach a copy of that amendment to the application.

2. Determine state’s registration requirements

State government websites have useful information for tax-exempt organizations. On these sites, they can find tax info and registration requirements for charities.

3. Get an employer identification number for the new organization

Organizations can apply for an EIN online, by fax or by mail.

An organization must be legally formed before applying for an EIN. Nearly all organizations will see their tax-exempt status terminated if they fail to file a required tax return or notice for three years in a row.

4. Submit your tax-exempt application

Use Form 1023 to submit your tax-exempt application. Certain small organizations can use Form 1023-EZ to submit for tax-exempt status.

More Information:
Tax Information for Charities and Other Non-Profits
Lifecycle of an Exempt Organization
Annual Reporting and Filing
How to Stay Exempt
Stay Exempt: Starting Out

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Tax Tip 2019-153: Organizations take these easy steps to apply for tax-exempt status

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Issue Number: Tax Tip 2019-153