Specialized Returns and Taxpayers · Exempt organizations

Applying for IRS tax-exempt status (e.g., Form 1023, Form 1024)

Almost every question about applying for exemption is really a question about a date. The form is chosen by the paragraph of IRC § 501(c) the organisation fits, and the choice is mechanical. The deadline is not: miss it and the organisation is still exempt going forward but was taxable for everything before it filed, and contributions in that window were not deductible.

The rule

Applying is mandatory for some, optional for most. except for churches, their integrated auxiliaries, and public charities whose annual gross receipts are normally less than $5,000, an organisation is not treated as described in IRC § 501(c)(3) unless it notifies the Service by applying for recognition^TY2026Verified 2026-08-21IRS, Application for recognition of exemption, read at irs.gov/charities-non-profits/application-for-recognition-of-exemption The requirement comes from the notice rule (IRC § 508(a)) and the exceptions from IRC § 508(c)(1). Organisations under the other paragraphs of IRC § 501(c) are exempt by operation of law and apply only when they want a determination letter in hand — or when something forces the issue. an organisation seeking a determination letter recognising exemption under IRC § 501(c)(2), (5)-(19), (21)-(23), (25)-(29) or (d), or under IRC § 521, submits Form 1024 electronically; only organisations operating under IRC § 501(c)(9) or (17) are required to apply, the rest applying by choice or because IRC § 6033(j)(2) requires it after automatic revocation (Rev. Proc. 2026-5 § 6.06(3))^TY2026Verified 2026-08-21Rev. Proc. 2026-5, 2026-1 I.R.B. 259, read in Internal Revenue Bulletin 2026-1 at irs.gov/pub/irs-irbs/irb26-01.pdf There are two compelled cases worth remembering: a welfare benefit fund under IRC § 501(c)(9) or (17), which IRC § 505 requires to apply, and any organisation reinstating after automatic revocation under IRC § 6033(j)(2).

Which form. an organisation seeking recognition of exemption under IRC § 501(c)(3) — including one to which § 501(e), (f), (k), (n), (q) or (r) applies — must electronically submit a completed Form 1023 at pay.gov, unless it is eligible for and chooses Form 1023-EZ (Rev. Proc. 2026-5 § 6.06(1))^TY2026Verified 2026-08-21Rev. Proc. 2026-5, 2026-1 I.R.B. 259, read in Internal Revenue Bulletin 2026-1 at irs.gov/pub/irs-irbs/irb26-01.pdf an eligible organisation may, but is not required to, seek recognition under IRC § 501(c)(3) by submitting the electronic Form 1023-EZ; it may always use the full Form 1023 instead (Rev. Proc. 2026-5 § 6.06(2))^TY2026Verified 2026-08-21Rev. Proc. 2026-5, 2026-1 I.R.B. 259, read in Internal Revenue Bulletin 2026-1 at irs.gov/pub/irs-irbs/irb26-01.pdf an organisation seeking a determination letter recognising exemption under IRC § 501(c)(4) submits Form 1024-A electronically with the user fee at pay.gov; the filing is optional except where IRC § 6033(j)(2) compels it, and it does not relieve the organisation of the separate Form 8976 notice (Rev. Proc. 2026-5 § 6.06(4))^TY2026Verified 2026-08-21Rev. Proc. 2026-5, 2026-1 I.R.B. 259, read in Internal Revenue Bulletin 2026-1 at irs.gov/pub/irs-irbs/irb26-01.pdf Everything is submitted electronically through pay.gov with the fee; there is no paper channel.

Social welfare organisations file twice. an organisation described in IRC § 501(c)(4) must, not later than 60 days after it is established, notify the Secretary that it is operating as such by submitting Form 8976 with the accompanying user fee; the notice states the organisation’s name, address and taxpayer identification number, the date and state of organisation, and its purpose, and the Secretary must acknowledge receipt within 60 days (IRC § 506(a)-(e))^TY2026Verified 2026-08-21IRC § 506, read at law.cornell.edu/uscode/text/26/506 Form 8976 is a notice of intent to operate, not an application, and it is required whether or not the organisation ever seeks a determination letter. a $50 fee must accompany the Form 8976 submission; without it the Service sends a non-payment notice within 5 days, and if the fee is not submitted within 14 days the form is rejected^TY2026Verified 2026-08-21IRS, Electronically submit your Form 8976, Notice of Intent to Operate Under Section 501(c)(4), read at irs.gov/charities-non-profits/electronically-submit-your-form-8976-notice-of-intent-to-operate-under-section-501c4 failure to submit the IRC § 506(a) notice on time costs the organisation $20 for each day the failure continues, capped at $5,000 for any one notice, with the same amounts falling on a person who fails to comply with a written demand; no penalty applies where the failure is due to reasonable cause. These amounts are not indexed — IRC § 6652(c)(7) adjusts only paragraphs (1), (2) and (3) of subsection (c)^TY2026Verified 2026-08-21IRC § 6652(c)(4), (c)(5), (c)(7), read at law.cornell.edu/uscode/text/26/6652 an organisation seeking a determination letter recognising exemption under IRC § 501(c)(4) submits Form 1024-A electronically with the user fee at pay.gov; the filing is optional except where IRC § 6033(j)(2) compels it, and it does not relieve the organisation of the separate Form 8976 notice (Rev. Proc. 2026-5 § 6.06(4))^TY2026Verified 2026-08-21Rev. Proc. 2026-5, 2026-1 I.R.B. 259, read in Internal Revenue Bulletin 2026-1 at irs.gov/pub/irs-irbs/irb26-01.pdf

The clock. an organisation seeking exemption under IRC § 501(c)(3) must file the IRC § 508(a) notice within 15 months from the end of the month in which it was organised, by submitting a properly completed Form 1023 or, if applicable, Form 1023-EZ (Treas. Reg. § 1.508-1(a)(2)(i))^TY2026Verified 2026-08-21Treas. Reg. § 1.508-1(a)(2)(i), read at law.cornell.edu/cfr/text/26/1.508-1 Fifteen months is the statutory rule, and it is the number in the regulation. The number practitioners quote is different because of a second regulation: an automatic 12-month extension from the due date is granted for the 15-month rule for filing an exemption application for an IRC § 501(c)(3) organisation under IRC § 508, and for the same rule under IRC § 505 for an organisation described in IRC § 501(c)(9), (17) or (20), provided corrective action is taken within the extension period — which is where the familiar 27 months comes from (Treas. Reg. § 301.9100-2(a)(2)(iii), (iv))^TY2026Verified 2026-08-21Treas. Reg. § 301.9100-2(a), read at law.cornell.edu/cfr/text/26/301.9100-2 Fifteen plus twelve is where 27 months comes from, and knowing that is the difference between reciting the deadline and understanding it.

What the clock buys. a determination letter recognising exemption under IRC § 501(c), other than § 501(c)(29), is effective as of the date of formation if the organisation’s purposes and activities before the determination were consistent with the requirements for exemption and it applied within 27 months from the end of the month in which it was organised (Rev. Proc. 2026-5 § 6.09(1))^TY2026Verified 2026-08-21Rev. Proc. 2026-5, 2026-1 I.R.B. 259, read in Internal Revenue Bulletin 2026-1 at irs.gov/pub/irs-irbs/irb26-01.pdf an organisation that otherwise qualifies but applied after the 27-month window is recognised only from the postmark or submission date of its Form 1023, 1023-EZ, 1024 or 1024-A (Rev. Proc. 2026-5 § 6.09(2))^TY2026Verified 2026-08-21Rev. Proc. 2026-5, 2026-1 I.R.B. 259, read in Internal Revenue Bulletin 2026-1 at irs.gov/pub/irs-irbs/irb26-01.pdf The gap matters. An organisation formed in March 2024 that applies in October 2026 is recognised from October 2026; the intervening two and a half years were taxable years of a taxable corporation, and gifts received in them were not deductible under IRC § 170.

Relief for a missed window. an organisation that missed the window may request relief under Treas. Reg. § 301.9100-3 for an earlier effective date, but may not use Form 1023-EZ to do so — it must file Form 1023 — and relief is denied where granting it would leave the organisation automatically revoked under IRC § 6033(j)(1) before the application date, or where the IRC § 6501(a) assessment period for a year claimed as exempt has already expired (Rev. Proc. 2026-5 § 6.09(3))^TY2026Verified 2026-08-21Rev. Proc. 2026-5, 2026-1 I.R.B. 259, read in Internal Revenue Bulletin 2026-1 at irs.gov/pub/irs-irbs/irb26-01.pdf

When the Service asks for changes. where the Service requires the organisation to alter its activities or make substantive amendments to its enabling instrument, exemption is effective from the date specified in the determination letter; where the required amendment is non-substantive — correcting a clerical error, or adding a dissolution clause where prior activities were consistent with exemption — recognition is ordinarily from the date of formation (Rev. Proc. 2026-5 § 6.09(5))^TY2026Verified 2026-08-21Rev. Proc. 2026-5, 2026-1 I.R.B. 259, read in Internal Revenue Bulletin 2026-1 at irs.gov/pub/irs-irbs/irb26-01.pdf A dissolution clause added at the Service’s request is the classic non-substantive amendment, and it preserves the date of formation.

Eligibility for the short form. an organisation may not use Form 1023-EZ if it projects annual gross receipts over $50,000 in any of the next 3 years, has had annual gross receipts over $50,000 in any of the past 3 years, or holds total assets with a fair market value over $250,000 (Form 1023-EZ Eligibility Worksheet, questions 1-3)^TY2026Verified 2026-08-21Instructions for Form 1023-EZ (rev. 01/2025), Eligibility Worksheet, read at irs.gov/instructions/i1023ez the worksheet also disqualifies an organisation formed under foreign law or with a foreign mailing address, an LLC or any entity other than a corporation, unincorporated association or trust, a for-profit entity or the successor to one, an organisation previously revoked other than by automatic revocation, a successor to or entity controlled by an organisation suspended under IRC § 501(p), a church, school or hospital described in IRC § 170(b)(1)(A)(i)-(iii), and a private operating foundation — a "yes" to any worksheet question means Form 1023 (Form 1023-EZ Eligibility Worksheet)^TY2026Verified 2026-08-21Instructions for Form 1023-EZ (rev. 01/2025), Eligibility Worksheet, read at irs.gov/instructions/i1023ez the applicant must complete the Eligibility Worksheet before filing, check the attestation box on the form confirming eligibility and that it has read and understands the requirements for exemption, and retain the worksheet — it is not submitted with the form (Instructions for Form 1023-EZ, Eligibility)^TY2026Verified 2026-08-21Instructions for Form 1023-EZ (rev. 01/2025), Eligibility Worksheet, read at irs.gov/instructions/i1023ez

Fees. Form 1023-EZ application $275; all other applications for recognition of exemption under IRC § 501 and under § 521 $600; group exemption letters $3,500, though the Service is not currently accepting group exemption letter requests; Treas. Reg. § 301.9100 relief in connection with applications $600; affirmation letters and Canadian registered charity requests, no fee (Rev. Proc. 2026-5, Appendix A)^TY2026Verified 2026-08-21Rev. Proc. 2026-5, 2026-1 I.R.B. 259, read in Internal Revenue Bulletin 2026-1 at irs.gov/pub/irs-irbs/irb26-01.pdf

An adverse determination. to protest a proposed adverse determination letter on an issue eligible for Appeals consideration, the organisation must submit a statement of the facts, law and arguments supporting its position within 30 days of the date of the proposed adverse letter, stating whether it wants an Appeals conference; without a timely protest a final adverse determination letter issues (Rev. Proc. 2026-5 § 9.04, 9.05)^TY2026Verified 2026-08-21Rev. Proc. 2026-5, 2026-1 I.R.B. 259, read in Internal Revenue Bulletin 2026-1 at irs.gov/pub/irs-irbs/irb26-01.pdf withdrawing an application under IRC § 501(c) or (d) is neither a failure to make a determination within the meaning of IRC § 7428(a)(2) nor an exhaustion of administrative remedies within the meaning of IRC § 7428(b)(2), the Service retains the application and supporting documents, and the user fee is generally not refunded (Rev. Proc. 2026-5 § 8.01, 8.02)^TY2026Verified 2026-08-21Rev. Proc. 2026-5, 2026-1 I.R.B. 259, read in Internal Revenue Bulletin 2026-1 at irs.gov/pub/irs-irbs/irb26-01.pdf Withdrawal is the trap there: it leaves the organisation with no determination, no refund, and no route to court. no declaratory judgment issues unless the court finds the organisation has exhausted its administrative remedies; an organisation is deemed to have exhausted them as to the Secretary’s failure to determine at the expiration of 270 days after the request, if it took all reasonable steps in a timely manner, and where the Secretary mails a determination the pleading must be filed before the 91st day after mailing (IRC § 7428(b)(2), (3))^TY2026Verified 2026-08-21IRC § 7428(b), read at law.cornell.edu/uscode/text/26/7428

Nothing about the application is private. once the Service determines that an organisation described in IRC § 501(c) or (d) is exempt, the application on which the determination was made, the papers submitted in support of it, and any letter or document the Service issued about it are open to public inspection (IRC § 6104(a)(1)(A))^TY2026Verified 2026-08-21IRC § 6104(a), read at law.cornell.edu/uscode/text/26/6104 the organisation itself must make its exempt status application materials, its annual IRC § 6033 returns and any Form 990-T available for inspection during regular business hours at its principal office and at each regional or district office with three or more employees (IRC § 6104(d)(1)(A))^TY2026Verified 2026-08-21IRC § 6104(d), read at law.cornell.edu/uscode/text/26/6104

Housekeeping. the organisation should request an employer identification number on Form SS-4 even if it has no employees; international applicants may call the non-toll-free number the Service publishes for the purpose^TY2026Verified 2026-08-21IRS, Application for recognition of exemption, read at irs.gov/charities-non-profits/application-for-recognition-of-exemption

Current figures

How it works in practice

Establish the date of formation before anything else, because every other deadline hangs off it. For a corporation it is the date the state accepted the articles, not the date the board first met and not the date the EIN issued. Count to the end of that month, add 27, and put the result on the engagement calendar. If the answer is in the past, the conversation changes entirely: the question is no longer which form but whether Treas. Reg. § 301.9100-3 relief is worth requesting, and that request cannot ride on Form 1023-EZ.

Run the Eligibility Worksheet even when the answer looks obvious. The two financial tests are the ones people remember, and they are not the ones that catch organisations out. An LLC is ineligible regardless of size. A successor to a for-profit is ineligible. A church, school or hospital is ineligible. Each of these is a “yes” that sends the file to the full Form 1023, and an organisation that attests to eligibility it does not have has made a false attestation on a document that will be open to public inspection.

Treat the application as a public document from the first draft. IRC § 6104 opens both the application and the determination letter, and the organisation itself must produce them on request at its own office. Anything in the narrative that the board would not want a journalist or a rival organisation to read should not be in the narrative — and financial projections that later prove embarrassing are still there years afterwards.

On timing of a determination, plan for the possibility that nothing happens. IRC § 7428 gives a route to court, but only after exhaustion, and the deemed-exhaustion date is 270 days from the request. An organisation that withdraws its application to “start fresh” has thrown that away, along with the fee.

How this has changed

Paper is gone. Form 1023 moved to mandatory electronic submission through pay.gov in 2020, Form 1024-A in 2021 and Form 1024 in 2022, and Rev. Proc. 2026-5 § 6.06 now states the electronic requirement for each of them without a paper alternative. The practical consequence is that an application is complete when the fee clears, not when it is postmarked, and the effective-date rule in § 6.09(2) speaks of the submission date for that reason.

Form 1023-EZ itself is a 2014 creation and remains controversial; the instructions were revised in January 2025 to modify worksheet question 29 and add questions 31 through 34, tightening eligibility further. Anyone working from a pre-2025 worksheet is working from the wrong list.

The IRC § 506 notice is newer than most practitioners realise: it was added by Pub. L. 114-113 § 405(a) on 18 December 2015, in the same division of that Act that added the IRC § 6033(f)(2) reporting requirement. Social welfare organisations formed before then had no 60-day obligation at all, which is why the requirement is still missed on new formations.

Group exemption letters are in abeyance. Rev. Proc. 2026-5 § 3.02(11) records that the Service is not currently accepting requests for them, even though Appendix A still carries the fee. A central organisation that expects to add subordinates cannot presently do so through that route.

Exam focus

The single most testable item is the 27-month rule and what turns on it: timely means recognition from formation, late means recognition from submission, and Treas. Reg. § 301.9100-3 relief is the bridge. Expect the fact pattern to give a formation date and an application date and ask for the effective date.

Know the form-to-paragraph mapping cold. Form 1023 or 1023-EZ for IRC § 501(c)(3); Form 1024-A for IRC § 501(c)(4); Form 1024 for the rest of IRC § 501(c) and for IRC § 521; Form 8976 as the separate 60-day notice for social welfare organisations. Know that IRC § 501(c)(9) and (17) funds must apply and that most others need not.

Know the Form 1023-EZ financial thresholds, but know that they are necessary rather than sufficient. Know the 30-day protest window, the 270-day deemed exhaustion under IRC § 7428(b)(2), and that the application and determination letter are public under IRC § 6104.

Check yourself

1. A charity incorporated on 3 June 2024 files Form 1023 on 12 October 2026. Its activities have always been exempt in character. From what date is it recognised as exempt?

Answer: From 12 October 2026, unless relief is granted. The 27 months ran from 30 June 2024 and closed on 30 September 2026, so the application was twelve days late. Under Rev. Proc. 2026-5 § 6.09(2) recognition runs from the submission date. Because the organisation filed Form 1023 rather than Form 1023-EZ, it may still request Treas. Reg. § 301.9100-3 relief for recognition from formation — and on facts this close it should.

2. An unincorporated association of neighbours, formed as a social welfare organisation, has gross receipts of $8,000 a year. Must it file anything with the Service in its first year?

Answer: Yes — Form 8976, within 60 days of being established, under IRC § 506(a). Its size is irrelevant to that notice. It need not file Form 1024-A, because recognition under IRC § 501(c)(4) is optional, and its receipts are low enough that the annual obligation under IRC § 6033 will be satisfied by the electronic notice rather than a full return.

3. A newly formed organisation projects gross receipts of $35,000 for each of its first three years and holds $40,000 of assets. It is organised as a member-managed LLC. May it file Form 1023-EZ?

Answer: No. It is comfortably inside the financial limits, but question 7 of the Eligibility Worksheet asks whether the organisation is organised as an entity other than a corporation, unincorporated association or trust, and directs a “yes” for an LLC. A “yes” to any worksheet question means Form 1023.

4. A charity receives a proposed adverse determination letter dated 4 May. It responds on 20 June with a full statement of facts and law. What happens?

Answer: A final adverse determination letter issues. The protest window under Rev. Proc. 2026-5 § 9.04 is 30 days from the date of the proposed adverse letter, which closed on 3 June. The substance of the response does not cure the lateness. The organisation’s remaining route is a new application, or a declaratory judgment action under IRC § 7428 filed before the 91st day after the final adverse letter is mailed.

5. A donor asks a small charity for a copy of the Form 1023 it filed six years ago. The executive director says the file is confidential. Is that right?

Answer: No. Under IRC § 6104(d)(1)(A) the organisation must make its exempt status application materials available for inspection during regular business hours at its principal office, and under IRC § 6104(a)(1)(A) the same materials are open to public inspection at the Service. Age does not matter. The only material properly withheld is the narrow class the statute itself excepts, such as trade secrets the Service has determined would adversely affect the organisation.