How to Request a 501c3 Letter: A Step-by-Step Guide
Starting a non-profit organization is an exciting endeavor that requires careful planning and legal compliance. One of the most crucial steps in this process is obtaining a 501(c)(3) letter from the Internal Revenue Service (IRS). This letter is a formal recognition that your organization is tax-exempt under Section 501(c)(3) of the Internal Revenue Code, allowing you to accept tax-deductible donations and apply for grants. This article will guide you through the process of requesting a 501(c)(3) letter.
1. Determine Eligibility
Before you begin the application process, ensure that your organization meets the criteria for tax-exempt status. According to the IRS, to qualify for 501(c)(3) status, your organization must be organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, educational, or other purposes. Additionally, your organization must not engage in any substantial lobbying or political campaign activities.
2. Choose a Name
Select a unique name for your organization that clearly indicates its purpose and is not already in use by another tax-exempt organization. The IRS provides a tool to check the availability of your chosen name on their website.
3. File Articles of Incorporation
Next, file the necessary documents to legally establish your organization. These documents, known as Articles of Incorporation, vary by state but typically include the organization’s name, purpose, name and address of the registered agent, and the names and addresses of the initial board members.
4. Apply for an Employer Identification Number (EIN)
An EIN is a unique nine-digit number assigned to your organization by the IRS. It is required for tax purposes and to open a bank account. You can apply for an EIN online, by phone, or by mail.
5. Draft Your Organizational Documents
Prepare your organization’s governing documents, including the articles of incorporation, bylaws, and conflict of interest policy. These documents will outline the structure and governance of your organization and are essential for the IRS application.
6. Complete and File Form 1023 or 1023-EZ
The IRS offers two forms for applying for 501(c)(3) status: Form 1023 and Form 1023-EZ. Choose the form that best suits your organization’s needs. Form 1023 is the longer and more detailed version, while Form 1023-EZ is a streamlined version for smaller organizations with less complex finances.
7. Pay the Application Fee
Both forms require a filing fee. The fee for Form 1023 is $850, while the fee for Form 1023-EZ is $400. You can pay the fee by credit card, electronic funds transfer, or check.
8. Submit Your Application
Submit your completed application and supporting documents to the IRS. You can file your application online, by mail, or by fax. The IRS will review your application and notify you of its decision.
9. Maintain Compliance
Once you receive your 501(c)(3) letter, it is crucial to maintain compliance with IRS regulations. This includes filing annual tax returns (Form 990), maintaining records, and adhering to the organization’s charitable purpose.
In conclusion, obtaining a 501(c)(3) letter is a vital step for your non-profit organization. By following these steps, you can navigate the application process successfully and secure the tax-exempt status that will enable your organization to thrive.
