Federal Tax Obligations of Non-Prot Corporations

Non-prot status may make an organization eligible for certain benets, such as state sales, property, and income tax 
exemptions; however, this corporate status does not automatically grant exemption from federal income tax.  To be tax 
exempt, most organizations must apply for recognition of exemption from the Internal Revenue Service to obtain a ruling 
or determination letter recognizing tax exemption.  

Exemption as a charitable, educational, or religious organization under section 501(c)(3) is generally considered the most 
favorable status, because donations to 501(c)(3) organizations are tax deductible.  To be exempt under that section, an 
organization must apply within 27 months after  the end of the month in which it was created.  

Although certain types of organizations are not required to apply for recognition of exemption, many do so in order to 
clarify their tax status.  A user fee must accompany an exemption application.  The IRS will not process an application 
until the user fee is paid.

Required Applications 
Section 501(c)(3)organizations
• Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code
• Form SS-4, Application for Employer Identication Number (or apply for an EIN on-line at www.irs.gov; type “EIN” in 
  the keyword box on any page)

Non-501(c)(3) organizations
• Form 1024, Application for Recognition of Exemption Under Section 501(a) of the Internal Revenue Code 
• Form SS-4, Application for Employer Identication Number (or apply for an EIN on-line at www.irs.gov; type “EIN” in 
  the keyword box on any page)
• Form 8718, User Fee for Exempt Organization Determination Letter Request

Help Available from the IRS
Publication 4220, Applying for 501(c)(3) Tax-Exempt Status
Publication 4221-NC, Compliance Guide for Tax Exempt Organizations (other than 501(c)(3) Public Charities and Private    
  Foundations)
Publication 4221-PC, Compliance Guide for 501(c)(3) Public Charities
Publication 4221-PF, Compliance Guide for 501(c)(3) Private Foundations
Publication 4630, Exempt Organizations Products and Services Navigator
Publication 557, Tax-Exempt Status for Your Organization

Download forms and publications at www.irs.gov; or call 1-800-829-3676 (toll-free)

Charities and Nonprots website: www.irs.gov/eo 
• Life Cycles: web-based information tools to help tax-exempt organizations comply with requirements that occur 
  throughout the life cycle of their organization
• www.stayexempt.irs.org: web-based training modules and mini-courses
• EO Update: free electronic newsletter with information for tax-exempt organizations and tax practitioners who 
  represent them
TE/GE Customer Service: (877) 829-5500 (toll free)

Applying for Federal Tax Exemption? New User Fees for 2010

An organization that applies for IRS recognition of its tax-exempt status must generally pay an application fee 
(sometimes called a user fee).  These fees will increase for all applications for exemption (Forms 1023, 1024, and 1028) 
postmarked after January 3, 2010:
• $400 for organizations whose gross receipts are $10,000 or less annually over a 4-year period
• $850 for organizations whose gross receipts exceed $10,000 annually over a 4-year period
• $3,000 for group exemption letters.

A complete schedule of all IRS user fees will be published in the annual procedure released in January 2010.

Cyber Assistant, a Web-based software program designed to help 501(c)(3) applicants prepare a complete and accurate 
Form 1023 application, will become available during 2010.  Once the IRS announces the availability of Cyber Assistant, 
the application fees will change again:
• $200 for organizations using Cyber Assistant (regardless of size) to prepare their Form 1023
• $850 for all other organizations not using Cyber Assistant (regardless of size) to prepare their Form 1023.

For a 2009 fee schedule, see www.irs.gov/eo.

IRS will announce when Cyber Assistant is available and the effective date of the fee change.  Subscribe to the EO 
Update to automatically receive an alert that Cyber Assistant is available. 

   Notice 844 (Rev. 10-2009) Catalog Number 10319Q Department of the Treasury Internal Revenue Service www.irs.gov