Tax Exempt and Government Entities

EXEMPT ORGANIZATIONS

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501c3

                                  (APPLYING)( )

501c3
                                                     for 501(c)(3)  

                                                     Tax-Exempt Status

                                                     Inside:
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                                                     Why apply for 501(c)(3) tax-exempt status?

501c3
                                                     Who is eligible for 501(c)(3) status?

                                                     What responsibilities accompany  
                                                     501(c)(3) status?

                                                     How do you apply for 501(c)(3) status?

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501c3

501c3

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Publication 4220 (Rev. 3-2018)  Catalog Number 37053T  Department of the Treasury  Internal Revenue Service  www.irs.gov

501c3

Contents

Why Apply for 501(c)(3) Status? ................................................................3

Who is Eligible for 501(c)(3) Status? ...........................................................3
501(c)(3) Organizations ............................................................................4
Public Charities and Private Foundations ........................................................5

What Responsibilities Accompany 501(c)(3) Status? ........................................6
Recordkeeping ....................................................................................6
Filing Requirements ...............................................................................6
Disclosure Requirements .........................................................................7
Recordkeeping Requirements ....................................................................8

How Do You Apply for 501(c)(3) Status? .......................................................8
When to File .......................................................................................9
Determination Letter..............................................................................10
While Your Application is Pending ...............................................................10

How Do You Get IRS Assistance and Information? ........................................ 10           1
Specialized Assistance for Tax-Exempt Organizations .........................................10
Tax Publications for Exempt Organizations .....................................................11
Forms for Exempt Organizations ................................................................12

Applying for 501(c)(3) Tax-Exempt Status,
                              ( )( )

501c3

ederal tax law provides tax benefits to nonprofit organizations recognized as exempt  
from federal income tax under Section 501(c)(3) of the Internal Revenue Code (IRC).  
FIt requires that most organizations apply to the Internal Revenue Service (IRS) for that status.

This IRS Publication 4220 presents general guidelines for organizations that seek tax-exempt 
status under IRC Section 501(c)(3). Content includes references to the statute, Treasury 
Regulations, other IRS publications that explain the requirements for tax-exempt status and  
                                                                                                     2
IRS forms with instructions. Publication 4220 is neither comprehensive nor intended to 
address every situation. As an alternative to applying for exemption, an organization may 
obtain many of the benefits of 501(c)(3) status by affiliating with an existing charity that acts as 
its agent. It is important to note that the existing charity must be given full control and author-
ity over the program.

To learn more about the rules and procedures that pertain to organizations applying for  
exemption from federal income tax under IRC Section 501(c)(3), see Publication 557,  
Tax-Exempt Status for Your Organization. For assistance on 501(c)(3) status, you may also 
want to consult a tax adviser.

the founder’s family, its shareholders or persons controlled by these interests;
Why Apply for 501(c)(3) Status?
The benefits of having 501(c)(3) status include exemption from federal income tax 
and eligibility to receive tax-deductible charitable contributions. To qualify for these 
benefits, most organizations must file an application with, and be recognized by, 
the IRS as described in this publication. Another benefit is that some organizations 
may be exempt from certain employment taxes.

Individual and corporate donors are more likely to support organizations with 
501(c)(3) status because their donations can be tax deductible. Recognition of 
exemption under IRC Section 501(c)(3) assures foundations and other grant-making 
institutions that they are issuing grants or sponsorships to permitted beneficiaries.

An IRS determination of 501(c)(3) status is recognized and accepted for other  
purposes. For example, state and local officials may grant exemption from income, 
sales or property taxes. In addition, the U.S. Postal Service offers reduced postal 
rates to certain organizations.

Who is Eligible for 501(c)(3) Status?
There are three key components for an organization to be exempt from federal  
                                                                                          3
income tax under IRC Section 501(c)(3). A not-for-profit (in other words nonprofit) 
organization must be organized and operated exclusively for one or more exempt 
purposes.

Organized – A 501(c)(3) organization must be organized as a corporation, trust 
or unincorporated association. An organization’s organizing documents (articles  
of incorporation, trust documents, articles of association) must:

■■■limit its purposes to those described in IRC Section 501(c)(3);

■■■not expressly permit activities that do not further its exempt purposes, in other 
words unrelated activities; and,

■■■permanently dedicate its assets to exempt purposes.

Operated – Because a substantial portion of an organization’s activities must 
further its exempt purpose, certain other activities are prohibited or restricted 
including, but not limited to, the following activities. A 501(c)(3) organization:

■■■must absolutely refrain from participating in the political campaigns of candidates 
for local, state or federal office;

■■■must restrict its lobbying activities to an insubstantial part of its total activities;

■■■must ensure that its earnings do not inure to the benefit of any private  
shareholder or individual;

■■■must not operate for the benefit of private interests such as those of its founder, 

■■■must not operate for the primary purpose of conducting a trade or business that 
is not related to its exempt purpose, such as a school’s operation of a factory; and,

■■■must not have purposes or activities that are illegal or violate fundamental  
public policy.

Exempt Purpose – To be tax exempt, an organization must have one or more 
exempt purposes, stated in its organizing document. IRC Section 501(c)(3) lists the 
following exempt purposes: charitable, educational, religious, scientific, literary, 
fostering national or international sports competition, preventing cruelty  
to children or animals, and testing for public safety.

501(c)(3) Organizations,

The most common types of 501(c)(3) organizations are charitable, educational and 
religious.

CHARITABLE
Charitable organizations conduct activities that promote:
  - relief of the poor, the distressed or the underprivileged
  - advancement of religion                                                                     4
                                                                                    501c3
  - advancement of education or science
  - erection or maintenance of public buildings, monuments or works
  - lessening the burdens of government
  - lessening neighborhood tensions
  - eliminating prejudice and discrimination
  - defending human and civil rights secured by law
  - combating community deterioration and juvenile delinquency

EDUCATIONAL
Educational organizations include:

  - schools such as a primary or secondary school, a college, or a professional or            (
trade school
  - organizations that conduct public discussion groups, forums, panels, lectures or similar  
programs
  - organizations that present a course of instruction by means of correspondence or through 
the use of television or radio
- museums, zoos, planetariums, symphony orchestras or similar organizations
                                                                                              )(
- nonprofit day-care centers
- youth sports organizations

                                                                                              )

RELIGIOUS,

The term church includes synagogues, temples, mosques and similar types of organizations. 
Although the IRC excludes these organizations from the requirement to file an application  
for exemption, many churches voluntarily file applications for exemption. This recognition by the 
IRS assures church leaders, members and contributors that the church is tax exempt under 
IRC Section 501(c)(3) and qualifies for related tax benefits. Other religious organizations that 
do not carry out the functions of a church, such as mission organizations, speakers’ organiza-
tions, nondenominational ministries, ecumenical organizations or faith-based social agencies, 
may qualify for exemption. These organizations must apply for exemption from the IRS. See 
Publication 1828, Tax Guide for Churches and Religious Organizations, for more details.

Public Charities and Private Foundations,

Every organization that qualifies for tax-exempt status under IRC Section 501(c)(3)  
is further classified as either a public charity or a private foundation. Under 
IRC Section 508(b), every organization is automatically classified as a private 
foundation unless it meets one of the exceptions listed in Sections 508(c) or 509(a).

For some organizations, the primary distinction between a classification as a  
public charity or a private foundation is the organization’s source of financial  
support. Generally, a public charity has a broad base of support while a private 
foundation has very limited sources of support. This classification is important 
because different tax rules apply to the operations of each. Deductibility of  
                                                                                                        5
contributions to a private foundation is more limited than deductibility of 
contributions to a public charity. See Publication 526,Charitable Contributions                   , for 
more information on deductibility of contributions. In addition, private foundations 
are subject to excise taxes that are not imposed on public charities. For more 
information about the special tax rules that apply to private foundations, see 
Publication 4221-PF, Compliance Guide for 501(c)(3) Private Foundations                , and the 
Life Cycle of a Private Foundation website.

Organizations statutorily classified as public charities under IRC Section 509(a) are:

■■■churches;

■■■schools;

■■■organizations that provide medical or hospital care (including the provision of 
medical education and in certain cases, medical research);

■■■organizations that receive a substantial part of their support in the form of  
contributions from publicly supported organizations, governmental units and/or 
from the general public;

■■■organizations that normally receive not more than one-third of their support 
from gross investment income and more than one-third of their support from 
contributions, membership fees and gross receipts from activities related to their 
exempt functions; and,

■■■organizations that support other public charities.

If the organization requests public charity classification based on receiving support 
from the public, it must continue to seek significant and diversified public support 

in later years. Beginning with the organization’s sixth year of existence and for all 
succeeding years, the organization must demonstrate in its annual return that it 
receives the required amount of public support. If the organization does not meet 
the public support requirement, it could be reclassified as a private foundation.

In addition, to avoid unexpectedly losing its public charity classification, the  
organization should keep careful track of its public support information throughout 
the year, so that it will have the information it needs to complete Schedule A, 
Form 990 or 990-EZ. Unless the organization is committed to raising funds from 
the public, it may be more appropriate to consider an alternate statutorily based 
public charity classification. See Publication 557, Tax-Exempt Status for Your 
Organization, for assistance with determining how your organization would be 
classified.

What Responsibilities Accompany 501(c)(3) Status?

While conferring benefits on 501(c)(3) organizations, federal tax law also imposes 
responsibilities on organizations receiving that status.

Recordkeeping,
                                                                                      6
Section 501(c)(3) organizations are required to keep books and records detailing 
all activities, both financial and nonfinancial. Financial information, particularly 
information on its sources of support (contributions, grants, sponsorships and 
other sources of revenue) is crucial to determining an organization’s private  
foundation status. See Publications 4221-PC,4221-PF,557  and the instructions to 
Forms 990,990-EZ    and 990-PF for more information.

Filing Requirements,

Annual Information Returns – Organizations recognized as tax exempt under 
IRC Section 501(c)(3) may be required to file an annual information return - Form 
990, Form 990-EZ, Form 990-N (see below) or Form 990-PF along with certain 
schedules that may be required for your organization. Certain categories of 
organizations are excepted from filing Form 990 or Form 990-EZ, including 
churches. See the instructions with each of these forms and the publications in the 
“Recordkeeping” section above for more information and guidance.

Annual Electronic Notice – To meet their annual filing requirement, organizations 
with gross receipts normally $50,000 or less may choose to submit an annual 
electronic notice using Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt 
Organizations Not Required To File Form 990 or Form 990-EZ. The e-Postcard can 
only be filed electronically; there is no paper version.

Any organization that fails to file a required annual return or notice for three  
consecutive years will automatically lose its tax-exempt status, by act of law, as  
of the due date of the return for the third consecutive year.

Unrelated Business Income Tax – In addition to filing Form 990, 990-EZ or  
990-PF, an exempt organization must file Form 990-T if it has $1,000 or more of 
gross income from an unrelated trade or business during the year. The organization 
must make quarterly payments of estimated tax on unrelated business income if  
it expects its tax liability for the year to be $500 or more. The organization may  
use Form 990-W to help calculate the amount of estimated payments required. In  
general, the tax is imposed on income from a regularly carried-on trade or business  
that does not further the organization’s exempt purposes (other than by providing  
funds). See Publication 598, Tax on Unrelated Business Income of Exempt 
Organizations, and the Form 990-T instructions for more information.

Disclosure Requirements,

Public Inspection of Exemption Applications and Returns – Section 501(c)(3)  
organizations must make their applications (Form 1023 or 1023-EZ) and the 
annual returns (Form 990, Form 990-EZ or Form 990-PF) available to the public 
for inspection, upon request and without charge (except for a reasonable charge 
for copying). Each annual return must be made available for a three-year period 
starting with the filing date of the return. The IRS is also required to make these 
documents available for public inspection and copying. These documents must be 
made available at the organization’s principal office during regular business hours. 
The requests may be made in person or in writing. See Publication 557 for more 
information.                                                                         7

For tax years beginning after August 17, 2006, Section 501(c)(3) organizations that 
file unrelated business income tax returns (Forms 990-T) must make them available 
for public inspection, and the IRS must make those returns publicly available. 
Organizations should not include private information of donors or other individuals, 
such as a Social Security number, in any information return.

Charitable Contributions—Substantiation and Disclosure – Organizations that 
are tax exempt under IRC Section 501(c)(3) must meet certain requirements for 
documenting charitable contributions. The federal tax law imposes two general 
disclosure rules: 1) donors must obtain a written acknowledgment from a 
charity for any single contribution of $250 or more before the donors can claim 
a charitable contribution on their federal income tax returns and 2) a charitable 
organization must provide a written disclosure to a donor who makes a payment 
in excess of $75 partly as a contribution and partly for goods and services 
provided by the organization. See Publication 1771,Charitable Contributions – 
Substantiation and Disclosure Requirements, for more information.

          Recordkeeping Requirements,

          A donor cannot claim a tax deduction for any contribution of cash, a check or 
          other monetary gift made on or after January 1, 2007, unless the donor maintains  
          a record of the contribution in the form of either a bank record (such as a cancelled 
          check) or a written communication from the charity (such as a receipt or a letter) 
          showing the name of the charity, the date of the contribution and the amount of the 
          contribution.

How Do You Apply for 501(c)(3) Status?
          Organizations that want to apply for 501(c)(3) status should be aware of the forms 
          required, the user fee, the filing deadline and the processing procedures.

FORMS TO FILE
Form SS-4,
An Employer Identification Number (EIN) is your account number with the IRS and is required regardless  
of whether the organization has employees. Include the organization’s EIN on all correspondence to the 
IRS. Apply for an EIN by faxing or mailing a completed Form SS-4, Application for Employer Identification 
Number,to the IRS by calling or by submitting an online version of the form. (International applicants may 
request an EIN by telephone.) Form SS-4 is available at Social Security Administration offices, by request 
through the IRS at 800-829-3676 and by downloading the form from www.irs.gov. For more information              8
about EINs, see Publication 1635, Understanding Your EIN.
Do not apply for an EIN until your organization is legally formed. Applying for an EIN signals to IRS computer 
systems that an organization has been created, and therefore triggers filing requirements. 

TYPES OF APPLICATIONS,

Form 1023
Complete Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal 
Revenue Code, and mail to the address indicated in the instructions. If you submit a substantially incom-
plete Form 1023, we’ll return the application package and user fee to you with a letter of explanation. We’ll 
also return your application package and user fee if you do not use the current version of Form 1023. 
A substantially complete application includes:
- The current version of the application form found at www.irs.gov 
- The correct user fee 
- A signature by an authorized individual 
- An employer identification number 
- A statement of receipts and expenses 
  - A copy of your organizing document that meets the requirements of a conformed copy 
- A detailed narrative of your proposed activities 
- A copy of your bylaws or similar governing rules, if adopted 
Note: If your particular letter request doesn’t require a listed element, we won’t consider that element when 
determining whether your application is substantially complete.
If we return your application package, our records won’t show a pending application for a determination let-
ter. If you still want a determination letter, you must resubmit your entire application package, including the 
missing information and the correct user fee.

Form 1023-EZ
Small organizations may file Form 1023-EZ, Streamlined Application for Recognition of Exemption Under 
Section 501(c)(3) of the Internal Revenue Code, instead of Form 1023, and pay the required user fee. Form 
1023-EZ must be filed electronically. For more information, see IRS.gov/charities-non-profits.
Form 1023, Interactive
Interactive version of Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the 
Internal Revenue Code, includes helpful hints and links to help you submit a complete application.
Forms 2848 and 8821
Attach Form 2848, Power of Attorney and Declaration of Representative, if someone other than your princi-
pal officer or director will represent you on matters about the application. Attach Form 8821, Tax Information 
Authorization, if you want the IRS to be able to provide information about your application to someone other 
than a principal officer or director.

When to File,

Most organizations must file this application by the end of the 27th month after 
they were legally formed.

Formation date: A corporation is legally formed when its articles of incorporation 
are filed with the state, an unincorporated association is legally formed when its 
organizing document is adopted by the signature of at least two individuals, and a 
trust is legally formed when all non-charitable interests in the trust property expire 
or when it is funded if there are no non-charitable interests.                                                 9

An organization that is not a private foundation is not required to file an application  
unless its annual gross receipts are normally more than $5,000. An organization  
must file an application within 90 days of the end of the tax year in which it exceeds  
this threshold.

Example 1: An organization that was created on January 1, 2016, and exceeds the 
gross receipts threshold, must file an application by April 30, 2018.

Example 2: An organization that was created on January 1, 2015, but did not 
exceed the gross receipts threshold until its tax year ending December 31, 2017, 
must file an application by March 31, 2018.

An organization that files its application before the deadline will usually be  
recognized as tax exempt under IRC Section 501(c)(3) from the date of  
its creation, if it meets exemption requirements. An organization that files an  
application after the deadline will usually be recognized as tax exempt from the 
date of the application. It may also request exemption retroactive as of the date  
of creation. See the instructions to the application form for more information.

Determination Letter,

The IRS tax specialist reviewing an application may request additional information 
in writing. If all information received establishes that an organization meets the 
requirements for exemption, the IRS will issue a determination letter recognizing 
the organization’s exempt status and providing its foundation classification. This 
is an important document that you should keep in the organization’s permanent 
records.

While Your Application is Pending,

While an organization’s application is waiting for processing by the IRS, the  
organization may operate as a tax-exempt organization.

Most organizations are required to file an annual information return (Form 990, 
Form 990-EZ or Form 990-PF) or electronic notice (Form 990-N) while their  
application for exemption is pending. An organization’s exempt status can be  
automatically revoked while its application is pending if it has not filed a required 
return or notice for three consecutive tax periods after its formation date. These 
returns are subject to public disclosure. If the organization has unrelated business 
income of more than $1,000, it must also file a Form 990-T. See Publication 4221-PC    
or 4221-PF for more information.

Although donors have no assurance that contributions are tax-deductible for            10
federal income tax purposes until the application is approved, contributions 
made while an application is pending would qualify if the application is approved. 
However, if the application is disallowed, contributions would not qualify. Moreover, 
the organization would be liable for filing federal income tax returns unless its 
income is otherwise excluded from federal taxation.

The IRS Exempt Organizations website provides information about how to find out 
about the status of an application for tax-exempt status.

How Do You Get IRS Assistance and Information?
The IRS offers help through live telephone assistance and with reading material that 
is accessible either online, via mail or at IRS walk-in offices in many areas across 
the country. IRS forms and publications can be downloaded from the internet and 
ordered by telephone.

Specialized Assistance for Tax-Exempt Organizations,

Get help with questions about applying for tax-exempt status, annual filing  
requirements and information about exempt organizations.

EO Website                               www.irs.gov/filing/charities-non-profits  ,

Highlights:

■■■Applying for Tax Exempt Status provides information about how to apply for IRS 
recognition of tax-exempt status.

■■■Annual Reporting & Filing describes 990-series forms, requirements and filing 
tips. 

■■■Revoked? Reinstated? Learn More provides information about the automatic 
revocation process and how to be reinstated. 

■■■EO Select Check allows you to search for an organization’s tax-exempt status 
and Form 990-N filings. 

■■■How to Stay Exempt provides resources for tax-exempt nonprofit organizations. 

■■■StayExempt.IRS.gov provides tax basics for exempt organizations. 

■■■Educational Resources and Guidance provides EO related publications, forms, 
official guidance and other materials. 

Subscribe to the EO Update, an electronic newsletter with information for  
tax-exempt organizations and tax practitioners who represent them.

EO Customer Service   ,                                           877-829-5500,     11

EO Determinations Office Mailing Address,

Internal Revenue Service
Exempt Organizations Determinations
Room 4024
P.O. Box 2508
Cincinnati, OH   45201 

Fax Number 855-204-6184

Tax Publications for Exempt Organizations,

Download these publications or order a copy by calling the IRS at 800-829-3676.
Pub 15, Circular E, Employer’s Tax Guide,

Pub 15-A, Employer’s Supplemental Tax Guide,

Pub 15-B, Employer’s Tax Guide to Fringe Benefits

Pub 463, Travel, Entertainment, Gift, and Car Expenses

Pub 517, Social Security and Other Information for Members of the Clergy and 
Religious Workers
Pub 526, Charitable Contributions,

Pub 538, Accounting Periods and Methods

Pub 557, Tax-Exempt Status for Your Organization,

Pub 583, Starting a Business and Keeping Records 

Pub 598, Tax on Unrelated Business Income of Exempt Organizations

Pub 892, How to Appeal an IRS Determination on Tax-Exempt Status

Pub 1546, Taxpayer Advocate Service We are Here to Help You
Pub 1771, Charitable Contributions—Substantiation and Disclosure Requirements,

Pub 1828, Tax Guide for Churches and Religious Organizations,

Pub 3079, Tax-Exempt Organizations and Gaming,

Pub 3833, Disaster Relief, Providing Assistance Through Charitable Organizations,

Pub 4302, A Charity’s Guide to Vehicle Donation,

Pub 4303, A Donor’s Guide to Vehicle Donation,

Pub 4221-NC, Compliance Guide for Tax-Exempt Organizations (Other than 501(c)(3) 
Public Charities and Private Foundations),

Pub 4221-PC, Compliance Guide for 501(c)(3) Public Charities

Pub 4221-PF, Compliance Guide for 501(c)(3) Private Foundations

Pub 4573, Group Exemptions
                                                                                 12
Pub 4779 , Facts about Terminating or Merging Your Exempt Organization 

Pub 5248, IRS Form 990-N Electronic Filing System (e-Postcard) User Guide

Forms for Exempt Organizations,

Download these forms or order a copy by calling the IRS at 800-829-3676.

Form SS-4, Application for Employer Identification Number

Form 911, Request for Taxpayer Advocate Service Assistance (And Application for 
Taxpayer Assistance Order)
Form 941, Employer’s Quarterly Federal Tax Return,

Form 990, Return of Organization Exempt From Income Tax,

Form 990-EZ, Short Form Return of Organization Exempt From Income Tax,

Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt 
Charitable Trust Treated as a Private Foundation

Form 990-N, Electronic Notice (e-Postcard) For Tax-Exempt Organizations Not 
Required to File Form 990 or 990-EZ (available electronically only),

Form 990-T, Exempt Organization Business Income Tax Return,

Form 990-W, Estimated Tax on Unrelated Business Taxable Income for  
Tax-Exempt Organizations,

Form 1023, Application for Recognition of Exemption Under Section 501(c)(3)  
of the Internal Revenue Code
Form 1023, Interactive,

Form 1023-EZ, Streamlined Application for Recognition of Exemption Under 
Section 501(c)(3) of the Internal Revenue Code

Form 1041, U.S. Income Tax Return for Estates and Trusts

Form 2848, Power of Attorney and Declaration of Representative

Form 3115, Application for Change in Accounting Method

Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the 
Internal Revenue Code,

Form 5578, Annual Certification of Racial Nondiscrimination for a Private School 
Exempt from Federal Income Tax

Form 5768, Election/Revocation of Election by an Eligible Section 501(c)(3) 
Organization to Make Expenditures to Influence Legislation,

Form 8282, Donee Information Return

Form 8283, Noncash Charitable Contributions

Form 8821 , Tax Information Authorization
                                                                                 13
Form 8822, Change of Address

Form 8868, Application for Automatic Extension of Time To File an Exempt 
Organization Return

Form 8879-EO , IRS e-file Signature Authorization for an Exempt Organization

FinCEN Form 114, Report of Foreign Bank and Financial Accounts  
(filed with Treasury Department),