Many nonprofits apply to the IRS for 501(c)(3) tax-exempt status in order to avoid paying income taxes and to become eligible for nonprofit benefits and opportunities. Official nonprofit status also benefits donors, who provide donations that act as a write-off at tax time.
TL;DR (Too Long; Didn't Read)
Once your 1023 or 1023-EZ application is approved, the government will mail you an IRS 501(c)(3) determination letter for your files. This letter can come in handy at purchasing time or when donors want to see proof of your status before giving to your organization.
IRS 501(c)(3) Determination Letter Explained
There's nothing quite like the excitement of receiving your IRS 501(c)(3) determination letter in the mail after the lengthy process of forming your organization and completing the application. Wait times for the letter can be lengthy, especially if your nonprofit was required to submit the 1023 form rather than the shorter 1023-EZ form.
When the approval letter comes, it will say that your organization is exempt from income tax and that you are eligible for certain benefits as a nonprofit as well as remind you of your organization's responsibility to file the 990, 990-EZ or 990-N form after the end of each year.
Finding the Determination Letter Online
Because you might want to give the 501(c)(3) letters to donors as part of your donor care program, it is important to know where to find it. If you have applied within the last few months and have not received your original copy, it is likely that the IRS is still processing your application.
If you know you have already been approved, you can find your IRS entity status letter through the IRS 501(c)(3) search page. This tax-exempt organization search allows people to search for any approved nonprofit and view determination letters and basic tax information. Once you enter your entity's name or EIN on the IRS 501(c)(3) search page, you will be able to view your page and click on "Determination Letter" in order to view a printable image of your determination letter.
Using Form 4506-A
If you find that the printed quality of the online IRS entity status letter is not good enough for your records or for donors, you can request a new mailed copy using Form 4506-A. You will be required to print the form in order to fill in the organization's name, address and EIN. Under the requester section, you will also provide information about yourself.
Depending on whether or not you are a commercial user, you may also need to pay a small printing fee. Once you mail or fax the form to the appropriate IRS office, you can expect to be able to give a 501(c)(3) letter to donors within the next few weeks.
Finding Your 1023 or 1023-EZ
In addition to giving a 501(c)(3) letter to donors, you might also include a copy of your original 1023 or 1023-EZ application. This is especially true for larger donors who want to ensure your organization is operating within its declared scope. If you filed the 1023-EZ form through the pay.gov website, you will be able to print a copy once you log in to your account. For all other requests, you will need to submit Form 4506 to obtain your original application.
Donor Information Packets
In order to avoid having to do an IRS 501(c)(3) search or complete Form 4506-A every time a donor wants to make sure your nonprofit is legit, consider creating a donor information packet. You can include your IRS entity status letter, a copy of your original application and copies of tax forms as well as current information about your programs. Keep digital and print forms so you are prepared every time a donor wants to know more before giving.
- If you need assistance, call IRS Telephone Assistance for Exempt Organizations at 877-829-5500.
Anne Kinsey is an entrepreneur and business pioneer, who has ranked in the top 1% of the direct sales industry, growing a large team and earning the title of Senior Team Manager during her time with Jamberry. She is the nonprofit founder and executive director of Love Powered Life, as well as a Certified Trauma Recovery Coach, certified HRV biofeedback practitioner and freelance writer who has written for publications like Working Mother, the San Francisco Chronicle, the Houston Chronicle and Our Everyday Life. Anne works from her home office in rural North Carolina, where she resides with her husband and three children.