Section 501(C)(3) of the Internal Revenue Code provides an organization with tax-exempt status. Organizations with 501(C)(3) status do not pay income taxes. The Internal Revenue Service (IRS) requires organizations to be formed for an “exempt purpose” in order to receive this status. Generally, the organization must be formed for some public good, such as to further charitable, educational or religious principals. According to the IRS, organizations must file for this status within 27 months after formation of the endeavor.
Items you will need
- Form SS-4
- Form 1023
Obtain copies of IRS forms SS-4 and 1023. The SS-4 form is your “Application for Employer Identification Number;” Form 1023 is the “Application for Recognition of Exemption Under Section 501(C)(3) of the Internal Revenue Code.” These forms are available at the IRS website.
Form an “appropriate legal form” for your endeavor. The Internal Revenue Service grants 501(C)(3) status to corporations, trusts or associations that are organized for a charitable, religious or educational purpose. You must comply with your state laws when forming your endeavor. Corporations, for example, must file articles of incorporation with the state and comply with other requirements, such as forming a board of directors and creating bylaws.
Apply for an Employer Identification Number (EIN) by completing Form SS-4 and filing it with the IRS. This form requires basic information about the business, such as the type of entity, its location and the reason why you are applying for an EIN (in this case, to receive 501(C)(3) status). An EIN is like a social security number for your business.
Complete Form 1023. The form is lengthy. You must provide basic information about your business. Additionally, you must attach a statement describing your past, present and planned activities that are designed to further the exempt purpose of your organization. You must also provide detailed financial information about your organization. Submit this form to the IRS when complete. The IRS will review your application and send you a letter confirming your 501(C)(3) status.