How do I get a determination letter from the IRS?
Receiving a determination letter from the IRS can be a significant milestone for any organization, especially for tax-exempt entities like charities and non-profits. This letter confirms that the IRS has recognized the organization’s status and provides official documentation of its tax-exempt status. If you’re wondering how to obtain this letter, here’s a step-by-step guide to help you navigate the process.
1. Eligibility and Application
Before applying for a determination letter, ensure that your organization meets the IRS’s criteria for tax-exempt status. This typically includes being organized and operated exclusively for exempt purposes, as outlined in section 501(c)(3) of the Internal Revenue Code. Once you’ve confirmed eligibility, you’ll need to file Form 1023 or Form 1023-EZ, depending on your organization’s size and projected budget.
2. Complete the Application
Form 1023 is a comprehensive application that requires detailed information about your organization’s structure, activities, governance, and finances. The shorter Form 1023-EZ is available for smaller organizations with less complex operations. Ensure that you provide accurate and complete information to avoid delays in processing.
3. Pay the Application Fee
There is a filing fee associated with Form 1023 and Form 1023-EZ. The fee varies depending on your organization’s projected budget. You can pay the fee by check, money order, or credit card when you submit your application.
4. Submit the Application
Submit your completed application to the IRS via mail or online. If you choose to file online, you’ll need to create an account on the IRS’s website and follow the instructions provided.
5. Wait for Processing
The IRS reviews each application thoroughly. The processing time can vary, but it typically takes several months. You can check the status of your application online using the IRS’s online services.
6. Receive Your Determination Letter
Once your application is approved, the IRS will issue a determination letter confirming your organization’s tax-exempt status. This letter will include your organization’s Employer Identification Number (EIN) and a copy of your exemption determination letter. Keep this letter in a secure location, as it may be requested by other organizations or government agencies.
7. Maintain Compliance
Receiving a determination letter is not the end of the process. Your organization must continue to operate exclusively for exempt purposes and file an annual return (Form 990 or 990-N) with the IRS. Failure to comply with these requirements may result in the loss of your tax-exempt status.
In conclusion, obtaining a determination letter from the IRS is a crucial step for any tax-exempt organization. By following these steps and maintaining compliance with IRS regulations, you can ensure that your organization remains eligible for the tax benefits associated with its tax-exempt status.
