The 501 S(c)ene

The latest view on not-for-profit accounting issues

Steps to apply for Tax-Exempt Status

You have the passion to help and give back to others. You work so hard to get your passion into action and you know that the government offers the opportunity for organizations like yours to gain tax exemption. However, applying for tax-exempt status can be a long and complicated process and it may take months to prepare. There are a few steps you need to complete before submitting a tax-exempt application.

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First, you need to determine what type of entity you want to incorporate into, whether it is a trust, corporation or association. Your articles of incorporation must be filed with the appropriate state division, typically the Secretary of State’s Office. Doing so will give the nonprofit corporate status and all the rights and privileges that come with it. The IRS requires each application to be accompanied by an exact copy of the organizing documents, except for organizations that have gross receipts of less than $5,000.

Second, you need to determine the state’s registration requirements. For instance, you may need to obtain local licenses and permits required to conduct business. You will also need to fulfill any insurance requirements necessary for operating.

Finally, you would need to obtain your federal Employer Identification Number (EIN) by submitting Form SS-4 online with the IRS. Now you are ready to apply for your tax-exempt status.

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Do not let the length or complexity of requirements scare you. There are many resources available to help you through the application process, including the Exempt Organizations (EO) division of the IRS. Their website includes tools and an interactive web version that guides the users through completing Form 1023.

Reach out to us at Henry+Horne with any questions. Now you only need to worry about generating resources, donations and work with the people who have the same passion as you do! Let’s save the world!


Julia Kang, Senior Associate, CPA