Key Takeaways

  • Errors by applicants are the leading cause of delays in getting a 501(c)(3) determination letter.
  • Form 1023 applications usually take 3–6 months, but can be longer if issues arise.
  • Form 1023-EZ applications often take 2–4 weeks for approval if properly filed.
  • Following IRS instructions carefully, including paying correct fees, helps avoid delays.
  • Nonprofits must prepare key documents like Articles of Incorporation with correct language.
  • The IRS provides online tools to check your application status.
  • Preparation, completeness, and understanding eligibility requirements are crucial for faster approval.

The question, “how long does it take to become a non-profit?” is one that plagues many social entrepreneurs today. It is easy to blame the IRS for delays in receiving the 501(c)(3) determination letter.

The 501(c)(3) determination letter is the official letter notifying you that your organization is now a tax-exempt 501(c)(3) charity. However, this letter might be delayed by the IRS due to incomplete or wrong information, payment of the wrong fee, or nonpayment of fees.

Delays are Usually Caused by Applicants

This means that delays are usually caused by errors on your part. However, it can also be due to budget cutbacks in the IRS resulting in reduced numbers of IRS staff available to process applications. Other causative factors include technology failures and a backlog of application requests.

Factors That Affect IRS Processing Time

Several factors influence how long it takes to get a 501(c)(3) determination letter. These include:

  • Application Type: Full Form 1023 applications take longer (generally 3 to 6 months) compared to Form 1023-EZ.
  • Completeness of Application: Missing documents, incomplete responses, or incorrect fees lead to delays.
  • IRS Staffing and Backlogs: Budget constraints and a high volume of applications can slow processing.
  • Applicant Responses to IRS Requests: If the IRS requests additional information and the organization delays in responding, the process is extended.
  • Technological Factors: Technical issues or updates to IRS systems can also cause slower processing​.

Tips for Avoiding Processing Delays

Since so many organizations fail to properly file applications, the IRS had to publish an article containing tips on how to avoid processing delays. Paying the appropriate fee is the number one tip. When filing for tax-exempt status for your nonprofit, you should strictly follow the instructions, submit complete and accurate information, and pay the appropriate fees.

Some of the benefits of obtaining the 501(c)(3) determination letter include the following

  • Legitimizes the charity.
  • Allows donors to claim donations as tax deductions on their personal/business tax returns.
  • Exempts the nonprofit from paying income and federal corporate taxes.
  • Puts nonprofits in a better position to obtain grants. Most foundations only make donations to 501(c)(3) nonprofits.

After submitting your application, it may take the IRS three to six months to get back to you. This gives them time to properly go over the application, and if there is incomplete information, they will contact you. However, having to correct errors considerably slows down the process.

To avoid a long wait time, you should understand the requirements and instructions and complete the application accordingly.

The following are some of the information you must submit along with the form

  • Description of activities
  • Article of incorporation
  • EIN
  • Policies and bylaws
  • Publications, printed materials, and financial information
  • A filing fee of $600

The process of filing Form 1023 is challenging, and care should be taken when filling the form. Individuals are advised to hire an attorney specializing in nonprofits to assist them with the application.

How to Check Your 501(c)(3) Application Status

The IRS offers an online tool called the "Where’s My Application for Tax-Exempt Status?" tracker​. After submitting Form 1023 or Form 1023-EZ, applicants can use this tool to:

  • Confirm receipt of their application.
  • Check where their application is in the processing timeline.
  • Find out if any additional information is required.

Applicants are generally advised to wait at least 90 days after submission before inquiring with the IRS about the status of Form 1023 applications​.

Understanding Form 1023-EZ

Form 1023-EZ was designed to assist smaller organizations in quickly and easily filing for 501(c)(3) tax-exempt status. The major requirement for filing Form 1023-EZ is total annual projected revenue — it must be below $50,000 each year. Organizations that fit into this category are able to use this method to quickly obtain tax-exempt status.

The IRS usually takes two to four weeks to process Form 1023-EZ. The processing time is much shorter since applicants remove the burden of scrutinizing from the IRS. You should receive feedback on your application within 90 days after the application has been submitted.

Applicants can only submit Form 1023-EZ online, thus ensuring a speedier application process. However, they must complete and file the form according to the specific requirements of the IRS.

No matter the form you choose, whether Form 1023-EZ or Form 1023, adequate preparation and attention to detail are critical to hassle-free submission and quick approval.

Individuals who are considering setting up a nonprofit should understand what the 501(c)(3) means and the qualification requirements. They should also understand the incorporation laws of their state and ensure that their organization structure meets the requirements for both incorporation and tax-exempt status.

Although incorporation is advantageous to most charities, it is not a requirement for tax-exempt status. They can choose to become an unincorporated nonprofit association.

Failure to adhere to the IRS requirements may result in delays of up to several months. One such requirement is that the applicant's article of incorporation must contain specific provisions and languages such as a dissolution clause and a purpose clause.

Preparation is key to avoiding unnecessary delays in obtaining 501(c)(3) tax-exempt status. Applicants should ensure that their organization has taken the necessary prerequisite steps. This includes creating financial projections, defining your activities, creating organizational records, and incorporation.

Filing Form 1023: Full Version Overview

Form 1023, the standard application for tax-exempt status, is required for organizations that anticipate gross receipts exceeding $50,000 annually or possess total assets over $250,000. The full Form 1023 process includes:

  • Detailed organizational history.
  • Comprehensive description of activities.
  • Three years of financial information (actual or projected).
  • Copies of governance documents, including Articles of Incorporation and bylaws.
  • Inclusion of specific required language (purpose and dissolution clauses) in the organizing documents​.

Given the form's complexity, applicants often need legal guidance to avoid errors that can lead to delays or denials.

Frequently Asked Questions

  1. How long does it take to get a 501(c)(3) if I file Form 1023?

    It usually takes between 3 to 6 months, but errors or additional IRS inquiries can extend the timeline.

  2. How fast is the processing time for Form 1023-EZ?

    Form 1023-EZ is typically processed within 2 to 4 weeks, with many applicants receiving a determination within 90 days.

  3. What causes delays in receiving 501(c)(3) status?

    Common causes include incomplete applications, incorrect fees, delayed responses to IRS requests, IRS staffing shortages, and technology issues.

  4. How can I check the status of my 501(c)(3) application?

    Use the IRS’s “Where’s My Application for Tax-Exempt Status?” online tool to track your application progress after submission.

  5. Do I need to be incorporated before applying for 501(c)(3) status?

    No, incorporation is not strictly required, but being incorporated can strengthen your application and is often preferred for legal protection and eligibility for grants.

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