Resource Information Tax-exempt status determination
There are different types of nonprofit tax-exempt organizations but the most widely known is the 501(c)(3) organization. After an organization submits the IRS Form 1023, Application for Tax-Exempt Status, and it is reviewed and approved by the IRS, ithe organization will receive the Tax-exempt Status Determination Letter of advance status for a five-year period. At the end of that period the IRS makes a final determination of tax-exempt status based on the reports and information filed by the nonprofit during the five-year period. It is important for the organization to have a current determination letter.
If the organization substantially changes its purpose or activities, it must notify the IRS of such changes. To notify the IRS, the organization should send a letter describing the changes to the
Exempt Organizations Determinations office. Changes to the name of the organizations must be approved by the state (usually Secretary of State Office) in which the organization is located; address changes should also be noted with the same state department and with the IRS Exempt Organizations Office. If the organization amends its articles of organization or its internal regulations (bylaws), you should send a conformed copy of these changes to the appropriate EO area manager.
There is now (in 2007) an updated IRS Form 1023 (exemption application) for 501(c)(3) organizations. There are new instructions and a list of FAQs (frequently asked questions). The IRS says the new form "will streamline the application process for the organizations and will help the IRS spot potentially abusive charities." There are also new questions on the form covering topics such as: compensation, conflicts of interest policies, discretionary bonuses and transactions with officers, employees and contractors. To visit the IRS website click here for more information.
