How Long Does It Take to Get 501(c)(3) Status?

The biggest question most nonprofit founders ask is, "When will I receive my determination letter?" The IRS determination letter is official recognition of federal income tax exemption under 501(c)(3). Having this letter allows your donors to claim their charitable gifts to your organization on their tax returns, bestows a number of benefits upon your organization, and adds credibility to your mission.

The amount of time it takes to become a 501(c)(3) tax-exempt organization depends on several factors: which form you file, the completeness of the information you provide to the IRS, and your organization's preparation.

Using Form 1023 to File

If you file Form 1023, the average IRS processing time is 3-6 months. Processing times of 9 or 12 months are not unheard of. The IRS closely scrutinizes these applications, as the applicants are typically large or complex organizations.

Using Form 1023-EZ to File

If you file Form 1023-EZ, the average IRS processing time is 2-4 weeks. Applicants essentially scrutinize themselves, thus removing the burden from the IRS.

Completeness and Accuracy of Information

The IRS has very specific requirements for completing and filing both Form 1023 and Form 1023-EZ. Be sure to download and to read the Instructions to Form 1023 or the Instructions to Form 1023-EZ before filing.

Failure to abide by all the requirements can result in a delay of several weeks or months. For example, your Articles of Incorporation must contain specific IRS provisions, including, but not limited to, a purpose clause and a dissolution clause. The IRS will contact the applicant to obtain more information, if necessary.

Be sure to provide complete and correct information the first time. While this means doing more research initially, you will avoid lengthy delays in receiving your determination letter.

Your Organization's Preparation

To avoid delays in obtaining 501(c) tax-exempt status fast, you simply should be prepared. Read the instructions, and make sure your organization has taken the prerequisite steps to filing. This includes incorporation, creating organizational records, defining your activities, and creating financial projections.

Once you've gathered all your materials, start on the 501(c)(3) application. You'll be able to work through the whole application, and increase your chances of preparing it correctly and completely, the first time.