How to Apply for 501(c)(3) Tax-Exempt Status
Key Takeaways
Most charitable nonprofits apply for federal tax-exempt recognition under Section 501(c)(3) of the Internal Revenue Code
Organizations usually incorporate and obtain an EIN before submitting a 501(c)(3) application
Nonprofits apply using IRS Form 1023 or Form 1023-EZ, depending on eligibility
IRS review timelines vary depending on the application type and the complexity of the organization
Applying for 501(c)(3) tax-exempt status allows nonprofit organizations to receive tax-deductible donations and operate as federally recognized charities. This guide explains the steps required to apply, including forming a nonprofit corporation, obtaining an EIN, preparing governance documents, and submitting IRS Form 1023 or Form 1023-EZ.
Introduction
After forming a nonprofit organization, many founders ask how to apply for 501(c)(3) tax-exempt status so their organization can receive tax-deductible donations and pursue charitable funding opportunities.
Most nonprofits first establish a nonprofit corporation at the state level and obtain an Employer Identification Number (EIN). If your organization has not yet completed that step, start with our guide, How to Form a Nonprofit Organization in 8 Steps.
Once the organization is established, the next step is submitting an application to the Internal Revenue Service for recognition as a tax-exempt charitable organization under section 501(c)(3) of the Internal Revenue Code.
What Is 501(c)(3) Tax-Exempt Status?
Section 501(c)(3) of the Internal Revenue Code allows qualifying nonprofit organizations to receive federal tax exemption when they operate for approved public purposes.
Common qualifying nonprofit purposes include:
- charitable
- educational
- religious
- scientific
- literary
- testing for public safety
Organizations recognized under this section are generally exempt from federal income tax on activities related to their mission.
Many founders pursue 501(c)(3) status because it allows nonprofits to:
- receive tax-deductible donations
- apply for grants and foundation funding
- build credibility with donors and community partners
The IRS provides detailed guidance on its Applying for Tax Exempt Status page.
Who Qualifies for 501(c)(3) Status?
To qualify for 501(c)(3) recognition, organizations must meet both organizational and operational requirements established by the IRS.
The organization must:
- operate exclusively for approved nonprofit purposes
- avoid distributing profits to founders or insiders
- maintain appropriate nonprofit governance practices
Some founders compare nonprofit classifications before applying. Our article, 501(c)(3) vs. 501(c)(4): What is the Difference for Nonprofits? explains how different tax-exempt classifications operate under IRS rules.
Step-by-Step: How to Apply for 501(c)(3) Tax-Exempt Status
The following steps outline how nonprofit organizations typically apply for 501(c)(3) tax-exempt status after forming a nonprofit corporation.
1. Form a Nonprofit Corporation
Most nonprofits begin by forming a nonprofit corporation in their state.
This usually involves filing Articles of Incorporation with the appropriate state agency. Some states require specific nonprofit language in the formation documents for organizations seeking federal tax-exempt recognition.
Organizations typically establish a board of directors and adopt governance policies during this stage.
2. Obtain an Employer Identification Number (EIN)
Before submitting a tax-exempt application, nonprofits must obtain an Employer Identification Number (EIN) from the IRS.
An EIN is required to:
- submit a 501(c)(3) application
- open a nonprofit bank account
- file federal tax forms
Our guide, Do Nonprofit Organizations Need an EIN? explains when nonprofit organizations must obtain an EIN and how the process works.
3. Prepare Nonprofit Governance Documents
The IRS requires organizations to demonstrate how the nonprofit will be governed.
Common nonprofit governance documents include:
- nonprofit corporate bylaws
- a conflict-of-interest policy
- board governance procedures
These documents help show that the organization has a clear structure and accountability practices. To understand how governance connects to ongoing reporting and legal responsibilities, read our Nonprofit Compliance Checklist.
4. Complete IRS Form 1023 or Form 1023-EZ
Most nonprofits apply for tax-exempt recognition using one of two IRS forms.
- standard application for recognition of exemption
- requires detailed information about the organization’s activities and finances
- typically used by larger or more complex nonprofits
- simplified online application
- available only to organizations that meet IRS eligibility requirements
- often used by smaller nonprofits with limited expected revenue
Organizations should review IRS eligibility rules carefully before deciding which form to submit.
501(c)(3) Application Checklist
Before submitting a 501(c)(3) tax-exempt application, most nonprofit corporations prepare the following materials:
- nonprofit Articles of Incorporation
- an Employer Identification Number (EIN)
- nonprofit bylaws
- a conflict-of-interest policy
- descriptions of nonprofit programs or activities
- financial information or projected budgets
- the completed Form 1023 or Form 1023-EZ
Preparing these materials ahead of time can help organizations complete the IRS application more efficiently. Additional guidance for nonprofit leaders is available in the National Council of Nonprofits guide to applying for 501(c)(3) tax-exempt status.
What Happens After Submitting the 501(c)(3) Status Application?
After a nonprofit submits its application, the IRS reviews the materials to determine whether the organization qualifies for tax-exempt recognition.
During this review process, the IRS may request additional information or clarification about the organization’s programs, governance structure, or finances.
Processing timelines vary depending on the application type and the complexity of the organization. Our article, How Long Does It Take to Get 501(c)(3) Status? explains typical review timelines.
What Happens After 501(c)(3) Tax-Exempt Status Approval?
Once the IRS approves an organization’s tax-exempt status, the nonprofit must continue meeting federal and state compliance requirements.
Common responsibilities include:
- filing annual IRS returns such as Form 990, 990-EZ, or 990-N
- maintaining governance records
- following nonprofit operational rules
Our guide, What Happens After You Receive 501(c)(3) Status, explains the next steps organizations often take after receiving tax-exempt approval.
Final Thoughts
Applying for 501(c)(3) tax-exempt status is an important step for nonprofit organizations that plan to pursue charitable funding and operate as federally recognized tax-exempt entities.
After forming a nonprofit corporation and obtaining an EIN, organizations can prepare their governance documents and submit an application to the Internal Revenue Service using Form 1023 or Form 1023-EZ.
If you are preparing to start a nonprofit organization, Beacon Nonprofit provides guidance on formation and required filings. You can also explore our guide, How to Form a Nonprofit Organization in 8 Steps, for a clear overview of how to establish your organization before applying for tax-exempt status.
Frequently Asked Questions
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