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Pub. 557, Tax-Exempt Status for Your Organization 2005 Tax Year

Publication 557 - Introductory Material


Table of Contents

Form 1023, Application for Exemption Under Section 501(c)(3) of the Internal Revenue Code (Rev. October 2004), has been substantially revised. Changes to Form 1023 are not reflected in the text of this publication. However, the major changes to Form 1023 are briefly discussed on this cover page.

Note


The information requested on the revised Form 1023 has substantially increased, thereby minimizing the need for additional information from the filer during the approval process. Specific changes to the form include the following:
•Form 8718, User Fee for Exempt Organization Determination Letter Request, has been incorporated into Part X of Form 1023. Therefore, when filing the new Form 1023 you will not need to file Form 8718 to determine the correct user fee.
•The automatic 27-month retroactive exemption rule pursuant to Rev. Proc. 92-85, 1992-2 C.B. 490 has been incorporated into the application.
•You can no longer submit Form SS-4, Application for Employer Identification Number, with the application. You must have an Employer Identification Number (EIN) prior to filing Form 1023.
• Limited liability companies have been added as a type of organization eligible to apply for tax-exempt status under section 501(c)(3) of the Code.
•Questions about compensation and other financial arrangements with officers, directors, trustees, highly compensated employees, and highly compensated independent contractors aimed at determining whether benefits are appropriate have been added to Part V.
• Form 872-C, Consent Fixing Period of Limitation Upon Assessment of Tax Under Section 4940 of the Internal Revenue Code, has been obsoleted and the required information has been incorporated into Part X. Therefore, when filing the new Form 1023, you will not need to submit Form 872-C.
•A new Schedule E. Organizations Not Filing Form 1023 Within 27 Months of Formation was created to consolidate questions and financial data in one place that relates to whether an exemption can be made retroactive to the organization's date of formation.
Schedule H incorporates advance ruling procedures for private foundations requesting advance approval of individual grant procedures.


Caution. Organizations that have begun completing the prior revision (Rev. September 1998) may file it until April 30, 2005. Beginning May 1, 2005, only the Form 1023 (Rev. October 2004) will be accepted.




Item to note. Section 317 of the American Jobs Creation Act of 2004, provides that a farmer's cooperative is eligible for declaratory judgment relief with respect to the initial classification or continuing classification as an organization exempt under section 521(a) of the Code.

Introduction

This publication discusses the rules and procedures for organizations that seek recognition of exemption from federal income tax under section 501(a) of the Internal Revenue Code (the Code). It explains the procedures you must follow to obtain an appropriate ruling or determination letter recognizing your organization's exemption, as well as certain other information that applies generally to all exempt organizations. To qualify for exemption under the Code, your organization must be organized for one or more of the purposes specifically designated in the Code. Organizations that are exempt under section 501(a) of the Code include those organizations described in section 501(c). Section 501(c) organizations are covered in this publication.

Chapter 1 provides general information about the procedures for obtaining recognition of tax-exempt status.

Chapter 2 contains information about annual filing requirements and other matters that may affect your organization's tax-exempt status.

Chapter 3 contains detailed information on various matters affecting section 501(c)(3) organizations, including a section on the determination of private foundation status.

Chapter 4 includes separate sections for specific types of organizations described in section 501(c).

Organizations not discussed in this publication.   Certain organizations that may qualify for exemption are not discussed in this publication, although they are included in the Organization Reference Chart . These organizations (and the Code sections that apply to them) are as follows.
Corporations organized under Acts of Congress 501(c)(1)
Teachers' retirement fund associations 501(c)(11)
Mutual insurance companies 501(c)(15)
Corporations organized to finance crop operations 501(c)(16)
Employee funded pension trusts (created before June 25, 1959) 501(c)(18)
Withdrawal liability payment fund 501(c)(22)
Veterans' organizations (created before 1880) 501(c)(23)
Religious and apostolic associations 501(d)
Cooperative hospital service organizations 501(e)
Cooperative service organizations of operating educational organizations 501(f)

  Section 501(c)(24) organizations (section 4049 ERISA trusts) are neither discussed in the text nor listed in the Organization Reference Chart.

  Likewise, farmers' cooperative associations that qualify for exemption under section 521, qualified state tuition programs described in section 529, and pension, profit-sharing, and stock bonus plans described in section 401(a) are not discussed in this publication. If you think your organization falls within one of these categories, contact the Internal Revenue Service (IRS) for any additional information you need. For telephone assistance, call 1-877-829-5500.

  Check the Table of Contents at the beginning of this publication to determine whether your organization is described in this publication. If it is, read the chapter (or section) that applies to your type of organization for the specific information you must give when applying for recognition of exemption.

Organization Reference Chart.   This chart enables you to locate at a glance the section of the Code under which your organization might qualify for exemption. It also shows the required application form and, if your organization meets the exemption requirements, the annual return to be filed (if any), and whether or not a contribution to your organization will be deductible by a donor. It also describes each type of qualifying organization and the general nature of its activities.

  You may use this chart to determine the Code section that you think applies to your organization. Any correspondence with the IRS (in requesting forms or otherwise) will be expedited if you indicate in your correspondence the appropriate Code section.

Comments and suggestions.   We welcome your comments about this publication and your suggestions for future editions.

  You can write to us at the following address:


Internal Revenue Service
TEGE and Specialty Forms and
Publications Branch
SE:W:CAR:MP:T:T:SP
1111 Constitution Ave. NW, IR-6406
Washington, DC 20224

  We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

  You can email us at *[email protected]. (The asterisk must be included in the address.) Please put “Publications Comment” on the subject line. Although we cannot respond individually to each email, we do appreciate your feedback and will consider your comments as we revise our tax products.

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