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Expedited IRS Processing of Applications for Tax-Exempt Status May Be Requested


3/14/14

The IRS has corrected a revenue procedure issued in early 2014 to make it clear that organizations may continue to request expedited processing of applications for tax-exempt status and other exempt organization (EO) determination letters. (See IRS Rev. Proc. 2014-19.)
 
Issue
 
The IRS Exempt Organizations Determinations office issues determination letters on initial qualification for tax-exempt status under section 501 of the Internal Revenue Code. In general, Form 1023 is filed by organizations applying for recognition of exempt status under section 501(c)(3), and Form 1024 is filed by most organizations applying under a paragraph of section 501(c) other than 501(c)(3). EO determination letters may also be requested on certain other issues including, for example, reclassification of foundation status, change in Type (or initial determination of Type) of a section 509(a)(3) supporting organization, and exemption from Form 990 filing requirements by filing Form 8940, Request for Miscellaneous Determination.
 
The IRS ordinarily processes exemption applications and other requests for EO determination letters in order of the date received. However, an organization that has a compelling need to have an application or other determination letter request processed ahead of the regular order may request expedited handling. Whether the request for expedited handling will be granted is within the IRS’s discretion. Circumstances generally warranting expedited processing of a Form 1023 application include the following:

  • A grant to the organization is pending and the failure to secure the grant may have an adverse impact on the organization’s ability to keep operating.
  • The purpose of the newly created organization is to provide disaster relief to victims of emergencies such as a flood or hurricane.
  • There have been undue delays in issuing a letter caused by problems within the IRS.
     

What Does CohnReznick Think?
In the right circumstances, a request for expedited handling may reduce the amount of time taken by the IRS in processing an application for exempt status or other EO determination letter request. In all cases, delays may be reduced by making sure the application or request is correctly completed and includes all required documents and schedules as well as any required IRS user fee.

Contact
 
For more information, please contact Phil Royalty, Director, at 916-930-5222 or Tom Lanning, Partner, at 646-834-4108.
 
To learn more about CohnReznick’s Not-for-Profit and Education Industry Practice, please visit our webpage.


Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.

This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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