Форма 1023 Інструкції
Інструкція по формуванню 1023, застосування для визнання викривлення під розділом 501(c)(3) внутрішнього коду доходів
Січень 2020
Пов'язані форми
- Форма 1023 - Заява про визнання викупу за секцією 501(c)(3) Кодексу внутрішнього доходів
Department of the Treasury
Internal Revenue Service
Instructions for Form 1023
(Rev. January 2020)
Application for Recognition of Exemption Under Section 501(c)(3) of the Internal
Revenue Code
Section references are to the Internal Revenue
Contents
Page
How To Get Forms and
Publications
Code unless otherwise noted.
Revenue Code Section
Contents
Page
Internet. You can access the IRS website
24 hours a day, 7 days a week, at IRS.gov
to do the following.
Appendix D: National Taxonomy of
Exempt Entities (NTEE)
Overview of Organizations
Download forms, instructions, and
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Described in Section 501(c)
Order IRS products online.
•
•
•
Note. Keep a copy of the completed
Research your tax questions online.
Search publications by topic or
Form 1023 for your permanent records.
keyword.
Use the online Internal Revenue Code,
•
Future Developments
regulations, or other official guidance.
For the latest information about
View Internal Revenue Bulletins (IRBs)
•
developments related to Form 1023 and
published since 1995.
Sign up at IRS.gov/Charities-Non-
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enacted after they were published, go to
Profits to receive local and national tax
news by email.
Reminder
Tax forms and publications. You can
download or print all of the forms and
publications you may need at IRS.gov/
FormsPubs. Otherwise, you can go to
IRS.gov/OrderForms to place an order
and have forms mailed to you. You should
receive your order within 10 business
days.
Don't include social security numbers
on publicly disclosed forms. Because
the IRS is required to disclose approved
exemption applications and information
returns, don't include social security
numbers on this form. Documents subject
to disclosure include supporting
information filed with the form and
correspondence with the IRS about the
filing.
Part III. Required Provisions in
Part V. Compensation and Other
Part VII. Foundation
Overview of Organizations
Described in Section
501(c)(3)
How To Request Recognition of
Tax-Exempt Status Under
Section 501(c)(3)
Section 501(c)(3) describes organizations
organized and operated exclusively for
religious, charitable, scientific, testing for
public safety, literary, or educational
purposes, or to foster national or
Phone Help
Part IX. Annual Filing
If you have questions and/or need help
completing Form 1023, please call
877-829-5500. This toll-free telephone
service is available Monday through
Friday.
Schedule B. Schools, Colleges,
Schedule C. Hospitals and
Email Subscription
Medical Research
The IRS provides a subscription-based
email service for tax professionals and
representatives of tax-exempt
Schedule D. Section 509(a)(3)
organizations. We send subscribers
periodic updates regarding exempt
organization tax law and regulations,
available services, and other information.
international amateur sports competition,
or for the prevention of cruelty to children
or animals. Unless an exception applies,
an organization must file Form 1023 or
Form 1023-EZ (if eligible) to obtain
Schedule F. Low-Income
Schedule G. Successors to Other
Schedule H. Organizations
recognition of exemption from federal
income tax under section 501(c)(3). You
can find information about eligibility to file
Providing Scholarships,
Fellowships, Educational
Loans, or Other Educational
Grants to Individuals and
Private Foundations
What's New
Organizations requesting recognition of
tax-exempt status under section 501(c)(3)
must complete and submit their Form
1023 (or Form 1023-EZ, if eligible)
applications electronically (including
paying the correct user fee) using
Organizations not required to
obtain recognition of exemption. The
following types of organizations may be
considered tax exempt under section
501(c)(3) without filing Form 1023 (or
Form 1023-EZ).
Requesting Advance
Approval of Individual Grant
Appendix A: Sample Conflict of
Appendix B: States With Statutory
Churches, including synagogues,
•
Provisions Satisfying the
Requirements of Internal
temples, and mosques.
Feb 03, 2020
Cat. No. 17132z
Integrated auxiliaries of churches and
attempting to influence legislation or if it
directly or indirectly participates or
contribution deductions and attracting
grants from private foundations. In order to
be classified as a private operating
foundation, an organization must meet
certain support tests. Search for “private
operating foundations” at IRS.gov for more
information.
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conventions or associations of churches.
Any organization that has gross
intervenes in any political campaign on
behalf of (or in opposition to) any
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receipts in each tax year of normally not
more than $5,000. For more information
on gross receipts exceptions, go to
candidate for elective public office. These
issues are described in more detail in the
instructions for Part IV, lines 5 and 6.
Even though these organizations aren't
required to seek recognition of exemption,
they may choose to file Form 1023 (or
Form 1023-EZ, if eligible) to receive a
determination letter stating they are
recognized as exempt under section
501(c)(3) status. The determination letter
will also state whether an organization
must file annual information returns or
notices and will specify whether
Key distinctions between public chari-
ties and private foundations.
Public Charities and Private
Foundations
Foundation classification is important
because different tax rules apply to the
operations of each entity. For more
information on the different rules, see
Every organization described in section
501(c)(3) is classified as a private
foundation unless it qualifies for one of
the public charity exceptions. For some
organizations, the primary distinction
between a public charity and a private
foundation is its sources of financial
support.
Foundation classification has
contributions to that organization are tax
deductible.
nothing to do with the name of the
TIP
organization. Many organizations
that aren't private foundations include the
word “foundation” in their names.
Public charities. The following section
501(c)(3) organizations are classified as
public charities.
Requirements for Tax-Exempt
Status Under Section 501(c)(3)
To qualify for exemption under section
501(c)(3), an organization must be
organized and operated exclusively for
one or more exempt purposes.
Organizations that are public charities
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based upon their activities (without regard
to their sources of support), such as
churches, schools, hospitals, medical
research organizations, and cooperative
hospital service organizations and
agricultural research organizations
(sections 509(a)(1) and 170(b)(1)(A)(i),
(ii), (iii), and (ix)).
State Registration Requirements
Tax exemption under section 501(c)(3) is
a matter of federal law. After receiving
federal tax exemption, an organization
may also be required to register with one
or more states where it holds assets or
where it will solicit contributions. The
organization may also need to seek
exemption from state taxes. The National
Association of State Charity Officials
(NASCO) maintains a website that
provides informational links to the various
states for these purposes. It can be
Organized. An organization must be
organized as a corporation, a limited
liability company (LLC), an
unincorporated association, or a trust.
Its organizing document (corporate
articles of incorporation, LLC articles of
organization, articles of association or
constitution of an unincorporated
association, or trust agreement or
declaration of trust) must limit the
organization's purpose(s) and
Organizations that normally receive
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substantial support from grants,
governmental units, and/or contributions
from the general public (sections 509(a)(1)
and 170(b)(1)(A)(iv) and (vi)).
Organizations that normally receive
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more than one-third of their support from
contributions, membership fees, and
gross receipts from activities related to
their exempt functions, and not more than
one-third of their support from gross
investment income and net unrelated
business income (section 509(a)(2)).
permanently dedicate its assets to exempt
purposes.
General Instructions
Social Security number. Don't enter
social security numbers on this form or
any attachments because the IRS is
required to disclose approved exemption
applications and information returns.
Documents subject to disclosure include
supporting information filed with the form
and correspondence with the IRS related
to the application.
Operated. An organization described in
section 501(c)(3) must be operated to
further one or more of the exempt
purposes stated in its organizing
Organizations that support other public
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document. Certain other activities are
prohibited or restricted, including, but not
limited to, the following activities. A
section 501(c)(3) organization must:
charities (supporting organizations)
(section 509(a)(3)).
Organizations that test for public safety
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(section 509(a)(4)).
Absolutely refrain from participating in
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Private foundations. Section 501(c)(3)
organizations that don’t fit into any of the
foundation classifications above are
private foundations. Private foundations
are further classified as nonoperating
private foundations or private operating
foundations (section 4942(j)(3)).
the political campaigns of candidates for
local, state, or federal office;
“You” and “us.” Throughout these
instructions and Form 1023, the terms
“you” and “your” refer to the organization
that is applying for tax-exempt status. The
terms “us” and “we” refer to the IRS.
Ensure its assets and earnings don’t
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unjustly enrich board members, officers,
key management employees, or other
insiders;
Definitions. Terms in bold type in Form
1023 are defined throughout these
instructions and in Appendix C.
Not further non-exempt purposes (such
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as purposes that benefit private interests)
more than insubstantially;
Nonoperating private foundations.
Nonoperating private foundations
generally accomplish their exempt
purpose by making grants and don’t
otherwise engage directly in charitable
activities.
Not operate for the primary purpose of
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Answers
conducting a trade or business that isn’t
related to its exempt purpose(s);
Form 1023 asks you to answer a series of
questions and provide information to
assist us in determining if you meet the
requirements for tax exemption under
section 501(c)(3). Answer questions
completely. If you believe you previously
answered the question, you may refer to
your previous answer.
Not engage in activities that are illegal
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or violate fundamental public policy; and
Limit its legislative activities.
Private operating foundations. A
private operating foundation actively
conducts exempt programs. Private
operating foundations are subject to more
favorable rules than other private
foundations in terms of charitable
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Legislative and political campaign in-
tervention. Section 501(c)(3) denies
exemption to an organization if a
substantial part of its activities is
Instructions for Form 1023
-2-
Your answers must provide
Eligibility Worksheet in the Instructions for
Form 1023-EZ to determine if you're
eligible to file Form 1023-EZ. You can visit
IRS.gov/Charities for more information on
application requirements.
User fee amounts are listed in Rev.
Proc. 2020-5, updated annually. For the
current Form 1023 user fee, go to Rev.
Proc. 2020-5, 2020-1 I.R.B. 241, at
sufficient detail about your past,
present, and planned activities to
!
CAUTION
demonstrate that you're described in
section 501(c)(3). We won't be able to
recognize you as tax exempt based on a
mission statement (such as providing
assistance to the poor) unless you also
describe the activities that further
Division. You can also call 877-829-5500.
Leaving a group exemption. A
subordinate organization under a group
exemption can use Form 1023 to leave the
group and obtain individual exemption. If
you're a subordinate organization and
wish to leave a group, you should notify
your parent organization of your intention
to leave the group ruling before filing Form
1023.
Group Exemption
Don't use Form 1023 to apply for a group
exemption. We may issue to a central
organization a group exemption that
recognizes on a group basis the
accomplish your mission. We need to
understand the specific activities you will
undertake to accomplish your section
501(c)(3) exempt purpose(s).
exemption of subordinate organizations
on whose behalf the central organization
has applied. See Pub. 557 for information
on how to apply for a group exemption.
Financial data. Financial data, whether
budgeted or actual, should be consistent
with other information presented in your
application.
For example, if you're requesting public
charity classification under one of the
public support tests, your financial data
should show contributions from the public
or receipts from providing exempt
services. Budgeted financial data should
be prepared based upon your current
plans. We recognize that your actual
financial results may vary from the
budgeted amounts.
Application for Reinstatement
of Exempt Status and
What To File
Retroactive Reinstatement
All applicants, unless otherwise noted,
must complete Parts I through X of Form
1023, plus any required schedules and
attachments.
If your tax-exempt status was
automatically revoked for failure to file a
return or notice 3 consecutive years, you
must apply to have your tax-exempt status
reinstated. You must complete and submit
Form 1023, including Schedule E (or, if
eligible, Form 1023-EZ), and pay the
appropriate user fee.
The following organizations must
complete additional schedules to Form
1023.
If your application is approved, your
date of reinstatement will generally be the
filing date of the application, unless you
qualify for reinstatement of exemption
retroactive to your date of automatic
revocation. See Rev. Proc. 2014-11,
2014-03 I.R.B. 411 for details, including
additional requirements for retroactive
reinstatement.
THEN you
must
Past, present, and planned activities.
Many items on Form 1023 are written in
the present tense; however, base your
answers on your past, present, and
planned activities.
complete
Schedule
IF you’re
A church . . . . . . . . . . .
A
A school, college, or
Language and currency requirements.
Prepare Form 1023 and attachments in
English. Provide an English translation if
the articles of organization, bylaws, or any
other attachments are in any other
language.
Report financial information in U.S.
dollars (specify the conversion rate used).
Combine amounts from within and outside
the United States and report the total for
each on the financial statements.
university . . . . . . . . . .
B
C
A hospital or medical
research organization . .
Requesting Expedited Review
We generally review applications for
exemption in the order we receive them.
We only expedite processing of an
application where a written request
presents a compelling reason for
processing the application ahead of
others. This does not mean your
application will be immediately approved
or denied. Circumstances generally
warranting expedited processing include
the following.
A section 509(a)(3)
supporting
organization . . . . . . . .
D
Filing this application more
than 27 months from your
date of formation and/or
applying for reinstatement
of tax-exempt status after
being automatically
Purpose of Form
Completed Form 1023 required to ap-
ply for recognition of section 501(c)(3)
exemption. Use Form 1023, including
the appropriate user fee, to apply for
recognition of exemption from federal
income tax under section 501(c)(3). If
approved, we will issue a determination
letter that describes your tax-exempt
status and your qualification to receive
tax-deductible charitable contributions.
The determination letter will also show
your specific foundation classification
(described earlier) and annual filing
requirements.
revoked . . . . . . . . . . .
E
F
A grant to the applicant is pending and
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A low-income housing
organization . . . . . . . .
the failure to secure the grant may have an
adverse impact on the organization's
ability to continue operations.
A successor to other
organizations . . . . . . . .
G
The purpose of the newly created
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organization is to provide disaster relief to
victims of emergencies such as floods and
hurricanes.
An organization providing
scholarships, fellowships,
educational loans, or other
educational grants to
An IRS error has caused delays in
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review of the application.
individuals and/or a private
foundation requesting
User Fee
approval of individual grant
procedures . . . . . . . . .
The law requires payment of a user fee
with each application. You must pay this
1023.
H
Form 1023-EZ. You may be
eligible to file Form 1023-EZ,
Streamlined Application for
TIP
Recognition of Exemption Under Section
501(c)(3) of the Internal Revenue Code,
which is a streamlined version of Form
1023. Complete the Form 1023-EZ
Payments can be made directly from
your bank account or by credit or debit
card. You won't be able to submit Form
1023 without paying the correct fee.
Attachments To Form 1023
A complete application will include one or
more documents in addition to Form 1023.
Instructions for Form 1023
-3-
Pay.gov can accommodate only one
uploaded file. Before submitting Form
1023, consolidate your attachments into a
single PDF file. Combine your
Pub. 526, Charitable Contributions.
Pub. 557, Tax-Exempt Status for Your
•
•
Additional information needed. If we
can’t make a determination without more
information, we’ll write or call you.
Examples of the types of questions we
may ask you are available at IRS.gov/
Organization.
Pub. 598, Tax on Unrelated Business
•
attachments in the following order.
Income of Exempt Organizations.
Organizing document (required).
Pub. 1771, Charitable Contributions
•
•
Amendments to your organizing
Substantiation and Disclosure
Requirements.
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Sample-Questions. If the additional
information you provide shows that you
meet the requirements for exemption, we'll
send you a determination letter stating that
you're exempt under section 501(c)(3). If
we determine that you don't qualify for
exemption, we will send you a letter that
explains our position and your appeal
rights.
document in chronological order (required
if applicable).
Pub. 1828, Tax Guide for Churches and
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Bylaws or other rules of operation and
Religious Organizations.
Pub. 3079, Tax-Exempt Organizations
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amendments (if adopted).
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Form 2848, Power of Attorney and
and Gaming.
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Declaration of Representative (if
applicable).
Pub. 3833, Disaster Relief: Providing
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Assistance Through Charitable
Organizations.
Form 8821, Tax Information
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Authorization (if applicable).
Pub. 4220, Applying for 501(c)(3)
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Supplemental responses (if your
Tax-Exempt Status.
Pub. 4221-PC, Compliance Guide for
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Annual Return or Notice While
Your Application Is Pending
response won't fit in the provided text
field) and any additional information you
want to provide to support your request
(optional).
•
501(c)(3) Public Charities.
Pub. 4221-PF, Compliance Guide for
•
Unless you qualify for an exception from
the requirement to file an annual return or
notice, your filing obligations begin as
soon as you were formed. If you have an
information return or tax return due while
your Form 1023 is pending, complete the
return, mark the “Application Pending” box
in the heading, Item B, and submit the
return as indicated in those instructions.
501(c)(3) Private Foundations.
Expedite request (optional).
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Signature Requirements
Put your name and EIN on each page
An officer, director, trustee, or other official
who is authorized to sign for the
of your supplemental response and
identify the part and line number to which
the information relates.
organization must digitally sign Form 1023
at the end of Part X. The signature must
be accompanied by the title or authority of
the signer and the date.
When To File
If you’re eligible to file a Form 990-N,
e-Postcard, call 877-829-5500 and
request to be set up to allow filing of Form
990-N (note, it takes the IRS up to 6
weeks to update its records before you
can file your Form 990-N).
You can find information on return filing
requirements and exceptions in Pubs. 557
and 598 and in the instructions to the
annual returns listed in Figure 1.
Generally, if you file Form 1023 within 27
months after the end of the month in which
you were legally formed, and we approve
your application, the effective date of your
exempt status will be your legal date of
formation.
Authorized Representative
Form 2848. Upload a completed Form
2848 if you want to authorize a
representative to represent you regarding
your application. An individual authorized
by Form 2848 may not sign the application
unless that person is also an officer,
director, trustee, or other official who is
authorized to sign the application.
If you don’t file Form 1023 within 27
months, the effective date of your exempt
status will be the date you filed Form
1023. For exceptions and special rules,
see Part VIII. Effective Date and
Schedule E.
You may also be required to file
A Centralized Authorization File
other returns, such as
TIP
(CAF) number isn’t required to be
!
employment tax returns or benefit
CAUTION
How to File
listed on Form 2848.
plan returns, which aren't discussed here.
As of January 31, 2020, the IRS requires
that Form 1023 applications for
Form 8821. Upload a completed Form
8821 if you want to authorize us to discuss
your application with the person you have
appointed on that form.
Form 8821 doesn’t authorize your
appointee to advocate your position with
respect to the federal tax laws; to execute
waivers, consents, or closing agreements;
or to otherwise represent you before the
IRS. If you want to authorize an individual
to represent you, use Form 2848.
If a Form 990-series return is due
recognition of exemption be submitted
will provide a 90-day grace period during
which it will continue to accept paper
versions of Form 1023. To submit Form
1023, you must:
while your application is pending,
!
CAUTION
complete and submit the return
according to Form 990-series form's
instructions.
Public Inspection
1. Register for an account on
Pay.gov.
Information available for public in-
spection. If we approve exempt status
under section 501(c)(3), the following
information that will be open for public
inspection includes the following.
2. Enter "1023" in the search box and
select Form 1023.
After You Submit Form 1023
3. Complete the form.
Unless we approve a request for
expedited processing, we will assign and
work your application in the order we
received it.
Your complete Form 1023 and any
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Filing Assistance
supporting documents.
For help in completing this form or general
questions relating to an exempt
All correspondence between you and
•
the IRS concerning Form 1023, including
Form 2848.
organization, you may access information
No additional information needed. If
our review shows that you meet the
requirements for tax-exempt status under
section 501(c)(3), we’ll send you a
Your determination letter.
•
Annual information returns (Forms 990,
•
You may find the following publications
available on IRS.gov helpful.
990-EZ, or 990-PF).
Schedule A, included with Forms 990 or
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determination letter stating that you’re
exempt under section 501(c)(3) and
identifying your foundation classification.
Pub. 517, Social Security and Other
990-EZ.
•
Information for Members of the Clergy and
Religious Workers.
Schedule B, included with Forms 990 or
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990-EZ, excluding the names and
Instructions for Form 1023
-4-
addresses of contributors and other
Figure 1. 990 Series Forms Filed by Exempt Organizations
identifying information about contributors.
Schedule B, included with Form
•
Type of Annual Return
Who Should File
990-PF, including names, addresses, and
other identifying information about
contributors.
Exempt Organization Business Income
•
Form 990, Return of Organization
Exempt from Income Tax
Section 501(c)(3) public charities
Tax Return (Form 990-T).
Information not available for public
inspection. The following items won’t be
open for public inspection.
Form 990-EZ, Short Form Return of
Organization Exempt from Income Tax
Section 501(c)(3) public charities whose
gross receipts during the year were less
than $200,000 and total assets at the
end of the year were less than $500,000
Any information relating to a trade
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secret, patent, style of work, or apparatus
that, if released, would adversely affect
you (we must approve withholding this
information).
Form 990-PF, Return of Private
Foundation
Private foundations, including private
operating foundations, regardless of
financial status
Any other information that would
•
adversely affect national defense (we
must approve withholding this
information).
Form 990-T, Exempt Organization
Business Income Tax Return
Public charities and private foundations
that have gross unrelated business
income of $1,000 or more
User fee payment information.
•
Contributors' names and addresses
•
Form 990-N Electronic Notice
(e-Postcard) for Tax-Exempt
Organizations Not Required to File Form
990 or Form 990-EZ
Most small public charities with gross
receipts of $50,000 or less can file a
Form 990-N, if they choose not to file a
Form 990 or Form 990–EZ instead.
and identifying information about
contributors included with Forms 990 or
990-EZ and the Schedule B filed with
these forms.
When applying for tax-exempt status,
you must clearly identify any information
that isn’t open for public inspection by
marking it as “NOT SUBJECT TO PUBLIC
INSPECTION” and include an explanation
of why you’re asking for the information to
be withheld. We will decide whether to
withhold the identified information from
public inspection.
posted. To date, the IRS hasn’t approved
any third-party websites for posting.
U.S. sources are normally $50,000 or less
and it hasn’t conducted significant activity
in the United States. See the Instructions
for Form 990 and Form 990-EZ, and the
Instructions for Form 990-PF for further
information. A foreign organization that is
subject to unrelated business income tax
must file Form 990-T.
See Pub. 557 for additional information
on public inspection requirements.
Foreign Organizations
Foreign organizations are those that were
created in countries other than the United
States, its territories, or its possessions.
Foreign organizations may apply for
tax-exempt status on income earned in the
United States in the same way that
domestic organizations apply for exempt
status. See Language and currency
requirements, above.
Making documents available for public
inspection. Both you and the IRS must
make the information that is subject to
disclosure available for public inspection.
The public may request a copy of the
information available for public inspection
from us by submitting Form 4506-A. The
public may also request inspection of the
information or a copy of the information
directly from you.
You may post the documents required
to be available for public inspection on
your own website. Information returns and
your exemption application materials must
be posted exactly as filed with the IRS.
You may only delete the information that
isn’t open for public inspection.
If you post the documents on your
website, you can give any person
requesting copies the website where the
documents may be found, but you don’t
need to provide copies of the information.
However, even if these documents are
posted on your website, you must still
allow public inspection without charge at
your main office during regular business
hours.
Documents aren’t considered available
for public inspection on a website if the
otherwise disclosable information is edited
or subject to editing by a third party when
Canadian Organizations
Canadian organizations that have
received a Notification of Registration from
the Canada Revenue Agency (formerly
Canada Customs and Revenue Agency),
and whose registrations haven’t been
revoked (“Canadian registered charities”),
are automatically recognized in the U.S.
as section 501(c)(3) organizations and
aren’t required to file Form 1023.
If you’re a foreign organization applying
for exempt status, you must complete all
required parts of Form 1023. However,
see the special rules below for certain
Canadian organizations.
Canadian registered charities are also
presumed to be private foundations. If
you’re a Canadian registered charity and
want to be listed as a section 501(c)(3)
organization on IRS.gov or request
classification as a public charity rather
than a private foundation, mail or fax the
information below to:
Contributions by U.S. residents to
foreign organizations generally
aren’t deductible. Tax treaties
TIP
between the U.S. and certain foreign
countries provide specific limited
exceptions.
Internal Revenue Service
Exempt Organization Determinations
Room 6403
Annual returns for foreign organiza-
tions. A foreign organization that obtains
exemption as a public charity must file an
information return annually (Form 990 or
Form 990-EZ). A foreign organization that
is a private foundation must file Form
990-PF annually. However, a foreign
organization, other than a private
P.O. Box 2508
Cincinnati, OH 45201
(855) 204-6184
No user fee is required.
A letter stating the organization’s
•
foundation or a section 509(a)(3)
request (listing as a section 501(c)(3)
organization on IRS.gov or classification
as a public charity).
supporting organization, may file Form
990-N (e-Postcard) instead of Form 990 or
Form 990-EZ when its gross receipts from
Instructions for Form 1023
-5-
The legal name and complete mailing
For a foreign address, enter your
province or state and foreign postal code
where indicated.
or trustees, check the box provided to add
more officer, director, and/or trustee
information.
The person who is signing Form 1023
must be listed within the first five entries of
line 9.
•
address of the organization.
The organization’s EIN.
•
•
•
•
•
The month its tax year ends.
Line 2. Employer Identification Num-
ber (EIN). You must have your own EIN.
Enter the 9-digit EIN the IRS assigned to
you. If you don’t have an EIN, you must
apply for one before submitting your
application. You can find out how to apply
for an EIN by visiting IRS.gov and search
for “apply for an EIN.” You may apply for
an EIN online or by fax or mail.
The organization’s date of formation.
A contact name and telephone number.
The public charity status it is requesting
(if applicable) and information
demonstrating how it meets the
requirements of that status (see Part VII,
line 1, and related questions and
schedules).
Part II. Organizational
Structure
You must be a corporation, limited liability
company, unincorporated association, or
trust to be tax exempt under section
501(c)(3). Sole proprietorships,
This penalty of perjury statement:
•
International applicants may call
I declare under the penalties of perjury
that I have examined this request,
267-941-1099 (toll call).
partnerships, or loosely affiliated groups of
individuals aren’t eligible.
Don’t apply for an EIN more than
including the accompanying documents,
and to the best of my knowledge and
belief, the request contains all the relevant
facts relating to the request, and such
facts are true, correct, and complete.
once. If you’re unsure of your EIN
TIP
Line 1. Type of organization and copy
of organizing document. Select your
type of organization, and before
submitting the form, upload a copy of your
organizing document (including any
amendments) as part of the required
attachment.
or whether you have one, call
877-829-5500 for assistance.
Don’t use the EIN of a related or
The signature of an officer, director,
•
other organization.
trustee, or other authorized person.
A copy of the organization’s Notification
!
CAUTION
•
of Registration.
Line 3. Month tax year ends. Select the
month your tax year (annual accounting
period) ends. Your tax year (annual
accounting period) is the 12-month period
on which your annual financial records are
based.
Form 8833, Treaty-Based Return
Corporation. A corporation is an entity
organized under a federal or state statute,
or a statue of federally recognized Indian
tribal or Alaskan native government.
•
Position Disclosure Under Section 6114 or
7701(b).
Copy of organizing document
(articles of incorporation and any
amendments). A corporation’s
Organizations Created in U.S.
Territories and Possessions
Check your bylaws or other rules
of operation for consistency with
the tax year (annual accounting
TIP
Organizations created in possessions and
territories of the U.S. are generally treated
as domestic organizations. If you were
created in a U.S. possession or territory,
you must complete all required parts of
Form 1023 to apply for exempt status
under section 501(c)(3).
organizing document is its “articles of
incorporation. ” If you formed under state
statute, your articles of incorporation (and
any amendments) must show
period) you enter here.
Line 4. Person to contact. Enter the
name and title of the person you want us
to contact if we need more information.
The person to contact may be an officer,
director, trustee, or other individual who is
permitted to speak with us according to
your bylaws or other rules of operation.
Your person to contact may also be an
authorized representative, such as an
attorney, certified public accountant, or
enrolled agent, for whom you’re submitting
a completed Form 2848 with the Form
1023.
certification of filing. This means your
articles show evidence that on a specific
date they were filed with and approved by
an appropriate state authority. The
document must be an exact copy of what
is on file with your state.
Charitable contributions to you are
deductible by donors if you qualify for
exempt status under section 501(c)(3).
If you don’t have a copy of your articles
of incorporation showing evidence of
having been filed and approved by an
appropriate state official, you may submit
a substitute copy of your articles of
incorporation. This substitute copy may be
handwritten, typed, printed, or otherwise
reproduced. It must be accompanied by a
declaration, signed by an officer
Annual filing requirements for an
organization created in a U.S. territory or
possession are similar to those outlined
above for foreign organizations (see Rev.
Proc. 2011-15 at IRS.gov/pub/irs-irbs/
Line 5. Provide a daytime telephone
number for the contact listed on line 4.
Specific Instructions
authorized to sign for you, that it is a
complete and correct copy of the articles
of incorporation and that it contains all the
powers, principles, purposes, functions,
and other provisions by which you
Line 6. You may provide a fax number for
the contact listed on line 4.
Part I. Identification of
Line 7. Pay.gov will populate this field
with the current user fee for filing Form
1023.
Applicant
Line 1a. Enter your complete name
exactly as it appears in your organizing
document, including amendments.
currently govern yourself.
Line 8. Enter your complete website
address if you have one. Also, list any
websites maintained on your behalf. The
information on your website should be
consistent with the information in your
Form 1023.
Limited liability company. A limited
liability company (LLC) that files its own
exemption application is treated as a
corporation rather than a partnership.
Line 1b. If you have an “in care of” name,
enter it here; otherwise, leave this space
blank.
Copy of organizing document
(articles of organization and operating
agreement (if adopted) and any
amendments). Instead of articles of
organization, an LLC’s organizing
document is its state-approved “articles
of organization.” If it has adopted an
“operating agreement,” then this
Line 1c-i. Enter your complete address
where all correspondence will be sent. If
mail isn’t delivered to your street address
and you have a P.O. box, list your P.O.
box information instead of your street
address.
Line 9. Officers, directors, and trust-
ees. Enter the full names, titles, and
mailing addresses of your officers,
directors, and/or trustees. You may use
the organization’s address for mailing. If
you have more than five officers, directors,
Instructions for Form 1023
-6-
document is also part of its organizing
document. If you formed under state
statute, your articles of organization (and
any amendments) must show certificate
of filing. This means your articles show
evidence that on a specific date they were
filed with and approved by an appropriate
state authority. The document must be an
exact copy of what is on file with your
state. If you don’t have a copy of your
articles of organization showing evidence
of having been filed and approved by an
appropriate state official, you may submit
a substitute copy of your articles of
accurate copy of the signed and dated
original. Your declaration should clearly
indicate the original date that it was
signed. For trusts created by a will, include
a copy of the death certificate or a
statement indicating the date of death,
and a copy of the relevant portions of the
will.
Took over 25% or more of the fair
•
market value of the net assets of another
organization, or
Were established upon the conversion
•
of an organization from for-profit to
non-profit status.
If you’re a successor organization,
complete Schedule G, Successors to
Other Organizations.
If your trust agreement continues
to provide for distributions for
!
Your predecessor organization
CAUTION
non-charitable interests, you won’t
may have been either a
TIP
qualify for tax-exempt status.
tax-exempt or non-exempt
organization.
Line 2. Formation date. The date you
enter should be consistent with your
organizing document.
organization. This substitute copy may be
handwritten, typed, printed, or otherwise
reproduced. It must be accompanied by a
declaration, signed by an officer
Part III. Required
If you’re a corporation, enter the date
•
Provisions in Your
Organizing Document
that your articles of incorporation were
filed and approved by the appropriate
authority.
authorized to sign for you, that it is a
complete and correct copy of the articles
of organization and that it contains all the
powers, principles, purposes, functions,
and other provisions by which you
Line 1. Purpose clause. Your
If you’re an LLC, enter the date that the
•
organizing document must limit your
purposes to those described in section
501(c)(3). Those purposes are charitable,
religious, educational, scientific, literary,
testing for public safety, fostering national
or international amateur sports
appropriate authority filed your articles of
organization or other organizing
document.
currently govern yourself.
If you’re an unincorporated association,
•
If you are an LLC and want to be
enter the date that your organizing
document was adopted by the signatures
of at least two individuals.
treated as a disregarded entity by
a tax-exempt member, don’t file
TIP
competition, and preventing cruelty to
children or animals.
an exemption application.
If you’re a trust (other than a trust
•
The generally accepted legal definition
of “charitable” includes relief of the poor,
the distressed, or the underprivileged;
advancement of religion; advancement of
education or science; erecting or
Unincorporated association. An
unincorporated association formed
under state law must have at least two
members who have signed a written
document that creates an entity with a
specifically defined purpose.
formed by a will), enter the date your trust
was funded. If your trust agreement
provided for any non-charitable interests,
enter the date that non-charitable interests
expired. If you were formed by a will, enter
the date of death or the date any
maintaining public buildings, monuments,
or works; lessening the burdens of
non-charitable interests expired.
Copy of organizing document
(articles of association or constitution
and any amendments). Your organizing
document must include the name of the
organization, its purpose, the date the
document was adopted, and the
government; lessening neighborhood
tensions; eliminating prejudice and
discrimination; defending human and civil
rights secured by law; and combating
community deterioration and juvenile
delinquency. Therefore, the phrase “relief
of the poor” in your organizing document
properly limits your purposes.
Line 3. State of formation. Enter the
jurisdiction (for instance, the state or the
federally recognized tribal government)
under the laws of which you were
incorporated or otherwise formed. This
may not be the place in which you’re
physically located. For example, if you’re
physically located in New York, but
incorporated under Massachusetts law,
enter Massachusetts.
signatures of at least two individuals. If
your copy doesn’t contain the proper
signatures and date of adoption, you may
submit a written declaration that states
your copy is a complete and accurate
copy of the signed and dated original.
Your declaration should clearly indicate
the original date of adoption.
Limiting your purposes by reference to
section 501(c)(3) generally will be
sufficient to meet the organizational test
under section 501(c)(3). Your organizing
document may also sufficiently limit your
purpose by reference to a specific
charitable purpose such as “relief of the
elderly within the meaning of section
501(c)(3).”
However, purposes listed in your
organizing document broader than those
listed in section 501(c)(3) may cause you
to fail the organizational test. In that case,
you will need to amend your organizing
document before applying. A reference to
section 501(c)(3) won’t ensure that your
purposes are limited to those described in
section 501(c)(3) if other provisions
describing your purposes include one or
more non-exempt purposes. The following
is an example of an acceptable purpose
clause.
For purposes of completing this
application, you’re formed under the laws
of a foreign country if you’re not formed
under the laws of the United States, its
territories and possessions, federally
recognized Indian tribal or Alaska native
governments, or the District of Columbia.
Bylaws may be considered an
organizing document only if they
include the required elements
TIP
listed above.
Line 4. “Bylaws” are generally the
internal rules and regulations of an
organization. If you have bylaws, upload a
current copy (including any amendments).
Bylaws don’t need to be signed unless
they are your organizing document as
described in the instructions for line 1
above.
Trust. A trust may be formed by a trust
agreement or declaration of trust. A trust
may also be formed through a will.
Generally, a trust must be funded with
property, such as money, real estate, or
personal property.
Copy of organizing document (trust
agreement/declaration of trust or will
and any amendments). Your trust
agreement (and any amendments) must
be signed by at least one trustee. If your
trust agreement copy isn’t signed, you
may submit a written declaration that
states your copy is a complete and
Line 5. Successor organization. You
are a “successor” if you:
Took over activities previously
•
conducted by another organization,
Instructions for Form 1023
-7-
Where is the activity conducted?
•
•
The organization is organized
exclusively for charitable,
religious, educational, and
scientific purposes under
section 501(c)(3) of the Internal
Revenue Code, or
Upon the dissolution of this
organization, assets shall be
distributed for one or more
exempt purposes within the
meaning of section 501(c)(3) of
the Internal Revenue Code, or
corresponding section of any
future federal tax code, or shall
be distributed to the federal
government, or to a state or
local government, for a public
purpose.
What percentage of your total time is
allocated to the activity? (Combined time
percentages should add up to 100%.)
How is the activity funded (for example,
•
donations, fees, etc.) and what
percentage of your overall expenses is
allocable to this activity?
corresponding sections of any
future federal tax code.
How does the activity further your
•
exempt purposes?
Line 2. National Taxonomy of Exempt
Entities (NTEE) code. An NTEE code is
a three-character series of letters and
numbers that generally describes a type of
organization. Enter the code that best
describes your organization from the list of
NTEE codes, located in Appendix D. For
more information and more detailed
See Pub. 557 for further information
and examples of how to limit your
purposes.
Line 2. Dissolution clause. Your
organizing document must provide for
the permanent dedication of your assets
to a section 501(c)(3) purpose. This
means that if you dissolve your
See Pub. 557 for further information
and examples of acceptable language for
dedication of assets in your organizing
document.
definitions of these codes developed by
the National Center for Charitable
organization in the future, your assets
must be distributed for an exempt purpose Part IV. Your Activities
Statistics (NCCS), visit the Urban Institute
described in section 501(c)(3), or to the
Reminder
federal government, or to a state or local
government, for a public purpose. In
NTEE codes are also used for
Answer all questions in this part as they
purposes other than identification
of organizations described in
TIP
certain states, you may rely on state law to pertain to your past, present, and future
establish the permanent dedication of
assets for exempt purposes. This is based
on Rev. Proc. 82-2, 1982-1 C.B. 367. For
additional information, search “Operation
of state law” at IRS.gov.
activities.
section 501(c)(3). Therefore, all codes in
the list don't necessarily correspond to a
section 501(c)(3) purpose.
Line 1. Describe completely and in detail
your past, present, and planned activities.
Don’t refer to or repeat the purposes in
your organizing document or speculate
about potential future programs. Your
narrative description of activities should be
thorough and accurate because we
determine whether you qualify for section
501(c)(3) exempt status based on the
information in your application. You should
describe either actual or planned
Line 3. If programs are limited to specific
individuals, describe how you select or
identify those individuals. If programs are
available only for members, describe
membership criteria, any membership
dues, any different membership levels,
and the benefit each membership level
receives.
Foreign organizations may be able to
rely upon the applicable laws of their
jurisdiction in a similar manner. If relying
on a foreign law, you must provide a copy
of the applicable law with an English
translation.
Naming a specific organization to
receive your assets upon dissolution will
be acceptable only if your organizing
document requires that the specific
organization to be exempt under section
501(c)(3) at the time your dissolution takes
place and provides for a qualified
alternative recipient if the named
organization isn’t exempt under section
501(c)(3) at that time.
If your organizing document states that
your assets would be distributed to
members or private individuals or for any
purpose other than those provided in
section 501(c)(3), you must amend your
organizing document to remove such
statements.
activities. For example, if you plan to
further educational purposes by operating
an afterschool homework club, you would
describe that activity rather than cite that
you will further educational purposes. If
you were also contemplating offering
scholarships in the future, but currently
have no plans to do so, then the
Line 4. Describe any business or family
relationship between individuals who
receive goods, services, or funds through
your programs and any officers, directors,
trustees, or highest compensated
employees or independent contractors.
For purposes of this form, “highest
compensated” employees or independent
contractors are persons to whom you pay
over $100,000 of compensation,
including compensation from related
organizations.
scholarship activity would be speculative,
and you should not describe it.
Some organizations (such as credit
counseling organizations (see Part IV,
line 8), childcare organizations (see Part
IV, line 12), agricultural research
Line 5. You participate in a political
campaign if you promote or oppose the
candidacy of an individual for public office.
Candidate debates and nonpartisan voter
education and registration may be
permitted. See Rev. Rul. 2007-41,
2007-25 I.R.B. 1421 at IRS.gov/irb/
2007-25_I.R.B. 1421 and Pub. 1828 for
more information and examples.
organizations (see Part VII, line 1), or
cooperative hospital service organizations
(see Schedule C)) must meet specific
operational requirements to qualify for
exemption under section 501(c)(3). If
you’re such an organization, be certain to
include an explanation in your activity
description of how activities you conduct
(or don’t conduct, if the specific
The following is an example of an
acceptable dissolution clause.
Organizations described in
operational requirement limits permissible
activities) satisfy those specific
section 501(c)(3) are prohibited
!
CAUTION
from supporting or opposing
operational requirements.
candidates for public office in any political
campaign. If you answer “Yes,” you aren’t
qualified for tax exemption under section
501(c)(3) and should reconsider whether
the filing of application Form 1023 is
For each past, present, or planned
activity, include information that answers
the following questions.
What is the activity?
•
Who conducts the activity?
•
appropriate for you. See Pub 557 for a
Instructions for Form 1023
-8-
description of other code sections under
which you may qualify.
Churches and private foundations
aren’t eligible to make this section
501(h) election.
being associated with terrorism on
OFAC’s Specially Designed Nationals and
Blocked Persons List (OFAC SDN List).
Information about OFAC sanction
!
CAUTION
Line 6. You are attempting to influence
legislation if you directly contact or urge
the public to contact members of a
legislative body for the purpose of
proposing, supporting, or opposing
legislation. You are also attempting to
influence legislation if you advocate the
adoption or rejection of legislation. If you
answer “Yes,” your explanation should
include the percentage of your total time
and total funds spent on such legislative
activities.
Line 7. Intellectual property includes
programs and the OFAC SDN List are
the following;
Patents (for inventions);
•
Line 10. A “foreign country” is a
country other than the U.S., its territories
and possessions, and the District of
Columbia.
Copyrights (for literary and artistic
•
works such as novels, poems, plays, films,
musical works, drawings, paintings,
photographs, sculptures, architectural
designs, performances, recordings, film,
and radio or television programs);
Line 10a–c. See instructions for lines 9g–
i.
Trade names, trademarks, and service
•
Line 11. You are a sponsoring
marks (for symbols, names, images, and
designs); and
organization of a donor-advised fund if
you establish separate accounts that you
own or control for a donor whereby the
donor or donor-advisor may make
recommendations about the investments
of or distributions from the account. See
Pub. 557 for more information on the
definitions of sponsoring organizations
and donor-advised funds.
Organizations described in section
501(c)(3) are prohibited from engaging in
a substantial amount of legislative
Formulas, know-how, and trade
•
secrets.
activities. Whether you’re engaged in
substantial legislative activities depends
on all of the facts and circumstances.
Line 8. These activities involve the
education of the consumer on budgeting,
personal finance, financial literacy,
mortgage foreclosure assistance, or other
consumer credit areas. These activities
may also involve assisting the consumer
in consolidating debt and negotiating
between debtors and creditors to lower
interest rates and waive late and over-limit
fees. If you answer “Yes,” you may be
subject to the requirements of section
501(q). Search “501(q)” on IRS.gov for
information on these requirements and
whether they apply to you.
For this purpose, “legislation” includes
action by Congress, a state legislature, a
local council, or a similar governing body,
with respect to acts, bills, resolutions or
similar items (such as legislative
You can't sponsor a
donor-advised fund if you're a
!
CAUTION
private foundation.
confirmation of appointive offices).
Legislation also includes action by the
public in a referendum, ballot initiative,
constitutional amendment, or similar
procedure. Legislation generally doesn’t
include actions by executive, judicial, or
administrative bodies.
Organizations may involve themselves
in issues of public policy without being
engaged in legislative activity. For
Line 12. A “school” is an educational
organization whose primary function is the
presentation of formal instruction and
which normally maintains a regular faculty
and curriculum and that normally has a
regularly enrolled body of pupils or
students in attendance at the place where
its educational activities are regularly
carried on. A school may include the
following.
Line 9. A “relationship” between you
and the recipient organization includes the
following situations.
You control the recipient organization,
•
example, organizations may conduct
educational meetings, prepare and
distribute educational materials, or
otherwise consider public policy issues.
Similarly, an organization may appear
before a governmental body at its request
to offer testimony about a decision that
may affect the organization’s existence.
or it controls you through common
officers, directors, or trustees, or through
authority to approve budgets or
expenditures.
Primary, secondary, preparatory, or
•
high school.
College or university.
•
•
•
•
You and the recipient organization were
•
Trade or technical school.
Nursery or pre-school.
created at approximately the same time
and by the same persons.
School that you operate as an activity,
You and the recipient organization
•
such as a school that is operated as an
activity of a museum, historical society, or
church.
operated in a coordinated manner with
respect to facilities, programs, employees,
or other activities.
A private foundation isn’t allowed
to engage in any activities to
influence legislation.
TIP
If you're a nursery or pre-school
Persons who exercise substantial
•
that doesn't meet the description
of a school, answer “No,” to
TIP
influence over you also exercise
substantial influence over the recipient
organization.
Line 6a. Form 5768. Most public
charities are eligible to elect to make
expenditures to influence legislation by
filing Form 5768, Election/Revocation of
Election by an Eligible Section 501(c)(3)
Organization To Make Expenditures To
Influence Legislation. By filing Form 5768,
your legislative activities will be measured
solely by an expenditure limit under
section 501(h) rather than by whether the
legislative activity is considered
line 12.
Line 9b. Answer “Yes,” if you make
grants, loans, or other distributions (such
as goods) to a foreign organization.
If you’re a nursery, pre-school, or
child care organization that
TIP
doesn’t meet the description of a
school, you may still further an educational
purpose if substantially all the care you
provide is for the purpose of enabling
individuals to be gainfully employed and
your services are available to the general
public (section 501(k)).
Line 9g–i. The Office of Foreign Assets
Control (OFAC) of the U.S. Department of
the Treasury administers and enforces
economic and trade sanctions based on
U.S. foreign policy and national security
goals against certain governments,
entities, and individuals, as directed in
Executive Orders. As part of the
substantial. Form 5768 describes the
types of organizations that are eligible to
make an election. You must file Form
5768 by mailing it to the address on the
form. For a discussion of influencing
legislation and the requirements of section
501(h), see Pub 557.
If you’re a school, or if you operate a
school as an activity (even if it is a
comprehensive and sustained campaign
against terrorist financing, all U.S.
secondary activity), complete Schedule B.
See Pub. 557 for additional information.
persons, including U.S.–based charities,
are prohibited from dealing with persons
(individuals and entities) identified as
Line 13. “Hospital” or “medical care”
includes the treatment of any physical or
Instructions for Form 1023
-9-
mental disability or condition, whether as
an inpatient or outpatient. A hospital
includes the following.
support. Fundraising may be conducted
by your employees or volunteers, through
an agent, or through an independent
contractor. Check all the boxes that apply.
“Yes,” if you will or you do have highest
compensated employees or highest
compensated independent contractors.
For purposes of this form, “highest
compensated” employees or independent
contractors are persons to whom you pay
over $100,000 of compensation,
including compensation from related
organizations.
Hospitals and rehabilitation institutions,
•
outpatient clinics, or community mental
health or drug treatment centers if the
principal purpose or function is the
providing of medical or hospital care or
medical education or research.
For purposes of this application,
“bingo” is a game of chance played with
cards that generally are printed with five
rows of five squares each on which
participants place markers to form a
pre-selected pattern to win the game.
“Other (non-bingo) gaming activities”
include pull-tabs, raffles, keno,
Medical research organizations if the
•
For information on determining if an
principal purpose or function is the
continuous active conduct of medical
research in conjunction with a hospital.
individual is an employee or an
independent contractor, see Pub. 15-A,
Employer’s Supplemental Tax Guide.
split-the-pot, and other games of chance.
If you provide “hospital or medical
care,” or you’re a medical research
organization, complete Schedule C.
Gaming doesn’t further an
Line 1e. “Similarly situated
exempt purpose under section
501(c)(3). Except to the extent
TIP
organizations” means tax-exempt or
taxable organizations of comparable size,
purpose, and resources. Adjustments due
to geographic area and other specified
conditions are appropriate, but you should
document the adjustments. You should
document the sources(s) of comparable
compensation data, both taxable and
non-taxable, and retain copies in your
permanent records.
See Pub. 557 for additional
that an exception may apply, your revenue
from gaming activities will be subject to
unrelated business income tax. See
Pub. 3079 for further information about
gaming.
information.
Line 14. “Low-income housing” refers
to rental or ownership housing provided to
persons based on financial need. If you
provide low-income housing, complete
Schedule F.
Part V. Compensation and
Other Financial
Line 15. Answer “Yes,” if you pay money
to an individual as a scholarship,
Line 1g. “Reasonable compensation”
is the amount that would ordinarily be paid
for like services by like organizations
under like circumstance as of the date the
compensation arrangement is made.
Establishing and documenting your
decisions about compensation is
important because excess compensation
(including cash and other benefits that
aren’t accounted for as reasonable
compensation for services) may result in
excise taxes on both the individual and
you, and may jeopardize your tax
exemption.
Arrangements
fellowship, or education loan; for travel,
study, or other similar purposes. Also,
answer “Yes,” if you pay such amounts on
behalf of an individual to a school or a
tuition or educational savings program.
Complete Schedule H—Section I.
Reminder. Answer all questions in this
part as they pertain to your past, present,
and future activities.
For purposes of Part V, compensation
includes:
Travel, study, or other similar purposes
include payments made to enhance a
literary, artistic, musical, scientific,
teaching or other similar capacity, skill, or
talent of the individual recipient. These
payments include, for example, amounts
paid to:
Salary or wages;
•
•
•
Deferred compensation;
Retirement benefits, whether in the
form of a qualified or non-qualified
employee plan (pensions or annuities);
Fringe benefits (personal vehicle,
•
meals, lodging, personal and family
educational benefits, low-interest loans,
payment of personal travel, entertainment,
or other expense, athletic or country club
membership, and personal use of your
property); and
Vocational high school students to be
•
Line 2. A conflict of interest arises when a
person in a position of authority over an
organization, such as a director, officer, or
manager, may benefit personally from a
decision he or she could make. A sample
Conflict of Interest Policy is included as
Appendix A. This sample conflict of
interest policy doesn’t prescribe any
specific requirements. Therefore,
organizations should use a conflict of
interest policy that best fits their
used to purchase basic tools;
Teachers to induce them to teach in a
•
public school system in an economically
depressed area; and
A scientific researcher to underwrite
•
Bonuses.
•
that individual’s research project.
Example. An organization could
Educational grants don’t include
amounts you pay to an individual as
compensation, such as payments made to
a consultant for personal services or to
produce a report for you.
Educational grants don’t include
amounts paid to another organization that
distributes your funds as a scholarship to
an individual if you have no role in the
selection process.
compensate a director as follows:
Wages
Director
Compensation . . .
organizations.
$2,500
Adoption of a conflict of interest policy
isn’t required to obtain tax-exempt status.
However, by adopting the sample policy or
a similar policy, you will be choosing to put
in place procedures that will help your
officers, directors, and trustees recognize
situations that could present potential or
actual conflicts of interest so that you can
take steps to reduce the risk that those in
positions of authority over you may
Salary as Chief Executive
Officer . . . . . . . . . . . . . . .
Deferred retirement . . . . . .
Health insurance policy . . .
Use of a vehicle . . . . . . . .
Total Compensation
40,000
2,000
5,000
5,000
$54,500
If you're a “private foundation”
as described in Part VII, you must
!
CAUTION
obtain advance approval of your
grant-making procedures. You can use
Schedule H—Section II, to request
advance approval as part of this
application process. You can complete
Section II when you complete Part VII.
Foundation Classification.
receive an inappropriate benefit.
Make sure the information you provide in
Part V is consistent with the information
you enter in Part VI. Financial Data.
The sample conflict of interest
policy in Appendix A includes
TIP
items marked “Hospital insert–for
Line 1. Compensation. Check “Yes,” if
you do or you will compensate your
hospitals that complete Schedule C” that
are intended to be adopted by hospitals.
Line 16. “Fundraising”includes efforts
officers, directors, or trustees. Also, check
to raise funds through appeals for financial
Instructions for Form 1023
-10-
haven’t existed, for a total of 4 years of
financial information. Place financial
information for the year you’re filing this
application in the column marked Current
tax year.
Line 3. A fixed payment means a
payment that is either a set dollar amount
or fixed through a specific formula where
the amount doesn’t depend on discretion.
For example, a salary of $200,000 that is
adjusted annually based on the increase
in the Consumer Price Index is a fixed
payment.
Line 5. Answer “Yes,” if any of your
officers, directors, or trustees:
Is an officer, director, or trustee in
•
another organization (other than a section
501(c)(3) organization) that has a lease,
contract, loan, or other agreement with
you; or
Completed 5 years or more. If
you’ve existed for 5 years or more, provide
your actual income and expenses for your
5 most recently completed tax years.
Place financial information for your most
recently completed tax year in the column
marked Current tax year.
Possesses more than a 35% ownership
•
interest in any organization that has a
lease, contract, loan, or other agreement
with you. For example, answer “Yes,” if
one of your directors is an officer for a
section 501(c)(4) organization with whom
you have a lease for office space, or if one
of your directors owns more than 35% of
the voting stock of a corporation to which
you made a loan.
A “non-fixed payment” means a
payment that depends on discretion. For
example, a bonus of up to $100,000 that is
based on an evaluation of performance by
the governing board is a non-fixed
We may request financial
payment because the governing body has
discretion over whether the bonus is paid
and on the amount of the bonus.
information for more than 5 years.
!
CAUTION
A. Statement of Revenue and
Expenses
Preparing the statement. Prepare the
statement using the method of accounting
you use in keeping your books and
records.
Prepare the statement using the
accounting period entered on Part I, line 3.
Enter “0” if a particular revenue or
expense doesn’t apply to you.
Your financial information should reflect
your activities described in this
application.
Line 4. Don’t include purchases or sales
of goods and services in your normal
course of operations that are available to
the general public under similar terms and
conditions.
Line 6. “Develop” means the planning,
financing, construction, or provision of
similar services involved in the acquisition
of real property, such as land or a building.
For example, you should provide
Answer “Yes,” if any of your officers,
information regarding the services of a
consultant who arranges your acquisition
of a facility through the issuance of
tax-exempt bonds.
directors, or trustees:
Is an officer, director, or trustee of
•
another organization (other than a section
501(c)(3) organization) that you will
purchase or sell goods, services, or
assets from or to; or
Line 7. “Manage” means to direct or
administer. For example, you would
provide information about an organization
hired to administer a museum gift shop.
Possesses more than 35% ownership
•
interest in any organization that you will
purchase or sell goods, services, or
assets from or to.
Line 1. Enter the total gifts, grants, and
contributions you receive (other than
membership dues reported on line 2 and
described below). Include items of value
that you receive as gifts, grants, or
contributions. For example, if one of your
activities is a food drive, include the value
of the donated food on this line. Also
include on this line payments a
Line 8. A “joint venture” is a legal
agreement in which the persons jointly
undertake a transaction for mutual profit.
Generally, each person contributes assets
and shares risks. Like a partnership, joint
ventures can involve any type of business
transaction and the persons involved can
be individuals, groups of individuals,
companies, or corporations.
Arm’s length. An arm’s length
standard exists where the parties have an
adverse (or opposing) interest. For
example, a seller wants to sell his goods
at the highest possible price, while a buyer
wants to buy at the lowest possible price.
These are adverse interests.
governmental unit makes to enable you to
both accomplish your exempt purpose(s)
and to provide a service or facility directly
to the general public.
See the instructions for line 9 if you’re
uncertain whether revenue should be
included as a grant on line 1 or as gross
receipts on line 9. Include unusual
grants on line 12 and not on line 1.
In negotiating with a person, an
adverse interest is assumed if that person
is otherwise unrelated to you in the sense
of not being in a position to exercise
substantial influence over you or your
affairs. If the person is in a position to
exercise substantial influence over your
affairs, then an arm’s length standard
requires additional precautions to
Part VI. Financial Data
Line 1. Select the option that best
describes you to determine the years of
revenues and expenses you need to
provide.
Completed less than 1 year. If
you’ve existed for less than 1 year,
provide projections of your likely income
and expenses for your current year and
projections of your likely income and
expenses for the next 2 years based on a
reasonable and good faith estimate of
your future finances for a total of 3 years of
financial information. Place financial
information for the year you’re filing this
application in the column marked Current
tax year.
eliminate the effect of the relationship.
Examples.
Using a conflict of interest policy,
1. A city pays the symphony orchestra
to provide free music programs in the
public schools. The programs are open to
the public. This income received from a
governmental unit accomplishes the
orchestra's exempt purpose and directly
provides a service to the general public.
This income is a grant to the symphony
orchestra that should be listed on line 1.
2. The symphony orchestra sells
tickets to the public for its fall season.
Such income is gross receipts received
from the general public in performance of
the symphony orchestra’s exempt function
and should be listed on line 9.
information about comparable
transactions between unrelated parties,
and reliable methods for evaluating the
transaction, are examples of precautions
that would help make the negotiation
process equivalent to one between
unrelated persons.
Fair market value. This is the price at
which property or the right to use property
would change hands between a willing
buyer and a willing seller, neither being
under any compulsion to buy, sell, or
transfer property or the right to use
property, and both having reasonable
knowledge of relevant facts.
Completed more than 1 year, fewer
than 5 years. If you’ve existed for more
than 1 year but fewer than 5 years,
provide your actual income and expenses
for each completed year you’ve existed
and projections of your likely income and
expenses based on a reasonable and
good faith estimate of your future finances
for your current year and each year you
3. The public school system pays the
orchestra to create several musical pieces
Instructions for Form 1023
-11-
Provide an itemized list of your gross
receipts in line 25, describing the sources
and amounts of income. For payments by
a governmental unit, list the payer, the
purpose of the payment, and the payment
amount.
Figure 2. Net Gain or Loss On Sales of Capital Assets
Categories
(A) Real Estate
(B) Securities
(C) Other
1. Gross sales price of
assets (other than
Line 10. Lines 8 and 9 will be added for
inventory) by category.
you.
2. Less: Cost or other
basis and sales
expenses.
Line 11. Enter any net gain or loss on the
sale of capital assets. Provide an itemized
list by asset category (for example, real
estate or securities) showing gross sales,
cost or other basis/sales expenses, and
gain or loss by asset category in line 25.
You may use the format in Figure 2.
3. Gain or (loss). Subtract
line 2 from line 1.
4. Net gain or (loss) — Add line 3 of columns (A), (B), and (C). Enter here and
on Form 1023, Part VI - A. Statement of Revenues and Expenses, line 11.
Line 12. Enter any “unusual grants,”
which generally are any substantial
contributions and bequests you received
from disinterested persons that, by their
size, adversely affect your classification as
a public charity. “Unusual grants” are
unusual, unexpected, and received from
an unrelated party. Provide an itemized list
of any unusual grants, including the
amount in line 25, and explain how it was
unusual, unexpected, and from an
unrelated party.
suitable for the school system’s
provided by the governmental unit to the
public without charge.
elementary music curriculum. This
payment by a governmental unit for the
music compositions is primarily for the
school system’s own use, not for the direct
benefit of the public. Therefore, this
income is gross receipts received from a
governmental unit in performance of the
orchestra’s exempt function that should be
listed on line 9.
Line 7. Enter your total income from all
sources not reported on lines 1 through 6,
or lines 9, 11, and 12. Provide an itemized
list in line 25, showing each type and
amount of income included, and a brief
description of each type of income.
Line 8. Lines 1 through 7 will be added
for you.
For additional information about
unusual grants and a description of public
charity classifications, see Pub. 557.
Line 2. Enter the amount you receive
from members to provide support to the
organization. Don’t include payments from
members or on behalf of members to
purchase admissions, merchandise,
services, or use of facilities.
Line 9. Enter income from activities that
you conduct to further your exempt
purposes (excluding amounts listed on
other lines). Also, include as gross
receipts the income from activities
conducted:
Line 13. Lines 10 through 12 will be
added for you.
Lines 14. Enter the total expenses you
incur for soliciting gifts, grants, and
Line 3. Enter your gross income from
dividends, interest, payments received on
securities, loans, rents, and royalties you
hold for investment purposes.
See Pub. 598 for additional information
regarding royalties treated as unrelated
business income.
Intermittently (not regularly carried on),
•
such as an occasional auction;
With substantially all (at least 85%)
contributions included on line 1. Include
fees paid to professional fundraisers for
soliciting gifts, grants, and contributions.
•
volunteer labor, such as a car wash;
For the convenience of members,
•
Line 15. Enter the total amount you pay
out to both individuals and organizations.
Provide an itemized list in line 25,
students, patients, officers, or employees,
such as a parking lot for a school’s
students and employees; or
Line 4. Enter your net income from
unrelated business activities. “Unrelated
business income” generally is income
from any trade or business activity that is
regularly carried on, and not related to
your exempt purpose. Certain exceptions
and exclusions may apply.
Report on line 9 income from activities
that aren’t related to the accomplishment
of your exempt purposes, but aren’t
considered unrelated business activities.
For example, report income from the sale
of merchandise by volunteers that isn’t
treated as an unrelated trade or business
on line 9.
identifying recipients (using letter
With substantially all contributed
•
designations such as A, B, C, etc.), a brief
description of the purposes or conditions
of payments, and the amounts paid.
merchandise, such as a thrift store.
See Pub. 598 for additional information
regarding income that isn’t from an
unrelated trade or business.
“Gross receipts” also includes
payment by a governmental unit that may
be called a “grant” but is actually payment
for a service or facility for the use of the
government payer, rather than for the
direct benefit of the public.
Colleges, universities, and other
educational institutions and agencies
subject to the Family Educational Rights
and Privacy Act (20 U.S.C. 1232g) don’t
need to list the names of individuals to
whom they provided scholarships or other
financial assistance where such
disclosure would violate the privacy
provisions of the law. Instead, group each
type of financial aid provided, indicate the
number of individuals who received the
aid, and specify the aggregate dollar
amount.
Example. The state government gives
a conservation group a grant to study the
effects of a new sewage treatment plant
on an ecologically significant woodland
area. Although the payment is called a
grant, it is actually gross receipts that
should be included on line 9. The payment
is by a governmental unit (state) for a
study for its own use, not for the direct
benefit of the general public. A for-profit
consulting company could’ve done the
study rather than by the tax-exempt
conservation group.
See Pub. 598 for additional information
regarding unrelated business income.
Maintain (but don’t submit) a list
Line 5. Enter amounts any local tax
authority collects from the public on your
behalf.
showing the names of recipients
associated with each letter designation.
Line 16. Enter total payments you make
to or for the benefit of your members (not
including any amounts listed on line 15).
Provide an itemized list in line 25,
Line 6. Enter the value of services or
facilities a governmental unit furnishes to
you. Use the fair market value of the
services or facilities. Don’t include the
value of services or facilities generally
identifying recipients (using letter
Instructions for Form 1023
-12-
designations), a brief description of the
purposes or condition of payments, and
the amounts paid.
on lines 1 through 9, for example, patents,
copyrights, or other intangible assets.
Provide an itemized list of each asset in
line 19.
Line 4. Enter the total amount of bonds or
notes you issued that will be repaid to you.
Provide an itemized list in line 19, that
shows the name of each borrower (using a
letter designation), the borrower’s
Maintain (but don’t submit) a list
showing the names of recipients
Line 11. Lines 1 through 10 will be added
associated with each letter designation.
relationship to you, a brief description of
the obligation, the rate of return, the due
date, and the amount due.
for you.
Line 17. Enter the total amount of
compensation you pay to your officers,
directors, and trustees.
Line 12. Enter the total amount of your
accounts payable to suppliers and others,
such as salaries payable, accrued payroll
taxes, and interest payable.
Maintain (but don’t submit) a list
showing the names of borrowers
associated with each letter designation.
Line 18. Enter the total amount of
salaries and wages you pay to employees
(not reported on line 17).
Line 13. Enter the total unpaid portion of
grants and contributions you committed to
pay to other organizations or individuals.
Line 5. Enter the total fair market value
of corporate stocks you hold. Provide an
itemized list of your corporate stock
holdings in line 19.
For stock of closely held corporations,
list the name or the corporation, a brief
summary of the corporation’s capital
structure, the number of shares held, and
their value as carried on your books. If
valuation doesn’t reflect current fair market
value, also include fair market value.
Line 19. Enter your total interest
expenses for the year. Don’t include
mortgage interest treated as an
occupancy expense on line 20.
Line 14. Enter the total of your mortgages
and other notes payable outstanding at
the end of the current tax year/period.
Provide an itemized list in line 19 showing
each note separately, including the
lender’s name, purpose of loan,
repayment terms, interest rate, and
original amount.
Line 20. Enter the amount you pay for the
use of office space or other facilities, heat,
light, power and other utilities, outside
janitorial services, mortgage interest, real
estate taxes, and similar expenses.
Line 15. Enter the total amount of any
other liabilities not reported on lines 12
through 14. Provide an itemized list in
line 19 of these liabilities, including the
amounts you owe.
For stock traded on an organized
exchange or in substantial quantities over
the counter, list the name of the
Line 21. Enter the total depreciation,
depletion, and similar expenses you incur.
Line 22. Enter the total professional fees
you pay. Professional fees are amounts
charged by individuals and entities that
aren’t your employees. They include fees
for professional fundraisers (other than
fees listed on line 14, earlier), accounting
services, legal counsel, consulting
corporation, a description of the stock,
and the principal exchange on which it is
traded, the number of shares held, their
value as carried on your books, and their
fair market value.
Line 16. Lines 12 through 15 will be
added for you.
Line 17. Under fund accounting, an
organization segregates its assets,
liabilities, and net assets into separate
funds according to restrictions on the use
of certain assets. Each fund is like a
separate entity in that it has a
Line 6. Enter your total amount of loans
(personal and mortgage loans) receivable.
Provide an itemized list in line 19 that
identifies each borrower (using a letter
designation), the borrower’s relationship
to you, purpose of loan, repayment terms,
interest rate, and original amount of loan.
Report each loan separately, even if more
than one loan was made to the same
person.
services, contract management, or any
independent contractors.
Line 23. Enter any expenses you didn’t
include in the lines above, such as for
program services. Provide an itemized list
in line 25, showing the type and amount of
each significant expense.
self-balancing set of accounts showing
assets, liabilities, equity (fund balance),
income, and expenses. If you don’t use
fund accounting, report only the “net
assets” account balances, which include
capital stock, paid-in capital, retained
earnings or accumulated income, and
endowment funds.
Line 24. Lines 14 through 23 will be
added for you.
Maintain (but don’t submit) a list
showing the names of borrowers
associated with each letter designation.
B. Balance Sheet
Complete the balance sheet for your most
recently completed tax year. If you haven’t
completed a full tax year, use the most
current information available. Be sure to
enter the year-end date for the information
provided and not the date you prepare this
application. Enter “0” if a particular asset
or liability doesn’t apply to you.
Line 18. Lines 16 and 17 will be added
Line 7. Enter the total book value of your
other investments. Include the total book
value of government securities (federal,
state, and municipal), and buildings and
equipment held for investment purposes.
Provide an itemized list in line 19
for you.
Part VII. Foundation
Classification
Organizations that are exempt under
section 501(c)(3) are private
foundations unless they are:
identifying and reporting the book value of
each building/item of equipment held for
investment purposes.
Line 1. Enter your total cash in checking
and savings accounts, temporary cash
investments (money market funds, CDs,
treasury bills, or other obligations that
mature in less than 1 year), and petty cash
funds.
Churches, schools, hospitals,
•
Line 8. Enter the total book value of
buildings and equipment not held for
investment purposes. This includes
facilities you own and equipment you use
in conducting your exempt activities.
Provide an itemized list in line 19 of these
assets held at the end of the current tax
year/period, including the cost or other
basis.
governmental units, entities that undertake
testing for public safety, organizations that
have broad financial support from the
general public; or
Organizations that support one or more
•
Line 2. Enter your total accounts
receivable that arose from the sale of
goods and/or performance of services,
less any reserve for bad debt.
organization(s) that are themselves
classified as public charities.
Section 501(c)(3) organizations
excepted from private foundation
classification are public charities. Unless
you meet one of the exceptions above,
you’re a private foundation.
Line 3. Enter the amount of materials,
goods, and supplies you purchased or
manufactured and held to be sold or used
in some future period.
Line 9. Enter the total book value of land
not held for investment purposes.
Line 10. Enter the total book value of any
other category of your assets not reported
Instructions for Form 1023
-13-
You can only select one
foundation classification.
functions, or a combination of these
sources, and not more than one-third of
your support from gross investment
income and net unrelated business
income. Typically, you would show a
substantial part of your income on Part
VI-A. Statement of Revenues and
Expenses, lines 1, 2, and 9.
In Part IV, line 1, include information
detailing your agricultural research
TIP
program and how you will spend
contributions to your program, including a
description of how you’re engaged in the
continuous active conduct of agricultural
research (as defined in Section 1404 of
the Agricultural Research, Extension, and
Teaching Policy Act of 1977), information
showing that you’re operated in
Line 1. Select the foundation
classification you’re requesting from the
list below. The form will then take you to
additional lines or parts of the application
that you must complete based on your
response.
Under this public charity
classification, you must meet both the
“one-third public support test ” and the
“not-more-than-one-third investment
income and net unrelated business
income test,” lines 1 through 13. See Pub.
557 for additional information about these
tests.
conjunction with a land grant college or
university or a non-land grant college of
agriculture (as defined in Section 1404 of
the Agricultural Research, Extension, and
Teaching Policy Act of 1977), and
509(a)(1) and 170(b)(1)(A)(vi). Select
this classification if you normally receive a
substantial part of your support from
grants from governmental units or from
contributions from the general public, or a
combination of these sources. Typically,
you would show a substantial part of your
income on Part VI-A. Statement of
information discussing the timing of when
you will spend contributions for research.
509(a)(1) and 170(b)(1)(A)(i). Select
this classification if your primary purpose
is operating a church or convention or
association of churches. The term
“church” includes mosques, temples,
synagogues, etc. If you select this box,
complete Schedule A.
509(a)(3). Select this classification if
you’re organized and operated to support
one or more public charities described in
section 509(a)(1) or 509(a)(2) or an
organization that is tax exempt under
section 501(c)(4), (5), or (6) and meets the
public support test of section 509(a)(2).
See the instructions for Schedule D for
more information about the requirements
for this classification, including the
required relationship you must have with
your supported organization(s). Complete
Schedule D.
Revenue and Expenses, lines 1 and 2.
Under this public charity
classification, you must meet the one-third
public support test or 10% facts and
circumstances test. See Pub. 557 for more
information.
509(a)(1) and 170(b)(1)(A)(ii). Select
this classification if your primary purpose
is operating a school. If you select this
box, complete Schedule B.
Public support test. An organization
must receive either:
1. At least one-third of its total support
from governmental agencies,
If you operate a school but it isn’t your
contributions from the general public, and
contributions or grants from other public
charities; or
primary purpose, don’t select this
classification. However, you must still
complete Schedule B. See Part IV, line 12.
509(a)(4). Select this classification if your
primary purpose is to test products to
determine their acceptability for use by the
general public.
Contributions to organizations of this
type aren’t deductible under section
170(c). Also, organizations that primarily
test for specific manufacturers don’t
qualify for exemption under section 501(c)
(3).
2. At least 10% of its total support
509(a)(1) and 170(b)(1)(A)(iii). Select
this classification if your primary purpose
is providing medical or hospital care or
medical eduction or research (performed
in association with a hospital). If you select
this box, complete Schedule C.
A hospital includes a rehabilitation
institute, outpatient clinic, community
mental health clinic, drug treatment
center, or skilled nursing facility. A hospital
doesn’t include convalescent homes,
homes for children or the aged, or
institutions whose principal purpose or
function is to train handicapped individuals
to pursue some vocation.
from governmental agencies,
contributions from the general public, and
contributions or grants from other public
charities; and also satisfy a facts and
circumstances test.
Facts and circumstances test. Facts
and circumstances include:
1. The amount of support you
received from the general public,
governmental units, or public charities;
Select my classification for me. Select
this option if you believe you’re a public
charity but would like the IRS to select the
correct public charity classification (509(a)
(1) and 170(b)(1)(A)(vi) or 509(a)(2)) for
you.
2. Whether you have a continuous
and bona fide program for solicitation of
funds from the general public,
governmental units, or public charities, or
carry on activities designed to attract
support from organizations or other
governmental units, and
Private foundation. Select this
classification if you don’t meet one of the
exceptions listed above.
Cooperative hospital service
organizations described in section
501(e) should also check this box and
complete Schedule C.
Line 1a. Section 508(e) provides that a
private foundation isn’t tax exempt unless
its organizing document contains
specific provisions. These specific
provisions require that you operate to
avoid liability for excise taxes under
sections 4941(d), 4942, 4943(c), 4944,
and 4945(d). You can also meet these
provisions by reliance on state law.
See Pub. 557 for samples of provisions
that will meet section 508(e). Also, see
Appendix B for a list of states that have
enacted statutory provisions that satisfy
the requirement of section 508(e), subject
to notations. Appendix B is based on Rev.
Rul. 75-38, 1975-1 C.B. 161.
3. All other facts and circumstances,
including the public nature of your
governing board, the extent to which your
facilities or programs are publicly
available, the extent to which nature your
dues encourage membership, and
whether your activities are likely to appeal
to persons having a broad common
interest or purpose. For additional
information about the 10% facts and
circumstances test, see Pub. 557 and
Reg. 1.170A-9(f)(3).
509(a)(1) and 170(b)(1)(A)(iv). Select
this classification if you’re organized and
operated exclusively to benefit a college
or university owned or operated by a
governmental unit. You must also normally
receive a substantial part of your support
from a governmental unit or from
contributions from the general public.
509(a)(1) and 170(b)(1)(A)(ix). Select
this classification if you’re an agricultural
research organization described in section
170(b)(1)(A)(ix) operated in conjunction
with a land grant college or university or a
non-land grant college of agriculture.
509(a)(2). Select this classification if you
normally receive more than one-third of
your support from contributions,
membership fees, and gross receipts
from activities related to your exempt
Instructions for Form 1023
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amount contributed must also be more
than 2% of all the contributions you
received. A creator of a trust is treated as
a substantial contributor regardless of the
amount contributed. For more information
regarding substantial contributors, go to
Line 1c. Some private foundations are
private operating foundations. Private
operating foundations make qualifying
distributions directly for the active conduct
of their educational, charitable, and
religious purposes. “Directly for the active
conduct” means that you use the
Line 2a(i). 509(a)(2). Check “Yes,” if you
received amounts listed on lines 1, 2, and
9 of Part VI-A, Statement of Revenue and
Expenses, from any disqualified
persons and identify those disqualified
persons by letter (A, B, C, etc.) and list the
amounts contributed by each. Keep, but
don’t submit, a list of the names of your
donors with the associated letter
distributions yourself to carry out the
programs for which you’re organized and
operated. Grants made to assist other
organizations or individuals are normally
considered indirect.
designations.
Family members. A “member of the
family” includes the spouse, ancestors,
children, grandchildren,
Line 2a(ii). Check “Yes,” if you received
amounts paid by an individual or
Line 1d. If you have existed for 1 year or
more, you must provide information that
demonstrates you meet the requirements
to be classified as a private operating
foundation, including the income test and
organization greater than the larger of 1%
of line 10, of Part VI-A, Statement of
Revenues and Expenses, or $5,000 for
any completed tax year, and identify those
individuals or organizations by letter and
great-grandchildren, and their spouses.
For additional information concerning
members of the family, go to IRS.gov/
either the endowment test, the assets test, list the amount(s) received from each.
Further information about disqualified
persons, can be obtained at IRS.gov/
or the support test. If you have existed for
less than 1 year, you must sufficiently
describe how you’re likely to meet these
requirements and tests. You may also
submit an affidavit or opinion of counsel
giving enough facts about your operations
and support to enable us to determine that
you’re likely to meet these requirements.
Keep, but don’t submit, a list of the names
of your donors with the associated letter
designations.
Don’t include disqualified persons
Line 2a(iii). Use Schedule A (Form 990
or 990-EZ), Public Charity Status and
Public Support, Part III, Support Schedule
for Organizations Described in Section
509(a)(2), and its instructions to determine
if you meet the public support test for your
most recent 5-year period.
in this list. Disqualified persons
!
CAUTION
should be listed in line 2(a)(i). For
purposes of this application, a
“disqualified person” is any individual or
organization that is any of the following.
See Pub. 557 for additional information
about private operating foundations.
1. A “substantial contributor” to you
Line 2. Confirmation of public support
status. If you have been in existence for
more than 5 years, and you requested
classification as a public charity described
in sections 509(a)(1) and 170(b)(1)(A)(vi),
you must confirm that you meet the public
support test.
To show that you meet the required
public charity support test, complete lines
2(i) and 2(ii). Calculate your public support
based on the accounting method you used
to complete Part VI-A, Statement of
Revenues and Expenses.
(defined below).
2. An officer, director, trustee, or any
other individual who has similar powers or
responsibilities.
3. An individual who owns more than
20% of the total combined voting power of
a corporation that is a substantial
contributor.
4. An individual who owns more than
20% of the profits interest of a partnership
that is a substantial contributor.
5. An individual who owns more than
20% of the beneficiary interest of a trust or
estate that is a substantial contributor.
6. A member of the family of any
individual described in 1, 2, 3, 4, or 5
above.
7. A corporation in which any
individuals described 1, 2, 3, 4, 5, or 6
above hold more than 35% of the total
combined voting power.
8. A trust or estate in which any
individuals described in 1, 2, 3, 4, 5, or 6
above hold more than 35% of the
beneficial interests.
9. A partnership in which any
individuals described in 1, 2, 3, 4, 5, or 6
above hold more than 35% of the profits
interest.
Part VIII. Effective Date
Line 1. Use the formation date you listed
in Part II, line 2, and the date you will
submit this electronic form and required
user fee payment to determine whether
you’re submitting this application within 27
months from the month in which you were
formed. If you’re not submitting this
application within 27 months from your
formation, complete Schedule E.
Line 2(i). 509(a)(1) and 170(b)(1)(A)
(vi). Check “Yes,” if you received
contributions from any person, company,
or organization (other than a governmental
unit described in section 170(c)(1) or a
publicly supported organization under
section 170(b)(1)(A)(vi)), whose gifts
totaled more than 2% of the amount on the
total of amounts entered on line 8 of Part
VI-A, Statement of Revenue and
Part IX. Annual Filing
Requirement
Most organizations must file an annual
return (Form 990, 990-EZ, or Form
990-PF) or notice (Form 990-N, Electronic
Notice (e-Postcard)). Exceptions to this
rule include churches, certain church
affiliated organizations, and certain
affiliates of a governmental unit. You can
find more detailed information about filing
requirements and exceptions from the
requirement to file in the Instructions for
Form 990.
Expenses, and identify those contributors
by letter (A, B, C, etc.) and list the
amount(s) contributed by each. Keep, but
don’t submit, a list of the names of your
donors with the associated letter
The following are some general rules.
designations.
A private foundation must file Form
•
990-PF annually, regardless of its gross
receipts.
Line 2(ii). Use Schedule A (Form 990 or
990-EZ) Public Charity Status and Public
Support, Part II, Support Schedule for
Organizations Described in Sections
170(b)(1)(A)(iv) and 170(b)(1)(A)(vi), and
its instructions to determine if you met the
public support test for your most recent
5-year period.
Unless specifically required to file Form
•
990 or Form 990-EZ (see the Instructions
for Form 990), most public charities that
normally have gross receipts of $50,000 or
less may satisfy their filing obligation with
Form 990-N, Electronic Notice
Substantial contributor. A substantial
contributor is any individual or
organization that gave more than $5,000
to you from the date you were formed or
other date that your exemption would be
effective, to the end of the year in which
the contributions were received. This total
(e-Postcard).
Instructions for Form 1023
-15-
If you fail to file a required
The characteristics generally attributed to
churches are:
activities conducted as part of your
information return or notice for 3
consecutive years, your exempt
services further your religious purposes.
!
CAUTION
A distinct legal existence,
•
Line 7a. Enter the average number of
members and non-members who attend
your regularly scheduled religious
services.
status will be automatically revoked.
A recognized creed and form of
•
worship,
Line 1. Check “Yes,” if you’re claiming
you are excepted from filing a Form
990-series return or notice and indicate
the reason you believe you’re excepted
from filing. See Pub. 557 and the
A definite and distinct ecclesiastical
•
government,
Line 8. An “established place of worship”
is a place where you hold regularly
scheduled religious services. It may be a
place that you own, rent, or that is
provided free for your use.
A formal code of doctrine and
•
discipline,
A distinct religious history,
•
•
Instructions for Form 8940, Request for
Miscellaneous Determination, for more
information on the requirements for the
various filing exceptions. Provide
A membership not associated with any
other church or denomination,
Ordained ministers ministering to the
•
Line 9. An “established congregation” or
“other religious membership group”
includes individuals who regularly attend
and take part in the religious services of
your organization at an established
location. An established congregation
generally doesn’t include members of only
one family. If you answer “No,” because
you don’t have an established
congregation,
Ordained ministers selected after
information regarding how you meet your
requested exception in your narrative
description of activities or as part of an
uploaded supplemental response.
•
completing prescribed courses of study,
A literature of its own,
•
•
•
•
•
Established places of worship,
Regular congregations,
Regular religious services,
Sunday schools for the religious
Part X. Signature
Signature requirements. An officer,
director, trustee, or other official who is
authorized to sign for the organization
must sign Form 1023. The signature must
be accompanied by the title or authority of
the signer and the date.
instruction of the young, and
congregation or other religious
Schools for the preparation of ministers.
•
membership, you may be a religious
organization that doesn’t qualify as a
church. If you don’t qualify as a church,
you will need to go back to Part VII, line 1,
to reconsider your public charity
Although you don’t need to meet each of
the above criteria to be classified as a
church, you’re generally required to have
a congregation or other religious
membership group. For purposes of
foundation classification under section
509(a)(1) and 170(b)(1)(A)(i), the term
“church” includes, without limitation,
mosques, temples, and synagogues, and
certain other forms of religious
classification.
The person signing Form 1023
You may request classification as
must be listed as an officer,
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a church at a later date after you
establish a congregation or other
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director, or trustee within the first
five entries of Part I, line 9.
religious membership group. For
information about this option, see Form
8940, Request for Miscellaneous
Determination Under Section 507, 509(a),
4940, 4942, 4945, and 6033 of the Internal
Revenue Code, or contact our customer
account service representatives at
877-829-5500 (toll-free).
Upload Checklist
Documents to upload. Check the boxes
to indicate which documents are included
in the file you upload with your application.
organizations. For more information, see
Pub. 1828.
The practices and rituals associated with
your religious beliefs or creed must not be
illegal or contrary to public policy.
You must upload a copy of your
organizing document and any
amendments to it along with a copy of
your bylaws, if adopted. The other listed
documents are not required.
Line 9a. Enter the total number of your
current members. If you have no
members, enter zero (0).
Specific Line Items
Line 1. Describe your written creed,
Put your name and EIN on each page
of your supplemental response and
identify the part and line number to which
the information relates.
Pay.gov can accommodate only one
uploaded file. Consolidate your
attachments into a single PDF file, which
cannot exceed 15MB.
If your PDF file exceeds the 15MB limit,
remove any items over the limit and
contact IRS Customer Accounts Services
at 877-829-5500 for assistance on how to
submit the removed items.
statement of faith, or summary of beliefs.
Line 9b. Answer “Yes,” if you have a
prescribed way to become a member.
Answer “Yes,” even if you just keep
records of who is currently a member.
Describe any actions required for
individuals to become members.
Line 2. Your literature includes any
writings about your beliefs, rules, or
history.
Line 3. A “code of doctrine and discipline”
refers to a body of laws or rules that
govern behavior.
Line 9c. Describe any rights and benefits
of members. You should include details of
any levels of membership and the rights
and/or benefits associated with each level.
Line 4. A “religious hierarchy or
ecclesiastical government” refers to
people or institutions that exercise
significant influence or authority over your
church.
Line 9d. If your members may be
associated with another denomination or
church, describe the circumstances in
which your members would be members
of your church and another church.
Schedule A. Churches
Line 5. Answer “Yes,” if you’re part of a
group of churches with similar beliefs and
structures, such as a convention,
There is no single definition of the word
“church” for tax purposes. When
Line 9e. See Appendix C for a
description of the word “family.”
determining whether a section 501(c)(3)
religious organization is described as a
church (described in section 509(a)(1) and
170(b)(1)(A)(i)), we will consider
association, or union of churches.
Line 6. A “form of worship” refers to
religious practices that express your
devotion to your creed, faith, or beliefs.
Line 10. Answer “Yes,” if you conduct
baptisms, weddings, funerals, or other
religious rites.
characteristics generally attributed to
churches and the facts and circumstances
of each organization applying for public
charity classification as a “church.”
Line 7. Indicate the regular days and
times of your religious services. Describe
the order of events during your regular
worship service and explain how the
Line 11. A school for the religious
instruction of the young refers to any
Instructions for Form 1023
-16-
regularly scheduled religious, educational
activities for youth.
Certification by the appropriate state
nondiscriminatory policy as to students as
follows.
•
authority or successful completion of
required training for qualified teachers;
Line 12. A “prescribed course of study”
refers to formal or informal training. It
doesn’t include self-ordination or paying a
fee for an ordination certificate without
completing a course of study. Describe
the course of study completed by your
religious leaders.
The M school admits students
of any race, color, national
origin, and ethnic origin to all the
rights, privileges, programs, and
activities generally accorded or
made available to students at
the school. It doesn't
discriminate on the basis of
race, color, national origin, and
ethnic origin in administration of
its educational policies,
Records of regular attendance by
•
students at your facility; and
A lease agreement or deed for your
•
facility.
If you answer “No,” you may not meet
the requirements of a school and you may
need to go back to Part VII, line 1, to
reconsider your foundation classification if
you requested classification as a school
under sections 509(a)(1) and 170(b)(1)(A)
(ii).
Line 15. Provide any additional
information you would like us to consider
that would help us classify you as a
church.
admission policies, scholarship
and loan programs, and athletic
and other school-administered
programs.
Schedule B. Schools,
Line 2. Answer “Yes,” if your primary
function of the school is the presentation
of formal instruction. If you answer “No,”
you may not meet the requirements for
classification as a school and may want to
go back to Part VII, line 1, to reconsider
your foundation classification if you
Colleges, and Universities
An organization qualifies as a school (for
purposes of classification under sections
509(a)(1) and 170(b)(1)(A)(ii)) if all the
following applies. It:
Annual certification. A private school
must certify annually that it meets the
requirements of Rev. Proc. 75-50, as
modified by Rev. Proc. 2019-22, by filing
Schedule A (Form 990, or Form 990-EZ)
Organization Exempt Under Section
501(c)(3).
requested classification as a school under
sections 509(a)(1) and 170(b)(1)(A)(ii).
Presents formal instruction as its
•
primary function,
Line 3. Answer “Yes,” if you’re a public
school and explain how you’re operated
by the state or a subdivision of a state,
including if you have a signed contract or
agreement with a state or local
Has a regularly scheduled curriculum,
Has a regular faculty of qualified
•
•
teachers,
Has a regularly enrolled student body,
•
Schools that don’t file Form 990 or
990-EZ must make the certification by
filing Form 5578, Annual Certification of
Racial Nondiscrimination for a Private
School Exempt From Federal Income Tax.
and
government under which you operate and
receive funding. If you answer “Yes,” don’t
complete the remainder of Schedule B.
Has a place where educational
•
activities are regularly carried on.
The term “school” includes primary,
secondary, preparatory, high schools,
colleges, and universities. An organization
won’t be described as a school under
sections 509(a)(1) and 170(b)(1)(A)(ii) if it
engages in both educational and
Line 4. Answer “Yes,” if you were formed
or substantially expanded when public
schools in your district or county were
desegregated by court order.
Line 7. Answer “Yes,” if your organizing
document or bylaws contain a
nondiscriminatory statement as to
students similar to the one shown above
or if you adopted such a policy by
If you're unsure whether to answer
non-educational activities, unless the latter
are merely incidental to the educational
activities. Non-traditional schools such as
an outdoor survival school or a yoga
school may qualify. However, an
“Yes,”contact an appropriate
!
resolution of your governing body. State
where your policy is located in your
organizing document, bylaws, or if it is in
an adopted resolution. If you answered
“No,” you must adopt a nondiscriminatory
policy before submitting this application.
CAUTION
school official.
Line 5. Answer “Yes,” if a state or federal
administrative agency or judicial body ever
determined your organization to be racially
discriminatory. Identify the parties involved
and the forum in which the case was
presented. Explain the reason for the
action, the decision reached, and provide
legal citations (if any) for the decision.
Also, explain in detail any changes made
in response to the action against your
organization or the decision reached.
organization may further an educational
purpose without satisfying all the
conditions listed above that describe a
school. Such organizations may qualify as
public charities based upon their sources
of support as organizations described in
sections 509(a)(1) and 170(B)(1)(A)(vi) or
section 509(a)(2).
Line 8. Answer “Yes,” if your brochures,
application forms, advertisements, and
catalogues dealing with student
admissions, programs, and scholarships
contain a statement similar to the
following:
The M school admits students of any
race, color, and national or ethnic
origin.
Specific Line Items
Establishment of Racially
Nondiscriminatory Policy
Line 1. Answer “Yes,” if you have a
regularly scheduled curriculum, a regular
faculty of qualified teachers, a regularly
enrolled student body, and facilities where
your educational activities are regularly
carried on.
Every private school is subject to the
provisions of Revenue Procedure 75-50,
1975-2 C.B. 587, modified by Rev. Proc.
2019-22, 2019-22 I.R.B. 1260. See Pub.
557, which sets forth the requirements of
Rev. Proc. 75-50 under the section for
Private Schools.
Line 8a. If you answered “No” to Line 8,
check the box on line 8a if you agree that
all future printed materials, including
website content, will contain a statement
of nondiscriminatory policy as to students
similar to the one provided above.
If you answer “Yes,”you should
maintain in your records evidence
that you meet these factors, such
TIP
Publication of racially nondiscrimina-
tory policy. A section 501(c)(3)
organization that is a private school must
publish a notice of its racially
Line 9. You must make your
as:
nondiscriminatory policy known to all
segments of the general community
served by the school. One way to meet
this requirement is to publish your
A list of required courses of study,
•
dates and times courses are offered, and
other information about how to complete
required courses;
-17-
nondiscriminatory policy annually in a
newspaper or over broadcast media. Rev.
Proc. 2019-22 now allows this publication
requirement to be satisfied by
If you complete line 12 indicating
you do or will provide loans or
scholarships, be sure your
hospital if its principal function is providing
treatment services, as described above.
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A hospital doesn't include convalescent
homes, homes for children or the aged, or
institutions whose principal purposes or
function is to train handicapped individuals
to pursue a vocation.
response to Part IV, line 15 is consistent
with your response here.
continuously displaying your
nondiscrimination statement on your
Internet site, as described below.
Check “Yes,” if you make your racially
nondiscriminatory policy known to all
segments of the general community you
serve by:
Line 13. Identify each of your
incorporators, founders, board members,
donors of land, and donors of buildings by
name (whether individuals or
organizations).
Medical research organization. An
organization is a “medical research
organization” if its principal purpose or
function is the direct, continuous, and
active conduct of medical research in
conjunction with a hospital. The hospital
with which the organization is affiliated
must be described in section 501(c)(3), a
federal hospital, or an instrumentality of a
governmental unit, such as a municipal
hospital.
Publishing a notice of your policy in a
•
Line 14. Answer “Yes,” if any individuals
or organizations on your list have an
objective to keep public or private school
education segregated by race and explain
how these individuals or organizations
promote segregation in public or private
schools.
newspaper of general circulation that
serves all racial segments of the
community;
publicizing your policy over broadcast
•
media in a way that is reasonably
expected to be effective; or
display a notice of your policy at all
•
Line 15. Answer “Yes,” if on a continuing
basis, you will maintain for a minimum
period of 3 years the following records.
times on your primary, publicly accessible
Internet homepage in a manner
reasonably expected to be noticed by
visitors to the homepage.
“Medical research” means investigations,
experiments, and studies to discover,
develop, or verify knowledge relating to
the causes, diagnosis, treatment,
prevention, or control of human physical or
mental diseases and impairments. For
more information, see Regulations section
1.170A-9(c)(2).
Your racial composition (similar to the
•
information requested on Schedule B,
line 11).
See Rev. Proc. 75-50, as modified by
Rev. Proc. 2019-22, for guidance on the
format and content of the required notice
and whether any exceptions may apply to
you.
Evidence that your scholarships and
•
loans are awarded on a racially
nondiscriminatory basis (similar to the
information requested on Schedule B,
line 12).
A notice published in the legal
Cooperative hospital service
Copies of all materials used by you or
•
notices section or classified
advertisements of your local
TIP
organization. A cooperative hospital
service organization performs one or more
of the specific services listed below for
one or more exempt hospitals on a
cooperative basis. The services listed
below are exclusive. A cooperative service
organization that provides services other
than those listed below, or that provides
services to an organization other than an
exempt hospital, doesn’t qualify for
exemption under section 501(c)(3). The
list of services includes:
on your behalf to solicit contributions.
Copies of brochures, application forms,
•
newspaper generally is not acceptable.
advertisements, and catalogues dealing
with student admissions, programs, and
financial aid.
Line 9a. If you answered “No,” to line 9,
check the box on line 9a if you agree that
you will publicize your nondiscriminatory
policy in a way that meets the
Answer “No,” if you don’t maintain
records and explain how you meet the
recordkeeping requirements under Rev.
Proc. 75-50.
requirements of Revenue Procedure 75–
50, as modified by Revenue Procedure
2019-22.
Failure to maintain these records
Line 11. Enter the racial composition of
your student body, faculty, and
or produce them upon the proper
!
CAUTION
request will create a presumption
1. Data processing;
administrative staff in the spaces
that you haven’t complied with the
requirements of Rev. Proc. 75-50.
2. Purchasing (including the
provided. Enter actual numbers, rather
than percentages, for the current year and
projected numbers for the next academic
year. If the number is zero, then enter “0.”
purchasing of insurance on a group basis);
Schedule C. Hospitals and
Medical Research
Organizations
3. Warehousing;
4. Billing and collection (including the
purchasing of patron accounts receivable
on a recourse basis);
If you’re not operational, submit an
estimate based on the best information
available (such as the racial composition
of the community you serve).
5. Food;
6. Clinical;
7. Industrial engineering;
8. Laboratory;
9. Printing;
An organization qualifies as a hospital for
purposes of classification under sections
509(a)(1) and 170(b)(1)(iii) if it is a:
Don’t identify students, faculty,
Hospital,
•
and staff by name.
!
Medical research organization
•
CAUTION
operated in conjunction with a hospital, or
Line 12. Enter the racial composition of
students to whom you award loans and
scholarships in the spaces provided. Enter
actual numbers, rather than percentages,
for the current year and projected
Cooperative hospital service
•
10. Communications;
11. Record center; and
organization.
Hospital. An organization is a “hospital”
if its principal purpose or function is
providing medical or hospital care or
medical education or research. Medical
care includes treatment of any physical or
mental disability or condition, on an
inpatient or outpatient basis. Thus, if an
organization is a rehabilitation institution,
outpatient clinic, or community mental
health or drug treatment center, it is a
12. Personnel services (including
selection testing, training, and education
of personnel).
numbers for the next academic year. If the
number is zero, then enter “0.” If you won’t
provide any loans or scholarships, check
the box provided.
Specific Line Items
Don’t identify students by name.
Line 1. Answer “Yes,” if your organization
is a medical research organization, as
described above.
!
CAUTION
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to indicate how you determine who is
eligible for the services, how you inform
the general public about your policy, any
requirements you require of patients to
receive reduced cost or free care, and any
agreements you might have with
the broad interests of the community
served by the hospital facility, including
those with special knowledge of or
expertise in public health, and must be
made widely available to the public. Each
hospital facility must conduct a CHNA at
least once every 3 years and adopt an
implementation strategy to meet the
community health need identified through
such CHNA.
Answer “Yes,” if the hospital facility
conducted a complying CHNA in the
current tax year or in either of the 2
immediately preceding tax years or if the
hospital facility intends to conduct a
CHNA before the end of its first 3-year
period.
Line 1a. As a medical research
organization, you must be associated with
a hospital described in section 501(c)(3),
a federal hospital, or an instrumentality of
a government. Provide the name of the
hospital(s) you’re associated with and
describe the relationship(s).
municipalities or government agencies to
subsidize the cost of admitting or treating
patients through this policy.
Line 1b. List your assets and their fair
market value and the portion of your
assets directly devoted to medical
research. Don’t complete the remainder of
Schedule C.
Line 7. Answer “Yes,” if you have a
formal program of medical training and
research. If you answer “Yes,” describe
your program, including the programs you
offer, the scope of such programs, and
affiliation with other hospitals or medical
care providers with which you carry on the
medical training or research programs.
Line 2. Answer “Yes,” if you’re a
cooperative hospital service organization
and describe the services you provide to
your member hospitals and the exempt
status of your membership. Don’t
Line 10b. A financial assistance policy
(FAP), sometimes referred to as a charity
care policy, is a policy describing how an
organization will provide financial
Line 8. Answer “Yes,” if you have a
formal program of community educational
programs and describe your programs,
including the types of programs offered,
the scope of the programs, and affiliation
with other hospitals or medical care
providers with whom you offer community
educational programs.
complete the remainder of Schedule C.
Line 3. Answer “Yes,” if all the doctors in
your community are eligible for staff
privileges at your facility. You must answer
“Yes,” even if staff privileges at your
facilities are limited by capacity, provided
that all qualified medical professionals in
your community may seek and would be
considered for eligibility.
Answer “No,” if all doctors in your
community aren’t eligible for staff
privileges at your facility.
If you answer “No,” describe in detail
how you limit eligibility for staff privileges
at your facility. Include details of your
eligibility criteria and selection procedures
for your courtesy staff of doctors.
assistance at its hospital(s) and other
facilities, if any. Financial assistance
includes free or discounted health
services provided to persons who meet
the organization’s criteria for financial
assistance and are unable to pay for all or
a portion of the services. Financial
assistance doesn’t include:
Line 9. Answer “Yes,” if you have a board
of directors that is representative of the
community you serve or if an
organization described under section
501(c)(3) with a community board
exercises rights or powers over you.
Bad debt or uncollectible charges that
•
the organization recorded as revenue but
wrote off due to a patient’s failure to pay or
the cost of providing such care to such
patients;
Answer “Yes,”if you’re subject to a
state corporate practice of medicine law
that requires your governing board to be
composed solely of physicians licensed to
practice medicine in the state.
The difference between the cost of care
•
provided under Medicaid or other
means-tested government programs or
under Medicare and the revenue derived
therefrom;
Line 4. Answer “Yes,” if you admit all
patients in your community who can pay
for themselves or through some form of
third-party reimbursement (for example,
private health insurance, Medicare, or
Medicaid).
Answer “No,” if you limit admission for
these individuals in any way and describe
your admission policy in detail, including
how and why you restrict patient
admission.
Line 9a. List each board member by
name and describe that person’s
Self-pay or prompt pay discounts; or
Contractual adjustments with any
•
relationship to you. Also, for each board
member, describe if and how that
individual represents the community.
Generally, hospital employees and staff
physicians aren’t individuals considered to
be community representatives. If you
operate under a parent organization
whose board of directors isn’t comprised
of a majority of individuals who are
representative of the community you
serve, provide the requested information
for your parent organization's board of
directors as well.
•
third-party payors.
Answer “Yes,” if the hospital facility has
adopted a written financial assistance
policy and a written policy relating to
emergency medical care as required by
section 501(r)(4).
Line 10c. Under section 501(r)(5), the
maximum amounts that can be charged to
FAP-eligible individuals for emergency or
other medically necessary care are the
amounts generally billed to individuals
who have insurance covering such care.
Line 5. Answer “Yes,” if you offer
emergency medical or hospital care at
your facility on a 24-hour basis, seven
days a week.
Line 5a. Answer “Yes,” if the reason you
don’t maintain a full-time emergency room
is either because you’re a specialty
Line 10. Section 501(r). Answer “Yes,” if
you operate a facility that is required by a
state to be licensed, registered, or
Answer “Yes,” if the hospital facility:
hospital where emergency care would be
inappropriate for the services you provide
or another emergency medical care facility
that provides such services is located so
near to you as to make such services as
you might provide duplicative.
1. Limits or will limit any charges to
FAP-eligible individuals to whom the
hospital facility provided emergency or
other medically necessary services to not
more than the amounts generally billed to
individuals who had insurance covering
such care; and
similarly recognized as a hospital.
Organizations that respond “Yes,” to this
question are required to meet additional
requirements described in section 501(r)
to be considered a hospital exempt from
taxation by section 501(c).
Line 6. Answer “Yes,” if you provide free
or low-cost medical or hospital care
services. If you answer “Yes,” describe
your policy and to whom you provide
these services. Include details on how
these services promote benefits to the
community. For example, you may want
Line 10a. A community health needs
assessment (CHNA) is an assessment of
the significant health needs of the
2. Prohibits, or upon beginning
operations will prohibit, the use of gross
charges as described in section 501(r)(5).
community. To meet the requirements of
section 501(r)(3), a CHNA must take into
account input from persons who represent
The hospital facility may check “Yes,” if
it charged more than the amounts
generally billed to individuals who had
Instructions for Form 1023
-19-
insurance covering such care to an
individual if:
It meets one of three required
is vested in the same persons who control
or manage your supported
organization(s).
•
relationship tests with the supported
organization(s); and
The charge in excess of the amounts
•
generally billed (AGB) wasn’t made or
requested as a pre-condition of providing
medically necessary care to the
FAP-eligible individual;
It isn’t controlled by “disqualified
Type III (“operated in connection
•
•
persons,” directly or indirectly. See
Appendix C for a definition of a
“disqualified person.”
with” relationship; responsive to the
needs or demands of, and having
significant involvement in the affairs of, the
supported organization(s)): One or more
of your officers, directors, or trustees are
elected or appointed by the officers,
directors, trustees, or membership of your
supported organization(s); one or more of
your officers, directors, trustees, or other
important office holders are also members
of the governing body of your supported
organization(s); or your officers, directors,
or trustees maintain a close and
As of the time of the charge, the
•
A supporting organization can also
support the charitable purposes of
organizations that are exempt under
sections 501(c)(4), (5), or (6).
FAP-eligible individual hadn’t submitted a
complete FAP application and hadn’t
otherwise been determined by the hospital
facility to be FAP eligible for the care; and,
If the individual subsequently submits a
•
Specific Line Items
complete FAP application and is
determined to be FAP-eligible for care, the
hospital facility refunds any amount that
exceeds the amount he or she is
determnined to be personally responsible
for paying as a FAP-eligible individual,
unless such excess amount is less than
$5.
Line 1. List the name, address, and EIN
of each organization you support.
Line 2. Answer “Yes,” if each supported
organization has a letter from the IRS
recognizing it as a public charity under
section 509(a)(1) or 509(a)(2).
continuous working relationship with the
officers, directors, or trustees of your
supported organization(s).
If you don't meet one of these
Before you file your application,
Line 10d. Answer “Yes,” if the hospital
facility has, or will have at the beginning of
operation, either a separate written billing
and collections policy, or include in a
written FAP:
three relationship tests, you aren't
described in section 509(a)(3) and
TIP
use Tax Exempt Organization
Search on IRS.gov to confirm
TIP
should review the other foundation
whether each of your supported
organizations is currently recognized as
exempt and is classified as a public
charity.
classification options in Part VII, line 1.
Line 4. Describe how your governing
board and officers are selected, including
where (if applicable) this information is in
your governing document, bylaws, or
other internal rules and regulations.
A description of any actions that the
•
hospital facility (or other authorized party)
may take related to obtaining payment of a
bill for medical care, including, but not
limited to, any extraordinary collection
actions (ECAs);
Line 2a. Answer “Yes,” if any supported
organization you listed on line 1 received a
letter from the IRS stating that it’s exempt
under sections 501(c)(4), (5), or (6) and
meets the public support test under
section 509(a)(2). See Pub. 557 for
information on the public support test for
section 509(a)(2).
If you answer “No,” describe how each
organization you support is a public charity
under section 509(a)(1) or 509(a)(2). For
example, if you support a church or
foreign organization that hasn’t received a
determination letter recognizing it as a
public charity, you should describe how
this organization qualifies as a public
charity under section 509(a)(1) or 509(a)
(2). See Pub. 557 for information on public
charities under sections 509(a)(1) and
509(a)(2).
Type III organizations must also
The process and time frames the
•
describe how your officers, directors, or
trustees maintain a close and continuing
relationship with the officers, directors, or
trustees of your supported organization(s).
hospital facility (or other authorized party)
uses in taking those actions (including, but
not limited to, the reasonable efforts it will
make to determine whether an individual
is FAP-eligible before engaging in ECAs);
and
Line 5. Prohibited control by disquali-
fied person. You can’t be described in
section 509(a)(3) if you’re directly or
indirectly controlled by disqualified
persons. You are controlled if disqualified
persons:
The office, department, committee, or
•
other body with the final authority or
responsibility for determining that the
hospital facility has made reasonable
efforts to determine whether an individual
is FAP-eligible and may therefore engage
in ECAs against the individual.
Can exercise 50% or more of the total
•
voting power of your governing body;
Have authority to affect significant
•
decisions, such as power over your
investment decisions, or power over your
charitable disbursement decisions; or
Schedule D. Section
509(a)(3) Supporting
Organizations
Can exercise veto power over your
•
Line 3. Relationship test. To qualify
under section 509(a)(3), you must show
that you meet one of three relationship
tests with your supported organization(s).
Select the option that best describes your
relationship with your supported
actions.
Although control is generally
demonstrated where disqualified persons
have the authority over your governing
body to require you to take an action or
refrain from taking an action, indirect
control by disqualified persons will also
disqualify you as a supporting
Supporting organizations are described in
section 509(a)(3). The term “supported
organization” refers to an organization that
a supporting organization benefits. A
supporting organization may support more
than one supported organization.
organization(s).
Type I (“operated, supervised, or
•
controlled by” relationship; comparable
to a parent–subsidiary relationship): A
majority of your governing board or
officers are elected or appointed by the
governing body, members of the
organization.
See Appendix C for a description of the
terms “disqualified person,” “family,”
“foundation manager,” and “business
relationship.”
An organization qualifies as a supporting
organization (for purposes of classification
under section 509(a)(3)) if:
governing body, officers acting in their
official capacity, or the membership of
your supported organization(s).
It is organized and at all times thereafter
•
is operated exclusively for the benefit of,
to perform the function of, or to carry out
the purposes of one or more public
charities described in section 509(a)(1) or
509(a)(2);
Public charities and foundation
managers who otherwise are
TIP
Type II (“supervised or controlled in
•
disqualified persons only because
connection with” relationship;
comparable to a brother–sister
they are foundation managers aren't
disqualified persons for this purpose.
relationship): Your control or management
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officers, directors, or trustees of each
supported organization; and
2. Exercise a substantial degree of
direction over the policies, programs, and
activities of each supported organization.
modifications, reduced by total
deductions. Gross income doesn’t include
gifts, grants, or contributions. See
Appendix C.
Line 7. Organizational test. If you
answered “No,” you are a Type III
supporting organization, you must amend
your organizing document to specify
your supported organization(s) by name;
or you won’t meet the organizational test
under section 509(a)(3) and need to
reconsider your requested public charity
classification in Part VII, line 1.
For purposes of this line, “non-exempt-use
assets” are all assets of the supporting
organization other than:
1. Assets described in Regulations
section 53.4942(a)(2)(c)(2)(i) through (iv),
and
2. Exempt-use assets, which are
assets that are used (or held for use)
directly in carrying out the exempt
purposes of your supported organization.
See Regulations section 1.509(a)-4(i)(8)
for more information.
For example, N, an organization
described in section 501(c)(3), is the
parent organization of a healthcare system
consisting of two hospitals (Q and R) and
an outpatient clinic (S), each of which is
described in section 509(a)(1), and a
taxable subsidiary (T). N is the sole
member of each of Q, R, and S. Under the
charter and bylaws of each of Q, R, and S,
N appoints all members of the board of
directors of each corporation. N engages
in the overall coordination and supervision
of the healthcare system’s exempt
Line 7a. If you answered “No,” you won’t
meet the organizational test under section
509(a)(3) unless you amend your
organizing document to specify your
supported organization(s) by name,
purpose, or class, and need to reconsider
your requested public charity classification
in Part VII, line 1.
Line 13a. List the total amount you
distribute(d) annually to each supported
organization. Also, indicate how each
amount will vary from year to year.
Line 8. When responding to this question,
don’t include donors that are section
509(a)(1), (2), or (4) organizations.
subsidiary corporations Q, R, and S in
approval of their budgets, strategic
planning, marketing, resource allocation,
securing tax-exempt bond financing, and
community education. N also manages
and invests assets that serve as
This prohibition on contributions
Line 13b. List the total annual income for
each supported organization. If you
from controlling donors only
applies to Type I and Type III
TIP
distribute your income to, or for the use of,
a particular department or program of an
organization, list the annual revenue of the
supported department or program.
supporting organizations.
endowments of Q, R, and S.
Line 12. Answer “Yes,” if you conduct
activities that the supported organization
would otherwise need to conduct in
furtherance of its exempt purposes and
describe the activities that you conduct.
Line 9. Type III responsiveness test.
Answer “Yes,” if, because of your
relationship described in line 3, the
supported organization has a significant
involvement in your investment policies,
making and timing of grants, and directing
the use of your income and assets, and
explain how your supported organization
is involved in these matters.
Line 13c. Answer “Yes,” if your funds are
“earmarked” for a particular program or
activity conducted by your supported
organization.
Holding title to and managing assets
that are used (or held for use) directly in
carrying out the exempt purposes of your
supported organization (exempt-use
assets) are activities that directly further
the exempt purposes of your supported
organization. Conversely, with certain
exceptions, fundraising, making grants
(whether to the supported organization or
to third parties), and investing and
Schedule E. Effective Date
The questions in this schedule will help us
determine the effective date of exemption
if you’re either seeking reinstatement after
automatic revocation or you’re filing this
application more than 27 months after the
end of the month in which you were legally
formed.
Line 10. Type III notification require-
ment. A Type III supporting organization
must provide the notice described in this
question. If you’re a Type III supporting
organization, you’ll be required to answer
this question annually on your annual
information return (Schedule A of Form
990 or 990-EZ).
managing non-exempt-use assets aren’t
activities that directly further the exempt
purposes of the supported organization.
See Regulations section 1.509(a)-4(i)(4)
Specific Line Items
Lines 11–13. Type III integral part test.
Line 1. Answer “Yes,” if your exempt
status was automatically revoked under
section 6033(j)(1) for failure to file required
annual returns or notices for 3 consecutive
years and you’re applying for
An organization seeking classification as a (ii) for more information.
Type III supporting organization must
Line 13. To satisfy the integral part test
meet an integral part test, which is
satisfied by maintaining significant
involvement in the operations of one or
more supported organizations and
providing support on which the supported
organization(s) are dependent. A Type III
supporting organization may be
as a non-functionally integrated supporting
organization, you must distribute at least
85% of your annual net income or 3.5%
of the aggregate fair market value of all
of your non-exempt-use assets (whichever
is greater) to your supported
reinstatement.
Rev. Proc. 2014-11, 2014-3 I.R.B. 411,
several different procedures for reinstating
an organization’s exempt status
organization(s). You can use Part V of
Schedule A (Form 990 or 990-EZ) to help
determine your answer to this question.
functionally integrated (lines 11–12) or
non-functionally integrated (lines 13 and
13a–c) depending on the manner in which
it meets the integral part test. Functionally
integrated Type III supporting
depending upon its size, the number of
times it’s been automatically revoked, and
the timeliness of filing for reinstatement.
Review the revenue procedure to
The distributable amount for the
first tax year an organization is
TIP
treated as a non-functionally
integrated Type III supporting organization
is zero.
organizations are subject to fewer
restrictions and requirements than
non-functionally integrated Type IIII
supporting organizations.
determine which section applies to you.
Line 1a. Select the section of Rev. Proc.
2014-11 under which you’re applying for
reinstatement.
For purposes of this line, “net income” has
the same meaning as the term “adjusted
net income.” In general, “adjusted net
income” is the excess of gross income,
including gross income from any unrelated
trade or business, determined with certain
Line 11. Answer “Yes,” if you’re the
parent of all your supported organizations
because you:
Section 4. Select this section if:
You were eligible to file either Form
•
990-EZ or Form 990-N for each of the 3
consecutive years that you failed to file;
1. Have the power to appoint or elect,
directly or indirectly, a majority of the
-21-
This is the first time you’ve been
Describe how you exercised ordinary
business care and prudence in
•
Schedule F. Low-Income
Housing
automatically revoked pursuant to section
6033(j)(1); and
determining and attempting to comply with
your filing requirements in each of the 3
years of revocation. Include a detailed
explanation of all the facts and
You’re submitting this application no
•
To qualify for tax exemption, low-income
housing must provide affordable housing
for a significant segment of individuals in
your community with low incomes. Your
low-income housing may serve a
later than 15 months after the later of the
date of your Revocation Letter or the date
on which the IRS posted your name on the circumstances that led to the failure, the
Auto-Revocation List at
discovery of the failure, and the steps you
have taken or will take to avoid or mitigate
future failures to file timely returns or
notices.
combination of purposes, such as for
poor, frail, and elderly persons.
By selecting this item, you’re also
attesting that your failure to file wasn’t
intentional and you’ve put in place
procedures to file required returns or
notices in the future.
Specific Line Items
Section 7. Select this section if you’re
seeking reinstatement with an effective
date of reinstatement of the date of
submission of this application.
Line 1. The “type” of facility may be an
apartment complex, condominium,
cooperative, or private residence, etc.
If you were classified as a private
foundation prior to your
TIP
Line 6. Answer “Yes,” if you charge daily,
weekly, monthly, or annual fees or
maintenance charges.
Line 2. Generally, if you didn’t file Form
1023 within 27 months of formation, the
effective date of your exempt status will be
the date you filed Form 1023 (submission
date). We may grant requests for an
earlier effective date when there’s
evidence to establish you acted
automatic revocation, you weren't
eligible to file either Form 990-EZ or Form
990-N and, therefore, aren't eligible to
request reinstatement under Section 4.
Line 8. Government programs include
federal, state, or local government
programs.
If your exempt status was
automatically revoked more than
reasonably and in good faith, and the
grant of relief won’t prejudice the interests
of the government.
Select the appropriate box to indicate
whether you accept the submission date
as the effective date of your exempt status
or whether you are requesting an earlier
effective date.
!
CAUTION
once, you’re not eligible for
Schedule G. Successors
to Other Organizations
reinstatement under Section 4; however,
you may apply for reinstatement under
Section 5, Section 6, or Section 7.
You should consider this schedule as a
successor organization if any of the
following situations pertain to you.
Section 5. Select this section if:
You took or will take over activities
•
You’re ineligible to file for reinstatement
•
previously conducted by another
organization.
under Section 4, and
Line 2a. You may be eligible for
consideration for relief from the
requirement that you file Form 1023 within
27 months of formation if you can
establish that you acted reasonably and in
good faith, and that granting an extension
won’t prejudice the interests of the
government.
Describe in detail your reasons for filing
late, how you discovered your failure to
file, any reliance on professional advice or
advice from the IRS, and any other
information you believe will support your
request for relief. Also, you may want to
provide a comparison of (1) what your
aggregate tax liability would be if you had
filed this application within the 27-month
period with (2) what your aggregate
liability would be if you were exempt as of
your formation date.
You’re submitting this application not
•
You took or will take over 25% or more
•
later than 15 months after the later of the
date of your Revocation Letter or the date
on which the IRS posted your name on the
Auto-Revocation List at
of the fair market value of the net assets
of another organization.
You were established upon the
•
conversion of an organization from
for-profit to non-profit status.
By selecting this item, you’re also
attesting that you filed the required annual
returns, your failure to file was not
intentional, and you have put in place
procedures to file required returns or
notices in the future.
The other organization is the
predecessor organization. You should
complete this schedule regardless of
whether the predecessor (other
organization) was exempt or not exempt
from federal income tax.
Describe how you exercised ordinary
For purposes of this schedule, a
“for-profit” organization is one in which
persons are permitted to have an
ownership or partnership interest, such as
corporate stock. It includes sole
proprietorships, corporations, and other
entities that provide for ownership
interests.
business care and prudence in
determining and attempting to comply with
your filing requirements in at least 1 of the
3 years of revocation. Include a detailed
explanation of all the facts and
circumstances that led to the failure, the
discovery of the failure, and the steps you
have taken or will take to avoid or to
mitigate future failures to file timely returns
or notices.
We may consider the following factors.
You filed Form 1023 before we
•
discovered your failure to file.
You failed to file because of intervening
Schedule H. Organizations
Providing Scholarships,
Fellowships, Educational
Loans, or Other
•
Section 6. Select this section if you are
applying for reinstatement of your
events beyond your control.
You exercised reasonable diligence,
•
tax-exempt status more than 15 months
from the later of the date of the Revocation
Letter or the date on which the IRS posted
your name on the Auto-Revocation List at
but you weren’t aware of the filing
requirements. (The complexity of your
filing and experience in these matters may
be taken into consideration.)
Educational Grants to
Individuals and Private
Foundations Requesting
Advance Approval of
Individual Grant
You reasonably relied on written advice
•
By selecting this item, you’re also
attesting that you filed the required annual
returns, your failure to file wasn’t
intentional, and you have put in place
procedures to file required returns or
notices in the future.
from us.
You reasonably relied on the advice of
•
a qualified tax professional who failed to
file or advise you to file Form 1023.
Procedures
Complete this schedule if you provide
scholarships, fellowships, grants, loans, or
-22-
other distributions to individuals for
If you make educational loans,
educational purposes. When answering
describe the terms of the loan (for
the questions on this schedule, you should example, the factors you consider in
demonstrate how these distributions
further your exempt purposes.
selecting or approving loan recipients,
interest rate, duration, forgiveness
provision, etc.). Also, describe whether
any financial institutions or other lenders
are involved in your program.
Explain how you will publicize your
program and whether you publicize to the
general public or to another group of
possible recipients. Include specific
Line 1a. Check the box for section
“4945(g)(1)” if your award qualifies as a
scholarship or fellowship grant that’s
awarded on an objective and
If you’re a private foundation,
you’re subject to the rules under
!
CAUTION
section 4945 and may incur an
nondiscriminatory basis and is used for
study at a school (see Schedule B for
what is considered a school).
excise tax if you make grants for the
purpose described above without seeking
advance approval of your grant-making
procedures (see Schedule H–Section II).
Check the box for “4945(g)(3)” if the
purpose of your award is to achieve a
specific objective, produce a report or
other similar product, or improve or
enhance a literary, artistic, musical,
scientific, teaching, or other similar
capacity, skill, or talent of the recipient.
Include your educational loan program
under this section.
information about the geographic area in
which your program will be publicized and
the means you will use, such as through
newspaper advertisements, school district
announcements, or community groups.
Generally, distributions made to
individuals may advance educational
purposes if selection is made:
In a non-discriminatory fashion in terms
•
of racial preference;
Line 2. Organizations that make grants to
individuals must maintain adequate
records and case histories showing the
name and address of each recipient,
pursuant Rev. Rul. 56-304, 1956-2 C.B.
306 but don’t provide this information as
part of your application.
Based on need and/or merit; and
•
•
To a charitable class in terms of being
You may check more than one box.
available to an open-ended group, rather
than to pre-selected individuals.
If your award qualifies as a prize
A scholarship or fellowship is tax free to
the recipient only if he or she is a
candidate for a degree at an eligible
educational institution and uses the
scholarship or fellowship to pay qualified
education expenses.
Qualified education expenses include
tuition and fees; and course-related
expenses such as books, supplies, and
equipment. Room and board, travel,
research, clerical help, and non-required
equipment aren’t qualified education
expenses. See Pub. 970, Tax Benefits for
Education, for additional information.
or award that is subject to the
provisions of section 74(b) and
TIP
your recipient is selected from the general
public, you don’t have to request advance
approval of your grant-making procedures
since a prize or award isn’t subject to the
advance approval procedure requirements
because it isn’t a grant for travel, study, or
other similar purposes. See Rev. Ruls.
77-380, 1977-2 C.B. 419; 76-460, 1976-2
C.B. 371; and 75-393, 1975-2 C.B. 451.
Section II
If you requested public charity
classification in Part VII, line 1, don’t
complete Schedule H – Section II.
Line 1. Answer “Yes,” if you’re a private
foundation and you’re requesting
advance approval of your grant-making
procedures under section 4945(g).
Answer “No,” if you’re a private foundation
but don’t wish to request advance
approval of your grant-making procedures
under section 4945(g). If you answer “No”
the amounts you distribute as educational
grants provided to individuals may be
considered taxable expenditures under
section 4945.
Line 4. Answer “Yes,” if you award
scholarships on a preferential basis
because you require, as an initial
qualification, that the individual be an
employee or be related to an employee of
a particular employer.
Selection of individuals using a lottery
system generally hasn’t been approved by
the IRS.
Line 7. For purposes of this schedule, a
program for children of employees of a
particular employer includes children and
family members of employees.
Specific Line Items
Section I
For more information about advance
approval of grant-making procedures of a
private foundation, go to IRS.gov/
Line 1. If you conduct more than one
grant program, describe each program
separately.
Instructions for Form 1023
-23-
Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United
States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to
figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form
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as required by section 6103. However, certain returns and return information of tax exempt organizations and trusts are subject to
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The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for tax
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instructions for their information return.
Comments and suggestions. If you have comments concerning the accuracy of this time estimate or suggestions for making this
form simpler, we would be happy to hear from you. You can send us comments from IRS.gov/FormComments. Or you can write to:
Internal Revenue Service
Tax Forms and Publications Division
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Washington, DC 20224
Instructions for Form 1023
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Appendix A: Sample Conflict of Interest Policy
Note. This Sample Conflict of
Interest Policy is intended to
provide an example of a
indirectly, through business,
investment, or family:
conflict of interest is discussed
and voted upon. The
4. Violations of the Conflict
of Interest Policy
remaining board or committee
members shall decide if a
conflict of interest exists.
a. An ownership or
a. If the governing board or
committee has reasonable
cause to believe a member
has failed to disclose
conflict of interest policy for
organizations. The sample
conflict of interest policy does
not prescribe any specific
requirements. Therefore,
organizations should use a
conflict of interest policy that
best fits their organization.
investment interest in any
entity with which the
Organization has a
3. Procedures for Address-
transaction or
ing the Conflict of Interest
actual or possible conflicts
of interest, it shall inform
the member of the basis
for such belief and afford
the member an opportunity
to explain the alleged
failure to disclose.
arrangement,
a. An interested person
may make a presentation
at the governing board or
committee meeting, but
after the presentation,
he/she shall leave the
meeting during the
b. A compensation
arrangement with the
Organization or with any
entity or individual with
which the Organization
has a transaction or
arrangement, or
Note. Items marked Hospital
insert — for hospitals that
complete Schedule C are
intended to be adopted by
hospitals.
b. If, after hearing the
member's response and
after making further
discussion of, and the vote
on, the transaction or
arrangement involving the
possible conflict of
c. A potential ownership or
investment interest in, or
compensation
investigation as warranted
by the circumstances, the
governing board or
Article I
Purpose
arrangement with, any
entity or individual with
which the Organization is
negotiating a transaction
or arrangement.
interest.
committee determines the
member has failed to
disclose an actual or
b. The chairperson of the
governing board or
The purpose of the conflict of
interest policy is to protect this
tax-exempt organization's
(Organization) interest when it
is contemplating entering into
a transaction or arrangement
that might benefit the private
interest of an officer or director
of the Organization or might
result in a possible excess
benefit transaction. This policy
is intended to supplement but
not replace any applicable
state and federal laws
committee shall, if
possible conflict of
appropriate, appoint a
disinterested person or
committee to investigate
alternatives to the
d. Compensation includes
direct and indirect
interest, it shall take
appropriate disciplinary
and corrective action.
remuneration as well as
gifts or favors that aren’t
insubstantial. A financial
interest isn’t necessarily a
conflict of interest. Under
Article III, Section 2, a
person who has a financial
interest may have a
proposed transaction or
arrangement.
Article IV
Records of Proceedings
The minutes of the governing
board and all committees with
board delegated powers shall
contain:
c. After exercising due
diligence, the governing
board or committee shall
determine whether the
Organization can obtain,
with reasonable efforts, a
more advantageous
conflict of interest only if
the appropriate governing
board or committee
governing conflict of interest
applicable to nonprofit and
charitable organizations.
a. The names of the persons
who disclosed or otherwise
were found to have a financial
interest in connection with an
actual or possible conflict of
interest, the nature of the
financial interest, any action
taken to determine whether a
conflict of interest was present,
and the governing board's or
committee's decision as to
whether a conflict of interest in
fact existed.
transaction or arrangement
from a person or entity that
would not give rise to a
conflict of interest.
decides that a conflict of
interest exists.
Article II
Definitions
Article III
Procedures
d. If a more advantageous
transaction or arrangement
isn’t reasonably possible
under circumstances not
producing a conflict of
interest, the governing
board or committee shall
determine by a majority
vote of the disinterested
directors whether the
transaction or arrangement
is in the Organization best
interest, for its own benefit,
and whether it is fair and
reasonable. In conformity
with the above
1. Interested Person Any
director, principal officer, or
member of a committee with
governing board delegated
powers, who has a direct or
indirect financial interest, as
defined below, is an interested
person.
1. Duty to Disclose In
connection with any actual or
possible conflict of interest, an
interested person must
disclose the existence of the
financial interest and be given
the opportunity to disclose all
material facts to the directors
and members of committees
with governing board
b. The names of the persons
who were present for
discussions and votes relating
to the transaction or
[Hospital insert – for
hospitals that complete
Schedule C. If a person is an
interested person with respect
to any entity in the health care
system of which the
arrangement, the content of
the discussion, including any
alternatives to the proposed
transaction or arrangement,
and a record of any votes
taken in connection with the
proceedings.
delegated powers considering
the proposed transaction or
arrangement.
2. Determining Whether a
Conflict of Interest Exists
After disclosure of the financial
interest and all material facts,
and after any discussion with
the interested person, he/she
shall leave the governing
determination, it shall
make its decision as to
whether to enter into the
transaction or
organization is a part, he or
she is an interested person
with respect to all entities in the
health care system.]
arrangement.
2. Financial Interest A
person has a financial interest
if the person has, directly or
board or committee meeting
while the determination of a
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prohibited from providing
information to any committee
regarding compensation.
b. Has read and
b. Whether partnerships,
joint ventures, and
Article V
Compensation
understands the policy,
c. Has agreed to comply
with the policy, and
arrangements with
management
[Hospital insert-for
a. A voting member of the
governing board who receives
compensation, directly or
indirectly, from the
d. Understands the
organizations conform to
the Organization's written
policies, are properly
recorded, reflect
hospitals that complete
Schedule C Physicians who
receive compensation from the
Organization, whether directly
or indirectly or as employees
or independent contractors,
are precluded from
Organization is charitable
and in order to maintain its
federal tax exemption it
must engage primarily in
activities that accomplish
one or more of its
Organization for services is
precluded from voting on
matters pertaining to that
member's compensation.
reasonable investment or
payments for goods and
services, further charitable
purposes and don't result
in inurement,
tax-exempt purposes.
membership on any committee
whose jurisdiction includes
compensation matters. No
physician, either individually or
collectively, is prohibited from
providing information to any
committee regarding physician
compensation.]
b. A voting member of any
committee whose jurisdiction
includes compensation
matters and who receives
compensation, directly or
indirectly, from the
Periodic Reviews
impermissible private
benefit, or in an excess
benefit transaction.
To ensure the Organization
operates in a manner
consistent with charitable
purposes, and doesn't engage
in activities that could
Article VIII
Use of Outside Experts
Organization for services is
precluded from voting on
matters pertaining to that
member's compensation.
jeopardize its tax-exempt
status, periodic reviews shall
be conducted. The periodic
reviews shall, at a minimum,
include the following subjects:
When conducting the periodic
reviews, as provided for in
Article VII, the Organization
may, but need not, use outside
advisors. If outside experts are
used, their use shall not relieve
the governing board of its
responsibility for ensuring
periodic reviews are
Article VI
Annual Statements
c. No voting member of the
governing board or any
committee whose jurisdiction
includes compensation
matters and who receives
compensation, directly or
indirectly, from the
Each director, principal officer,
and member of a committee
with governing board
a. Whether compensation
arrangements and benefits
are reasonable, based on
competent survey
delegated powers shall
annually sign a statement
which affirms such person:
information, and the result
of arm's length bargaining.
conducted.
a. Has received a copy of
the conflict of interest
policy,
Organization, either
individually or collectively, is
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Appendix B: States With Statutory Provisions Satisfying the Requirements of
Internal Revenue Code Section 508(e)
The following states have adopted legislation satisfying the requirements of Section 508(e) relating to
private foundation governing instruments. Information derived from Revenue Ruling 75-38, 1975-1
C.B. 161.
ALABAMA — except where otherwise provided by a decree of a court of competent jurisdiction or by a provision in the
private foundation's governing instrument, which in either case has been entered or made after October 1, 1971, and
expressly limits the applicability of state law.
ALASKA — except for such private foundations that expressly provide in their governing instruments that the applicable
sections of Alaska law don't apply to them.
ARKANSAS — except for such private foundations which expressly provide in their governing instruments that the
applicable sections of Arkansas law don't apply to them and except in the case of trusts where otherwise provided by decree
of a court of competent jurisdiction.
CALIFORNIA — except where otherwise provided by a court of competent jurisdiction.
COLORADO — with respect to trusts that are private foundations except where otherwise provided by a court of competent
jurisdiction.
CONNECTICUT — except where otherwise provided by a court of competent jurisdiction.
DELAWARE — except for such private foundations, which expressly provide in their governing instruments that the
applicable sections of Delaware law don't apply to them.
DISTRICT OF COLUMBIA — except for such corporations, which expressly provide in their governing instruments that the
applicable sections of District of Columbia law don't apply to them and except in the case of trusts where otherwise provided
by a court of competent jurisdiction. (For purposes of this statute, corporations include corporations organized under any Act
of Congress applicable to the District of Columbia as well as corporations organized under the laws of the District of
Columbia.)
FLORIDA — except for such trusts that file a proper election not to be subject to the applicable provisions of Florida law and
for such corporations as to which a court of competent jurisdiction has otherwise determined.
GEORGIA — except for such private foundations that file a proper election not to be subject to such law.
HAWAII — no exceptions.
IDAHO — except for such private foundations that expressly provide in their governing instruments that the applicable
sections of Idaho law don't apply to them.
ILLINOIS — except for such corporations that have express provisions to the contrary in their articles of incorporation and
except for trusts where it is otherwise provided by a court of competent jurisdiction.
INDIANA — except where otherwise determined by a court of competent jurisdiction with respect to private foundations
organized before January 1, 1970.
IOWA — except for such private foundations which expressly provide in their governing instruments that the applicable
sections of Iowa law don't apply to them.
KANSAS — except where otherwise provided by a court of competent jurisdiction.
KENTUCKY — except, with respect to corporations in existence on July 1, 1972, to the extent that such a corporation
provides to the contrary by amendment to its articles of incorporation adopted after July 1, 1972, and, with respect to trusts in
existence on July 1, 1972, where action is properly commenced on or before December 31, 1972, in a court of competent
jurisdiction to excuse the trust from compliance with the requirements of section 508(e) of the Code.
LOUISIANA — except for such private foundations that expressly provide in their governing instruments that the applicable
sections of Louisiana law don't apply to them.
MAINE — except where otherwise provided by a court of competent jurisdiction.
MARYLAND — except where otherwise provided by a court of competent jurisdiction.
MASSACHUSETTS — except where otherwise provided by a court of competent jurisdiction.
MICHIGAN — with respect to trusts that are private foundations except for such private foundations which file a notice of
inconsistency under Michigan law.
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MINNESOTA — except for private foundations that have been held by a court of competent jurisdiction not to be affected by
such state statute.
MISSISSIPPI — except where otherwise provided by a court of competent jurisdiction.
MISSOURI — except for private foundations that have been held by a court of competent jurisdiction not to be affected by
such state statute.
MONTANA — except in the case of trusts where otherwise provided by court decree entered after March 28, 1974, and
except in the case of a corporation that has an express provision to the contrary in its articles of incorporation.
NEBRASKA — except for such trusts that effectively elect to be excluded from the applicable sections of Nebraska law, for
such corporations which have governing instruments expressly providing to the contrary, and except as a court of competent
jurisdiction has otherwise determined in any given case.
NEVADA — no exceptions.
NEW HAMPSHIRE — except where it is otherwise provided by a court of competent jurisdiction.
NEW JERSEY — except for such private foundations that expressly provide in their governing instruments that the
applicable sections of New Jersey law don't apply to them.
NEW YORK — except where such law conflicts with any mandatory direction of an instrument by which assets were
transferred prior to June 1, 1971, and such conflicting direction hasn’t been removed legally.
NORTH CAROLINA — except for such private foundations which expressly provide in their governing instruments that the
applicable sections of North Carolina law don't apply to them and except for trusts that have their governing instruments
reformed by a decree of the Superior Court of North Carolina.
NORTH DAKOTA — with respect to trusts that are private foundations except where otherwise provided by a court of
competent jurisdiction.
OHIO — except in the case of trusts where it is provided otherwise by a court of competent jurisdiction and except in the
case of corporations in existence on September 17, 1971, which expressly adopt contrary provisions in their governing
instruments after September 17, 1971.
OKLAHOMA — except for such private foundations that file a proper election not to be subject to such law.
OREGON — no exceptions.
PENNSYLVANIA — except where otherwise provided by a court of competent jurisdiction.
RHODE ISLAND — except where otherwise provided by a court of competent jurisdiction.
SOUTH CAROLINA — except for private foundations that expressly provide in their governing instruments that the
applicable sections of South Carolina law don't apply to them.
SOUTH DAKOTA — except where otherwise provided by a court of competent jurisdiction.
TENNESSEE — except where otherwise provided by a court of competent jurisdiction.
TEXAS — except for such private foundations that a proper election not to be subject to such law.
UTAH — with respect to trusts that are private foundations except where otherwise provided by a court of competent
jurisdiction.
VERMONT — except where otherwise provided by a court of competent jurisdiction.
VIRGINIA — except for private foundations whose governing instruments contain express provisions to the contrary or that
have filed a proper election not to be subject to such law.
WASHINGTON — except for such private foundations that expressly provide in their governing instruments that the
applicable sections of Washington law don't apply to them.
WEST VIRGINIA — with respect to trusts that are private foundations except for such trusts which provide in their governing
instruments that the applicable sections of West Virginia law don't apply to them.
WISCONSIN — except as may otherwise be provided by decree of a court of competent jurisdiction.
WYOMING — except where otherwise provided by a court of competent jurisdiction.
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Appendix C: Glossary of Terms
Adjusted net income (for Schedule D) Adjusted net income includes: gross income from any unrelated trade or
business; gross income from functionally related businesses; interest
payments received on loans; amounts received or accrued as repayments
of amounts taken as qualifying distributions for any tax year; amounts
received or accrued from the sale or other disposition of property to the
extent acquisition of the property was treated as a qualifying distribution
for any tax year; any amounts set aside for a specific project to the extent
the full set-aside was not necessary for the project; interest on
government obligations normally excluded under section 103; net
short-term capital gains on sale or other disposition of property; and
income received from an estate if the estate is considered terminated for
income tax purposes because of a prolonged administration period.
It doesn't include: gifts, grants, and contributions received; long-term
capital gains or losses; net section 1231 gains; capital gain dividends; the
excess of fair market value over adjusted basis of property distributed to
the U.S. or a possession or political subdivision, a state or its political
subdivision, a charitable trust, or corporation for public purposes; or
income received from an estate during the administration period.
In computing adjusted net income, deduct the following: ordinary and
necessary expenses paid or incurred for the production or collection of
gross income, or for the management, conservation, or collection of gross
income (includes operating expenses such as compensation of officers,
employee wages and salaries, interest, rent, and taxes); straight-line
depreciation and depletion (not percentage depletion); and expenses and
interest paid or incurred to carry tax-exempt obligations. Don't deduct net
short-term capital losses for the year in which they occur (these losses
cannot be carried back or carried over to earlier or later tax years); the
excess of expenses for property used for exempt purposes over the
income received from the property; charitable contributions made by you;
net operating losses; and special deductions for corporations.
Arm's length
A transaction between parties having adverse (or opposing) interests
where none of the participants are in a position to exercise substantial
influence over the transaction because of business or family
relationship(s) with more than one of the parties.
Authorized representative
An individual eligible to practice before the IRS who holds a power of
attorney (Form 2848 or other similar documents) that authorizes him or
her to represent the organizations in tax matters, including the application
for tax-exempt status.
Bingo
A game of chance played with cards that are generally printed with 5 rows
of 5 squares each, on which participants place markers to form a
pre-selected pattern to win the game. Bingo is gambling.
Business relationship
Employment and contractual relationships, and common ownership of a
business where any officers, directors, or trustees, individually or together,
possess more than a 35% ownership interest in common. Ownership
means voting power in a corporation, profits interest in a partnership, or
beneficial interest in a trust.
Bylaws
The internal rules and regulations of an organization.
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Certification of filing
Evidence that, on a specific date, articles of incorporation (for a
corporation) or articles of organization (for a limited liability company)
were accepted for filing by appropriate state authority resulting in the
creation of a state-law entity.
Community
The local or regional geographic area to be served by an organization.
Compensation
All forms of income from working, including salary or wages; deferred
compensation; retirement benefits, whether in the form of a qualified or
non-qualified employee plan (for example, pensions or annuities); fringe
benefits (for example, personal vehicle, meals, lodging, personal and
family educational benefits, low interest-loans, payment of personal travel,
entertainment, or other expenses, athletic or country club membership,
and personal use of your property); and bonuses.
Conflict of interest policy
A set of procedures to identify potential conflicts of interest and to reduce
the likelihood that persons in a position of authority over an organization
may use that authority to receive an inappropriate benefit. A conflict of
interest may arise when a person in a position of authority over an
organization, such as a director, officer, or manager, may benefit
personally from a decision he or she could make.
Controlled by disqualified persons
See the definition of a disqualified person below. A section 509(a)(3)
supporting organization, may not be controlled directly or indirectly by
disqualified persons (other than the organization’s officers, directors or
trustees). An organization is controlled by disqualified persons if
disqualified persons can exercise 50% or more of the total voting power
held by the organization’s governing body. For this purpose, controlled
includes the authority to affect significant decisions, such as power over
investment decisions, or charitable disbursement decisions, as well as the
power to veto such decision. Control may be direct or indirect.
Corporation
Develop
An entity organized under a federal or state corporation law (including the
statutes of a federally recognized Indian tribal or Alaskan native
government).
The planning, financing, construction, or provision of similar services
involved in the acquisition of real property, such as land or a building.
-30-
Disqualified person
Any individual or organization that is any of the following relationships.
a. A substantial contributor to you (see Substantial contributor).
b. An officer, director, trustee, or any other individual who has similar
powers or responsibilities.
c. An individual who owns more than 20% of the total combined voting
power of a corporation that is a substantial contributor to you.
d.