To apply for tax exempt status as a charitable organization described in Section 501(c)(3) of the Internal Revenue Code, your PA/PTA should file the following forms with the IRS:
Forms to file
IRS Form SS-4. Use IRS Form SS-4 to apply for an employer identification number or “EIN.” An EIN is the PTA’s IRS identification number and is required to file for tax exemption. You must include your PTA’s EIN on all correspondence with the IRS. If your PTA does not already have an EIN, you can apply online or by phone at (800) 829-4933. You can also download IRS Form SS-4, Application for Employer Identification Number, and mail or fax it to the IRS. (For instructions click here.) For more information about EINs, see IRS Publication 1635, Understanding Your EIN.
IRS Form 1023. To obtain tax exemption, your PA/PTA must submit one of two application forms to the IRS. The application form you should use depends on how much money your PA/PTA expects to earn and/or have in assets.
- If your PA/PTA expects to make over $50,000 in any of its first three years, or expects to have over $250,000 in total assets, you should use IRS Form 1023, Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code, to apply for tax exemption. You should complete and mail Form 1023 (including any required supporting documentation) to the address indicated in the instructions. Typical supporting documentation includes: (1) your PA/PTA’s organizing documents (i.e., Certificate of Incorporation and Bylaws), (2) a description of the PA/PTA’s activities, and (3) financial information. Also, a user fee of $600 must accompany Form 1023.
- If your PTA expects to make $50,000 or less per year during each of its first three years and expects to have total assets of $250,000 or less, you may use IRS Form 1023-EZ, Streamlined Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code, to apply for tax exemption. Form 1023-EZ is a much simpler, shorter-form version of Form 1023. It must be filed electronically through the pay.gov website, and you can register with pay.gov and file the application by following the instructions found at irs.gov/uac/About-Form-1023EZ. A user fee of $275 must accompany Form 1023-EZ.
IRS Forms 2848 and 8821. You should attach IRS Form 2848, Power of Attorney and Declaration of Representative, if someone other than one of the PA/PTA’s principal officers will represent the organization on matters related to application. (For instructions click here.) IRS Form 8821, Tax Information Authorization, should be attached if the organization wants the IRS to be able to provide information about the organization’s application to someone other than a principal officer.
When to file
You should file Form 1023 as soon as possible after your PA/PTA is organized. If your PTA files Form 1023 within 27 months after it is organized, the exemption will be retroactive to the date of incorporation or establishment. If you file after this deadline, exemption will be effective from the date the application is postmarked. If you think the annual gross receipts of your PA/PTA may be less than $5,000, you may not need to file Form 1023. See page 1 of the instructions for more information.
While the Application is Pending
Your PA/PTA must operate as a tax exempt organization while its Form 1023 is awaiting approval from the IRS. This means complying with all of the rules applicable to Section 501(c)(3) organizations and filing annual information returns with the IRS when due (either Form 990, 990-EZ or 990-N, depending on your PTA’s level of gross receipts). See the IRS resources for Form 990, available at irs.gov/Charities-&-Non-Profits/Form-990-Resources-and-Tools-for-Exempt-Organizations. If your PA/PTA’s application for exemption is approved, any contributions made while the application was pending will be tax-deductible. However, if the application is not approved, donor contributions would not be tax-deductible. Moreover, your PA/PTA will be liable for filing federal income tax returns unless its income is otherwise excluded from federal taxation. The exempt organizations section of the IRS website – irs.gov/Charities-&-Non-Profits – explains how to learn about the status of a pending application for tax exempt status.
The IRS’s Decision
If your PA/PTA meets the requirements for tax exemption, the IRS will issue a determination letter recognizing your PA/PTA’s exempt status. This document should be kept with your PA/PTA’s permanent records. If your application does not meet the requirements, the IRS might request additional information in writing.
How to Get IRS Assistance and Information
For help with questions about applying for tax exempt status, annual filing requirements, and information about exempt organizations, call the IRS at (800) 829-5500 or request help online at irs.gov. IRS forms and publications can be downloaded from the Internet and ordered by telephone. A general overview of the tax exemption process can be found in IRS Publication 4220, Applying for 501(c)(3) Tax Exempt Status.