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Applying for Exemption/Misc. Determination: Sample Questions

Activities Appear to be Described in Subsection other than Requested Subsection

Applications for exemption and miscellaneous determination requests are assigned to Exempt Organizations specialists for review. If additional information is necessary to make a determination, a specialist will contact the organization for the information. Here’s a list of questions that might be asked on this topic.

Submitted Form 1023 – Organization Appears to be Described in Subsection Requiring Form 1024

1. You submitted Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, requesting recognition of exemption under Section 501(a) of the Internal Revenue Code (IRC) as an organization described in Section 501(c)(3). From the information you provided, it is not clear whether you qualify under this section of the IRC. We need additional information before we can process your application and make a determination.

To be recognized under Section 501(c)(3), an organization must operate exclusively for the purposes described in Section 501(c)(3). The purposes described are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to animals. Note that the term “charitable” is interpreted very broadly. See Treasury Regulation Section 1.501(c)(3)-1(d)(2).

You might qualify as an organization described in a paragraph of IRC Section 501(c) other than paragraph (c)(3). You can find additional information about exempt organizations on the IRS website at www.irs.gov/Charities-&-Non-Profits, Tax Information for Charities and Other Non-Profits, and in IRS Publication 557, Tax-Exempt Status for Your Organization.

  • If you want to pursue recognition as an exempt organization described in Section 501(c)(3), please submit additional information showing how you are organized and operated exclusively for the purposes described in Section 501(c)(3).
  • If you decide that you qualify for recognition as an exempt organization described in a paragraph of Section 501(c) other than paragraph (c)(3), please complete and return Form 1024, Application for Recognition of Exemption Under Section 501(a), which is available on the IRS website at www.irs.gov/Forms-&-Pubs, Forms & Publications. A new user fee is not required. Although supporting information previously furnished need not be duplicated, you must provide any necessary additional information required for the application, including the applicable schedule to Form 1024.
  • If you decide not to pursue recognition as an exempt organization at this time, please submit a written statement indicating your intention, and we will close your case.

Submitted Form 1024 – Organization Appears to be Described in Subsection Requiring Form 1024 other than Subsection Requested

2. You submitted Form 1024, Application for Recognition of Exemption Under Section 501(a), requesting recognition of exemption under Section 501(a) of the Internal Revenue Code (IRC) as an organization described in Section 501(c)([Enter requested subsection number (X1)]) as a [Enter description of organization under requested subsection, as listed on page 1 of Form 1024, e.g., social club].From the information you provided, it appears that you might more appropriately be described in Section 501(c)([Enter recommended subsection number (X2)]) as a [Enter description of organization under recommended subsection, as listed on page 1 of Form 1024, e.g., domestic fraternal society], but we require additional information before we can process your application and make a determination. You can find additional information about exempt organizations on the IRS website at www.irs.gov/Charities-&-Non-Profits, Tax Information for Charities and Other Non-Profits, and in IRS Publication 557, Tax-Exempt Status for Your Organization.

  • If you agree to be classified as an organization described in Section 501(c)([X2]), please provide a written statement indicating your agreement and complete Schedule [X] of Form 1024, which is available on the IRS website at www.irs.gov/Forms-&-Pubs, Forms & Publications. A new user fee is not required. Although supporting information previously furnished need not be duplicated, you must provide any necessary additional information required for the application.
  • If you do not agree and wish to pursue recognition as an organization described in Section 501(c)([X1]), please submit additional information detailing how you meet the requirements of this subsection.

Submitted Form 1024 Requesting 501(c)(7) but with Excessive Non-member Income – Might Qualify under 501(c)(4)

3. You submitted Form 1024, Application for Recognition of Exemption Under Section 501(a), requesting recognition of exemption under Section 501(a) of the Internal Revenue Code (IRC) as an organization described as a social club in Section 501(c)(7). From the information you provided, it appears that you might not meet the limitations on gross receipts, but we require additional information before we can process your application and make a determination.  

In general, a social club described in Section 501(c)(7) may receive up to 35 percent of its gross receipts from sources outside its membership (non-member income) without jeopardizing its tax exemption. A social club with non-member income above this limit might lose its tax exemption, depending on facts and circumstances. See IRS Publication 557, Tax-Exempt Status for Your Organization, for more detail, including information on the related 15 percent limit.  

You might want to consider pursuing exemption under Section 501(c)(4) as an organization primarily engaged in social welfare activities. The promotion of social welfare means promoting in some way the common good and general welfare of the people of the community. Your primary activity is conducting events that are open to and benefit the general public. Therefore, it appears you might better qualify for exemption as an organization described in Section 501(c)(4), but, as noted above, we require additional information before we can process your application and make a determination.

  • If you agree to be classified as an organization described in Section 501(c)(4), please provide a written statement indicating your agreement and complete Schedule B of Form 1024, which is available on the IRS website at www.irs.gov/Forms-&-Pubs, Forms & Publications. A new user fee is not required. Although supporting information previously furnished need not be duplicated, you must provide any necessary additional information required for the application.
  • If you want to continue to pursue recognition as an organization described in Section 501(c)(7), please submit additional information detailing how, based on all the facts and circumstances, you meet the requirements of that section.  

Submitted Form 1024 – Organization Appears to be Described also in 501(c)(3), Requiring Form 1023

4. You submitted Form 1024, Application for Recognition of Exemption Under Section 501(a), requesting recognition of exemption under Section 501(a) of the Internal Revenue Code (IRC) as an organization described in IRC Section 501(c)([X]). Based on the information you provided, it appears you might more appropriately be described in Section 501(c)(3) as an organization operated exclusively for religious, charitable, scientific, educational, or literary purposes, the prevention of cruelty to children or animals, the promotion of amateur sports competition, or the testing for public safety, but we require additional information before we can process your application and make a determination. Contributions to organizations described in Section 501(c)(3) generally are tax deductible. You can find additional information about exempt organizations on the IRS website at www.irs.gov/Charities-&-Non-Profits, Tax Information for Charities and Other Non-Profits, as well as in IRS Publication 557, Tax-Exempt Status for Your Organization.

  • If you agree and want to be considered for recognition as an organization described in Section 501(c)(3), please complete and submit Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, which is available on the IRS website at www.irs.gov/Forms-&-Pubs, Forms & Publications. Although supporting information previously furnished need not be duplicated, you must provide any necessary additional information required for the application. Pay special attention to the provisions required to be in your organizational documents by reviewing Part III of the Instructions for Form 1023.
  • If you want to continue to pursue recognition as an organization described in IRC Section 501(c)([X]), please submit a statement indicating your intention.  

 

More information:

See the complete list of Applying for Exemption/Miscellaneous Determination Sample Questions by topic.

 

Page Last Reviewed or Updated: 16-Dec-2014