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Applying for Exemption/Misc. Determination: Sample Questions

Financial Information and User Fees

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.

Form 1023 Revenues and Expenses Incomplete or Missing [user fee may be incorrect] 

1. Your application did not contain sufficient information regarding your revenues and expenses. Please provide your revenues and expenses following the guidelines in a or b below. We recommend that you complete and submit page 9 of Form 1023.

a. If you have been in existence less than 5 years, provide actual information for each 
   year in existence and provide projections of your likely revenues and expenses based 
   on a reasonable and good faith estimate of your future finances. Include a total of 
   three years of financial information if you have not completed one tax year, or four 
   years of financial information if you have completed one tax year.

b. If you have been in existence 5 or more years, provide actual information for your 
    most recent 5 tax years. Note: If using page 9 of Form 1023 to submit your 
    information, you will need to provide a separate statement that includes information 
    about the most recent 5 tax years because the data table has not been updated to 
    provide for a 5th year.

[Instruction: Include paragraph below if organization paid $400 user fee and may owe additional user fee based on response.]

[The user fee for organizations whose annual gross receipts average or are expected to average more than $10,000 per year is $850. You paid a user fee of $400. If your annual gross receipts averaged more than $10,000 per year during the preceding 4 years, or are expected to average more than $10,000 per year, please remit an additional $450, payable to the Department of the Treasury. We recommend payment by certified check, cashiers’ check, or money order.]

Form 1024 Revenues and Expenses Incomplete or Missing [user fee may be incorrect]

2. Your application did not contain sufficient information regarding your revenues and expenses. Please provide your revenue and expenses following the guidelines below. We recommend that you complete and submit page 5 of Form 1024.

Provide actual information for your current year and each of the three years immediately before your current year (or the years the organization has existed, if less than 4). If you have been in existence less than 1 year, provide information for the current year and proposed budgets for the following 2 years.

[Instruction: Include paragraph below if organization paid $400 user fee and may owe additional user fee based on response.]

[The user fee for organizations whose annual gross receipts average or are expected to average more than $10,000 per year is $850. You paid a user fee of $400. If your annual gross receipts averaged more than $10,000 per year during the preceding 4 years, or are expected to average more than $10,000 per year, please remit an additional $450, payable to the Department of the Treasury. We recommend payment by certified check, cashiers’ check, or money order.]

Itemized Revenue Information Needed

3. Please provide a breakdown of your expected revenue for tax year(s) [Insert years]. Include both the type and amount of the revenue. Be as specific as possible.

Itemized Expense Information Needed

4. Please provide a breakdown of your expected expenses for tax year(s) [Insert years]. Include both the type and amount of the expense. Be as specific as possible.

Additional User Fee Owed - $850 Total Due

5. Per your application, your annual gross receipts average or are expected to average more than $10,000 per year. The user fee payment for such organizations is $850. Therefore, please remit an additional $450, payable to the Department of the Treasury. We recommend payment by certified check, cashiers’ check, or money order.

Statement of Revenues and Expenses Lists UBI (Line 4 of Application Statement of Revenue and Expenses)

6. You reported income from unrelated business income on your Statement of Revenues and Expenses. Please describe the source(s) of this income.

Statement of Revenues and Expenses Lists Interest Expense (Line 19-1023 Line 15-1024)

7. You reported an interest expense on your Statement of Revenues and Expenses. Please describe the source(s) of this expense.  

[Instruction: Include the following if not asked in a separate question.]

[If the interest is related to a mortgage or note payable, then identify all mortgages and notes payable, and for each:

a. If the mortgage/note is with an unrelated, established bank, provide a copy of the loan 
    term and rate.

b. If the mortgage/note is not with an unrelated, established bank, provide a copy of the 
    mortgage/note; clearly indicate the terms and interest rates; explain how loan terms were 
    determined or negotiated; and provide documentation, if available, of average loan rates 
    at the time of the loan.]

Balance Sheet Lists “Bonds and Notes Receivable” (Line 4 of Application Balance Sheet)

8. You reported “bonds and notes receivable” on your balance sheet. Please submit an itemized list of these assets.

Balance Sheet Lists “Mortgage/Notes Payable” (Line 14 of Application Balance Sheet)

9. You reported “mortgages and notes payable” on your balance sheet. Please identify all mortgages and notes payable and for each mortgage or note payable:

a. If the mortgage/note is with an unrelated, established bank, provide a copy of the loan 
    term and rate.

b. If the mortgage/note is not with an unrelated, established bank, provide a copy the 
    mortgage/note; clearly indicate the terms and interest rate; explain how loan terms were 
    determined or negotiated; and provide documentation, if available, of average loan rates 
    at the time of the loan.

Balance Sheet Lists “Other Liabilities” (Line 15 of Application Balance Sheet)

10. You reported “other liabilities” on you balance sheet. Please submit an itemized list of these liabilities.


More information:

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

Page Last Reviewed or Updated: 21-Feb-2014