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Applying for Exemption/Misc. Determination: Sample Questions

Other Miscellaneous Activities

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.           

Sending Website Information to Applicant – Adding to Administrative File

[Instruction: Do not list as a numbered item on additional information request.]

1. For Informational Purposes Only: Enclosed is a copy of information we obtained from your website. We have added it to your file. Because this information will be available for public inspection as part of your application if you are granted exemption, please notify us immediately if it is not information about your organization.

Narrative of Activities Not Included with Application or Vague

2. Your application did not clearly describe your activities. Therefore, please provide a detailed description of your past, present, and future activities. In general, you should include:

a. What specific activities you conduct
b. Who participates in the activities.
c. Where you conduct the activities.
d. When or how often the activities occur.
e. What fees, if any, are charged and how you determine them.
f. What percentage of your time and resources you spend on the activities.

Distributions to Other Organizations (Funds or Goods)

3. Your application indicates that you distribute (or will distribute) funds and/or goods to other organizations, but did not clearly describe the activity. Please explain whether you distribute (or will distribute) funds and/or goods solely to organizations described in Internal Revenue Code Section 501(c)(3). If not, provide the following:

a. Describe in detail the purpose of the funds and/or the types of goods you distribute 
   (or will distribute).

b. Describe your recipient selection process, including the criteria you use (or will use) 
    to select recipients.

c, Specify how you ensure that the funds and/or goods are (or will be) used for their 
    intended purpose(s).

Distributions to Individuals (Funds or Goods)

4. Your application indicates that you distribute (or will distribute) funds and/or goods to individuals, but did not clearly describe the activity. Please provide the following:

a. Describe in detail the purpose of the funds and/or the types of goods you distribute 
   (or will distribute) and how the funds and/or goods are (or will be) used by the 
    individual recipients.

b. Describe your recipient selection process, including the criteria you use (or will use) 
    to determine the recipients of the funds and/or goods.

c. Explain how the funds and/or goods are (or will be) distributed and how you ensure 
    that they are (or will be) used for their intended purpose(s).

d. Explain whether board members (or their relatives) or members of the committee 
    who select your recipients (or their relatives) are (or will be) eligible to receive funds 
    and/or goods. If so, describe in detail the safeguards you use (or will use) to ensure 
    the funds and/or goods are not distributed improperly.  

Loans to Individuals / Organizations

5. Your application indicates that you make (or will make) loans to individuals and/or organizations, but did not clearly describe the activity. Please provide the following:

a. Describe in detail the loans you make (or will make), including the terms and 
    conditions of the loans.

b. Submit copies of actual or sample loan agreements.

c. Describe how the terms and interest rates of the loans are (or will be) determined, 
    including the specific criteria used to establish the terms and interest rates.

d. Explain how your loans (or future loans) compare to loans made by for-profit entities.   

Relatives of Insiders or Selection Committee Eligible for Scholarships

6. Your application indicates that relatives of members of the committee who select the recipients of your awards, or relatives of your officers, directors, or substantial contributors are eligible for awards made under your award program, but did not clearly describe the activity. Please describe in detail how the application process and selection procedures for such applicants differs from the application process and selection procedures you use for applicants who are not relatives of members of the selection committee or relatives of your officers, directors, or substantial contributors.  

Donor Advised Fund (Generally Not for Use for Sponsoring Organization or Community Foundation)

7. Your application indicates that you maintain (or will maintain) separate accounts for donors who have the right to provide advice on the use or distribution of funds, but did not clearly describe the activity. Please provide a complete description of your program, including the specific advice that such donors may provide. Describe in detail the control you maintain (or will maintain) over the use of the funds.

Professional Fundraising

8. Your application indicates that you have (or will have) arrangements with professional fundraisers, but did not clearly describe the activity. Please provide the following:

a. Submit a copy of the written agreements and contracts you have with individuals and 
   organizations for professional fundraising on your behalf. If you do not have written 
   agreements, describe in detail the terms and conditions of the fundraising arrangement(s)

b. Describe how you selected (or will select) a professional fundraiser(s) as well as how 
    the terms of the agreements and contracts (e.g., the rate of compensation) were (or will
    be) determined.

c. If your organization has future plans to enter into an arrangement(s) with a professional 
    fundraiser(s), describe those plans in detail, including how you will compensate the 
    professional fundraiser(s).

d. Describe how your organization, any member of your organization’s governing body, 
    or any of your employees are related to the professional fundraiser(s) you use 
    (or will use). Explain the relationship(s) completely.

Noncash Contributions

9. Your application indicates that you accept contributions of real or intellectual property, conservation easements, works of music or art, collectibles of any type, or other goods, but did not clearly describe the activity. Please provide the following:

a. Describe in detail the types of such noncash contributions you accept and how you 
    have used (or will use) such noncash contributions.

b. Describe in detail how you determine (or will determine) the value of such 
    noncash contributions.

c. Identify all conditions you allow (or will allow) donors to impose on your use 
   of such noncash contributions.

d. Describe in detail any agreements you have (or intend to have) with donors 
    regarding such noncash contributions.

Recreational/Social

10. Your application indicates that you conduct (or will conduct) recreational or social activities, but did not clearly describe the activity. Please provide the following:

a. Describe in detail the recreational or social activities that you conduct (or will conduct)

b. Indicate whether your recreational or social activities are (or will be) directed to children, 
    the elderly, or disabled persons, and, if so, the percentage of your participants in each 
    category.

c. Indicate the time and resources you spend (or will spend) on recreational or social 
    activities as a percentage of your total activities.

Formed in Foreign Country

11. Your application indicates that you were formed under the laws of a foreign country. Please provide the following:

a. Briefly explain why you applied for recognition of exemption.

b. Submit [an] English translation[s] of [Insert document name(s)/description(s)].

c. Describe how you make donors aware that contributions to you are not tax 
   deductible under Internal Revenue Code Section 170.

d. Explain whether your listed investment income and/or unrelated business income 
    comes from U.S. sources.

e. Describe whether you had interactions in the U.S. or U.S. source income prior to 
   your application date.

Temporary or Transitional Housing (Schedule F Not Applicable)

12. Your application indicates that you provide (or will provide) temporary or transitional housing, but did not clearly describe the activity. Please provide the following:

a. Indicate the number of residents you house (or will house) in your facilities.

b. Explain if you charge (or will charge) fees to residents. Submit a copy of your 
    actual (or proposed) fee schedule.

c. Describe your policy to deal with residents who become unable to pay the fees 
   you charge.

d. Describe in detail the process you use (or will use) to select residents, including 
    all eligibility requirements.

e. Describe the typical length of stay at your facility and if there are any limits to the 
    length of stay.

f. Provide copies of all rental/lease contracts between you and your residents 
   (if applicable).

Private School Publication of Nondiscriminatory Policy in a Newspaper  

13. Please submit the original newspaper page containing the notice of your nondiscriminatory policy as required under Revenue Procedure 75-50. If you have not published your notice, publish your policy in a prominent section of a newspaper, following the requirements below. In addition, you may want to post the policy on your website.

Note: The policy should be in a newspaper of general circulation that serves all racial segments of the community. It should be placed on a main page, not in the classified or legal section. Refer to Publication 557, Tax-Exempt Status for Your Organization, at www.irs.gov/Forms-&-Pubs for more detailed instructions.  

The notice must meet the following printing requirements:

  1. It must appear in a section of the newspaper likely to be read by prospective students and their families.
  2. It must occupy at least 3 column inches.
  3. It must have its title printed in at least 12 point bold face type.
  4. It must have the remaining text printed in at least 8 point type.

The following is an acceptable example of the notice (point type in body of text exceeds minimum required in item 4):  

NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS

The X School admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs.

Charter School - Charter Missing  

14. Your application indicates that you operate (or will operate) a charter school. Please provide a copy of your state approved charter. If your charter has not been approved, provide a draft copy.

Sports - General

15. Your application indicates that you conduct (or will conduct) sports programs, but did not clearly describe the activity. Please provide the following:

a. Describe your sports program(s) in detail.

b. Describe the requirements to participate in your sports program(s).

c. Describe how you advertise (or will advertise) your sports program(s).

d. Specify the number of individuals who participate (or will participate) in your 
    sports program(s).

e. Specify the number of individuals in your sports program(s) (or who you 
   anticipate to be in your program) who are over the age of 18.

f. Indicate the time and resources you spend (or plan to spend) on your sports 
   program(s) as a percentage of your total activities.

Sports - Fostering national or international sports competition 501(j)

16. Your application indicates that you foster (or will foster) national or international sports competition, but did not clearly describe the activity. Please provide the following:

a. Describe whether you participate (or plan to participate) in national or international 
   competitions or attempt to prepare your participants to participate in or qualify for 
   national or international competitions.

b. Provide a sample schedule of activities or competitions in which your members 
    participate (or will participate).

c. Specify whether you are a member of the United States Olympic Committee or 
   affiliated with a national/international sports organization. If so, explain the nature 
   of your membership.

d. Describe whether any of your participants are of a caliber and age group that 
    makes them serious contenders for the Olympic or Pan-American games.

e. Describe any requirements athletes must meet in order to participate in your 
    activities or competitions (such as certain level of talent and achievement).

f. If you provide (or plan to provide) a training program(s) for your athletes, 
  describe the training program(s) in detail.

g. Describe whether you are devoted to improving the performance of a small 
   group of elite athletes rather than improving the health of the general public.

Research Activities

17. Your application indicates that you engage (or will engage) in research activities, but did not clearly describe the activity. Please provide the following:

a. Describe in detail your current and planned research activity.

b. Specify to what extent, if any, your research results will be distributed outside 
   your organization.

c. Explain if you will make research results available to the general public. If so, 
    explain how the research results will be made available.

d. Explain in detail whether you conduct (or will conduct) research for the benefit 
    of, or on behalf of, entities other than your own.

e. Explain who will retain ownership or control of any patents, copyrights, 
    processes, formulas, or other intellectual property, if any, resulting from your research.

Daycare Center

18. Your application indicates that you operate (or will operate) a daycare center, but did not clearly describe the activity. Please provide following::

a. State how many children are (or will be) enrolled in your daycare center. Indicate 
   whether any of the children are related to members of your governing body or 
   your employees. If so, explain each relationship.

b. Explain whether the daycare center uses (or will use) a sliding scale of fees based 
    on the parents' income. If so, provide a schedule of the fees you charge (or will charge). 
    If not, explain how the fees are determined (or will be determined).

c. Describe how you determine (or will determine) which children to admit to your 
    daycare center. Describe how that practice is communicated (or will be communicated) 
    to the public.

d. List the educational activities you provide (or will provide) to the children enrolled 
    in your daycare center.

e. Provide your student/teacher(instructor) ratio.

f. List the academic credentials and degrees for each of your daycare center’s 
   teachers and instructors.

Art Sales

19. Your application indicates that you offer (or will offer) art for sale, but did not clearly describe the activity. Please provide the following:

a. Describe your role in the sales process, if any, and specify how sales proceeds are 
   (or will be) split/distributed among yourself and any other parties.

b. Explain the selection process for art that is displayed for sale.

c. Explain whether sales prices are (or will be) displayed on your art, and, if so, 
    how the sales price is (or will be) determined.

d. Explain how your art sales are distinguishable from the sales of a commercial 
    art gallery.

e. List the art museums and art galleries in your general area.

f. Describe the extent to which you rely (or will rely) on volunteers.

g. Describe your membership requirements and any membership benefits.

Thrift Store

20. Your application indicates that you operate (or will operate) a thrift store, but did not clearly describe the activity. Please provide the following.

a. Describe how you staff (or will staff) your thrift store and indicate the amount of time 
    the store is (or will be) staffed by unpaid volunteers compared to paid employees.

b. Explain whether your thrift store’s merchandise is (or will be) donated.

c. Explain how you determine (or will determine) the prices at which you sell 
    your merchandise.

d. Describe how you use (or will use) the proceeds from the sale of your merchandise

e. Provide copies of all advertisements that you have used (or will use) to promote 
   your thrift store.

f. Describe the training programs you offer (or will offer) to your employees and/or 
   unpaid volunteers.

Economic Development

21. Your application indicates that you engage (or will engage) in economic development activities, but did not clearly describe the activity. Please provide the following:

a. Describe your economic developmental programs in detail (e.g., job training, 
    business loans, etc.).

b. Describe your geographic area of operation and indicate whether any governmental 
    designations of the area have been made (e.g., deteriorated or blighted area). 
    Provide official documentation of any governmental agency designations.

c. Identify the median income level and demographics of your geographic area of operation

d. Describe the criteria you use (or will use) to select individuals or organizations 
    for assistance.

Historical

22. Your application indicates that you restore or maintain (or will restore or maintain) historical property, but did not clearly describe the activity. Please provide the following:

a. Describe each property that you restore or maintain (or plan to restore or maintain) 
   and its historical significance.

b. Specify whether each property is on the National Register of Historic Places or 
    a similar registry or list. If so, provide official documentation of the designation.

c. Identify who owns each property, and explain whether the property is subject 
    to any covenants.

d. Describe your specific role in the restoration or maintenance of each property 
    that you restore or maintain (or will restore or maintain).

e. Describe the existing and/or intended use of each property that you restore 
   or maintain (or will restore or maintain) and whether such property is (or will be) 
   open to the public.

Facility or Occupancy Expenses Listed

23. Your application indicates that you operate (or will operate) a facility (or in a facility) and that you pay (or will pay) occupancy expenses, but did not clearly describe the activity. Please provide the following:

a. Describe in detail your facility.

b. Detail the occupancy expenses that you incur (or will incur).

c. Describe the terms of your occupancy agreement and submit a copy of the 
   agreement (e.g., lease or rental agreement).

d. Explain how your occupancy agreement was (or will be) negotiated.

e. Explain who owns the facility and indicate whether any individuals related to your 
    organization (e.g., members, directors, or relatives thereof) have (or will have) 
    an ownership interest in the facility.

f. Indicate whether anyone uses (or will use) your facility for purposes other than 
   directly carrying out the work of your organization.

Intellectual Property

24. Your application indicates that you publish, own, or have rights (or will publish, own, or have rights) in music, literature, tapes, artworks, choreography, scientific discoveries, or other intellectual property, but did not clearly describe the activity. Please provide the following

a. Describe all the intellectual property that you publish, own, or otherwise have rights 
    (or will publish, own, or otherwise have rights) in.

b. Indicate whether you charge fees (or will charge fees) for the use of your intellectual 
    property. If so, describe how the amount of the fees is (or will be) determined, how you 
   distribute (or will distribute) the fees/sales proceeds, and how such fees/sales proceeds 
   compare to those of a for-profit entity.

c. Explain who owns each copyright, patent, or trademark that you publish or have rights 
    (or will publish or have rights) in. Note: If you do not own the copyrights, patents, or 
    trademarks, please specify the terms of your use, including whether payments of any kind 
    are made (or will be made) to the owner.

d. Explain in detail how you produce, distribute, and/or market (or plan to produce, 
    distribute, and/or market) each piece of intellectual property.

e. Specify the percentage of time and resources you spend (or plan to spend) on 
    this activity.

Individual Accounts

25. Your application indicates that you maintain (or will maintain) individual accounts for program participants or require (or will require) program participants to take part in fundraising events to receive distributions of raised funds.  

a. Describe in detail if you intend to change your activities to ensure earnings are not being 
   (or will not be) used directly and specifically to pay for benefits to specific individuals 
   rather than to a class of participants as a whole.

b. If you do make changes to your activities, submit a detailed description of your 
    changes, including the specific date the changes went into effect. Likewise, if you want 
    your application to be considered prospectively from the date of your changes, submit a 
    statement to that effect with your signed response.

c. If you do not intend to change your activities, please explain why.

Referrals

26. Your application indicates that you provide (or will provide) referrals to program participants, but did not clearly describe the activity. Please provide the following:

a. Describe why you refer (or will refer) program participants to other entities/businesses

b. Specify the entities/businesses to which you refer (or will refer) program participants 
    and how these entities/businesses are (or will be) selected.

c. Confirm whether you receive (or will receive) fees in exchange for referrals. If so, 
    please describe in detail the arrangement of these fees.

d. Identify any business or family relationships between members of your governing 
    body and the organizations to which you refer (or will refer) program participants.

e. Provide copies of all contracts or written agreements between you and the 
    organizations to which you provide (or will provide) referrals.

Relationship/Transactions with For-Profit Entities

27. Your application indicates that you have (or will have) relationships or transactions with for-profit entities [, including (Insert known relationships)]. Please provide the following:

a. Describe your relationships with the for-profit entities and explain the extent to which 
    you share (or will share) organizational resources, including officers and/or directors

b. Describe how you select (or will select) the for-profit entities with which you interact

c. Explain whether you conduct (or will conduct) activities on behalf of, or for the benefit 
    of, for-profit entities with which you share organizational resources, including officers 
    and/or directors.

d. Explain the steps you will take to enable the general public to distinguish between 
    your operations and the operations of such for-profit entities.

e. Describe the benefits, if any, for-profit entities will realize as a result of their 
    relationship with you.

f. Specify any payments for services the for-profit entities receive (or will receive) 
   from you.

g. Describe the amounts, including compensation, such for-profit entities do not 
    (or will not) have to pay to you, that they normally have to pay in the conduct of 
    their operations.

h. Provide copies of all contracts or written agreements between you and the 
    for-profit entities.

Homeowners’ Association

28. Your application indicates that you are claiming exemption as a homeowner’s association, but did not clearly describe the activity. Please provide the following:

a. Submit maps and/or pictures and describe the area that your homeowner’s 
    association covers.

b. Indicate if you restrict (or plan to restrict) your facilities and common areas from 
    public access and use. If so, describe the restrictions. If you do not, explain the 
    extent the general public may use your facilities and common areas.

c. Explain whether the geographic area you serve resembles a neighborhood, 
    subdivision, housing development, or other type of area.

d. Specify whether you administer and/or enforce covenants for preserving your 
    association’s property.

e. Submit all covenant agreements and policies explaining your association’s rules 
    and regulations regarding homeowners’ rights and obligations.

f. Describe any maintenance services your association provides (or will provide) 
   to the exterior of private residences.

g. Explain who owns the properties in the area your homeowner’s association 
    covers, including common areas, and explain the respective voting rights of 
    each property.  

Section 501(c)(19) - Deductibility

29. The requirements are different for tax exemption under Internal Revenue Code (IRC) Section 501(c)(19) and for deductibility of contributions to posts or organizations of war veterans under IRC Section 170(c)(3). To receive deductibility of contributions, at least 90% of your members must be war veterans. In addition, substantially all the other members must be veterans (but not war veterans); cadets; or spouses, widows, or widowers of war veterans, veterans, or cadets. To determine your eligibility for deductibility, please provide the following:  

a. Provide your total number of members.

b. Provide how many of your members are war veterans.

c. Provide how many of your members are veterans (but not war veterans); cadets; 
   or spouses, widows, or widowers of war veterans, veterans, or cadets.

Note: A war veteran is any person who served in the Armed Forces of the United States (i.e., United States Army, Navy, Marine Corps, Air Force, and Coast Guard, including the reserve components thereof) during any period of war. A period of war includes the following:

a. April 21, 1898, through July 4, 1902;

b. April 6, 1917, through November 11, 1918;

c. December 7, 1941, through December 31, 1946;

d. June 27, 1950, through January 31, 1955;

e. August 5, 1964, through May 7, 1975; and

f. August 2, 1990, through present.

Section 501(c)(5) - Copy of Collective Bargaining Agreement

30. Please submit a copy of your most recent collective bargaining agreement.  

Member Services

31. Your application indicates that you perform or provide (or will perform or provide) services for your members, but did not clearly describe the activity. Please provide the following:

a. Describe all services you perform or provide (or will perform or provide) for 
    your members, including the fees you charge members for the services.

b. Describe your role (or anticipated role) in performing or providing these services.

c. Indicate the time and resources you spend (or will spend) on these member 
    services as a percentage of your total activities.

Membership Requirements

32. Please describe your membership criteria and submit a copy of your membership application.  

Common Business Interest

33. Please describe your members’ common business interest and how you promote and improve this business interest.  

Section 501(c)(7) - Nonmember Income

34. Please provide a breakdown of the sources and total amounts of your nonmember income.

 

More information:

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

 

Page Last Reviewed or Updated: 16-Dec-2014