An organization that files an application after the 27-month deadline may be recognized as tax-exempt from the date of the application. It may also request exemption effective back to the date of creation by completing Schedule E, Form 1023, and checking the Yes box in Question 5 of that schedule. A request will be approved if the organization acted reasonably and in good faith, and granting relief will not prejudice the interests of the government. These standards are usually met if the organization files its application before the failure to file is discovered by the IRS.
Form 1023-EZ filers may, also, request exemption effective back to the date of creation. If you do not file Form 1023-EZ within 27 months of formation, and you believe you qualify for an earlier effective date than the submission date, you can request the earlier date by sending correspondence to the IRS (see 1023-EZ Instructions). The correspondence should include your name, employer identification number (EIN), the effective date you are requesting, an explanation of why the earlier date is warranted, and any supporting documents. This correspondence should be sent after you receive your Determination Letter.
Recognition of social welfare organization
An organization that files Form 1023 late may also be recognized as a tax-exempt social welfare organization, under Code section 501(c)(4), by checking the box in Question 8 of Schedule E. This provides exemption from federal income tax but does not generally permit deductibility of contributions under Code section 170.
- Application for recognition of exemption
- Treasury Regulation Section 301.9100-1, extension of time to make elections
- Income Tax Regulation 301.9100-1 (1994 EO continuing professional education article)