As you locate the many forms required by numerous jurisdictions to conduct business, keep in mind the time requirements to file your IRS Form 1023, the application for federal tax exemption.

The IRS form will be the last in a long progression of material you will develop. You may note on any of the appropriate forms that you are intending to make that application, but until you have done so and obtained your determination letter from the IRS, never imply that you have tax-exempt status.

From the date you submit the articles of incorporation with your state, you have twenty-seven months to file your IRS Form 1023. You may be able to secure an extension, but with careful planning an extension should not be necessary.

Requesting an Extension

If you do not file for federal tax exemption and do not obtain a further extension within twenty-seven months, it is highly unlikely you will receive a favorable determination. Your option will be to start all over again, which means redoing every state and local detail you've already completed. After the amount of work and valuable time expended to wade through the reams of permits and documentation, a failure to file in the allotted time is always a setback.

Schedule E: Your Final Life Preserver

If you need an extension, you must file a Schedule E in the Form 1023. You will need to prepare a statement explaining that you have been acting in good faith. Seek professional assistance in the preparation of this statement; it is your organization's final chance to obtain its 501(c)(3) tax-exempt status.

If, on the other hand, the goal is to obtain a 505(c)(4) determination, the rules are a little less stringent and your chances of prevailing are a bit better. Ideally, watch the calendar and do not allow your organization to get this far along without filing your Form 1023.