After submitting the application, you can expect a letter from the IRS in about eight weeks acknowledging the receipt of your application. Usually the letter will ask you for additional information. This is entirely normal and is not a cause for alarm. If you had a tax professional prepare your application, she can help you with this stage of the application. If you have not had anyone review your application, this is a good time to reconsider that decision. If there are questions, carefully prepare a written response.

If there are only ten or fewer questions, you are probably in very good shape and you can expect approval of your application without additional hassle. If, on the other hand, there are fifteen or more questions, there may be problems with your application. Regardless, answer all questions truthfully and in detail and submit the answers to the IRS within the deadlines stated in the letter.

The letter will give you the name and telephone number of your contact person at the IRS. Call this person and find out exactly what he wants to know. Contact people can often be very helpful, and the information they give you can help you focus your response to the letter.

If It Is Not on Paper, It Does Not Exist

Any telephone conversations you have with your IRS contact person are informational only. The only answers to the written questions that matter are your written responses. Both your organization and the IRS are establishing a paper trail, which is a good thing because it allows everyone involved to reference what happened before so there are no misunderstandings.

Remember, the IRS is not trying to stall the process or otherwise complicate matters. They do, however, need to be absolutely certain that you have met all the required benchmarks if they are going to issue a favorable determination.

In due course, the IRS will send you either a favorable or an unfavorable determination letter. If it is unfavorable for a 501(c)(3) determination, some applicants are offered a favorable determination for a 501(c)(4) organization. If it is favorable, you have every right to celebrate. Save this letter. It is very important. Not only does it give you critical information about compliance with the IRS, but your potential funding sources will usually ask you for a copy. Make copies of the determination letter and keep the original in a safe place. Over the life of the organization, you may send out copies of that letter dozens — if not hundreds — of times, so make certain you never lose the original.

A Denied Application

As previously noted, there will be situations where the IRS determines that for any number of reasons your organization does not qualify for a 501(c) (3) determination, and you may be granted a 501(c)(4) status as an alternative. You may also be completely denied, with no alternative presented.

A common problem could be that your supporting documents were simply not strong enough. You may believe you qualified as an educational organization, for example, but the material or your narrative simply didn't support that claim.

If you are not satisfied with the decision, you do have the right to appeal within 30 days of the decision. The appeal needs to be initiated by a letter to the IRS Appeals Office detailing the reasons you feel the decision was not accurate and requesting a conference. The address to send the letter to will be on the letter you received.

If the appeal is not made within the 30-day window from the time the denial was issued, the decision will be considered final. Likewise, if the decision on appeal is not favorable to you will have exhausted your options

It is strongly recommended that an attorney familiar with the IRS appeal process be consulted if you plan to move forward with an appeal. The stakes are too high and the possible details so numerous that it is best to seek such consultation.