27-Month Threshold

Time is always a factor in just about everything we do. You work for a number of hours throughout the day, you have a few hours for yourself or your family. You may have to be somewhere at a certain time, or you have to leave right at a certain hour. Things that have to get done, or activities that we would like to do, are often decided on how much time we have to do them. The same thing goes for taxes, or any federal forms for that matter. 

When filing for tax-exempt status, the IRS processes applications in the order they were received. But cases can be worked out of order sometimes. What’s important here is that how soon or late you apply for tax-exemption can determine when your organization actually receives its tax-exempt status.

So there’s this rule… this sort of 27-month rule that’s associated with section 501(c)(3) applications. Generally, your organization can be recognized as tax-exempt from the day it was officially formed. To receive that type of recognition date, you need to have your tax-exempt application filed, and accepted by the IRS, within 27 months after the end of the month your organization was formed.

Example: Your organization was officially formed on August 20, 2015. To get your exempt status to have to same date, your Form 1023 needs to be filed and accepted by the end of November 2017.

Now that’s a big chunk of time; it’s a little over two years. But don’t procrastinate. A lot can happen for a start-up organization within two years. You might not even decide to become tax-exempt until after a full year of operation.

“What happens if I file after 27 months?”

Nothing drastic or terrible will happen to your organization if you happen to file after 27 months. Your organization’s tax-exempt status will only be recognized after your actual filing date. However, there are exceptions depending on your organization filing late. For specific situations that mandate exception from the rule, contact your local tax professional or visit the IRS webpage.

Why wait a full two years when ExpressTaxExempt is your online solution to preparing your section 501(c)(3) application for tax exemption? Your information entered with ExpressTaxExempt is saved automatically, safely secured, and easily accessible at your leisure – anytime and anywhere. Our service also checks for any filing errors or mistakes so that your Form 1023 application can be complete and correct the first time around. Best of all, you can download and print your completed form as soon as you’re done.

Preparing your Form 1023 doesn’t have to be extremely hard. Our live team of expert professionals in Rock Hill, South Carolina are ready to help. Contact us by phone at (704) 839-2321; we’re available Monday through Friday from 9 a.m. to 6 p.m., Eastern Standard Time. You can also reach us by 24/7 email at [email protected], or by live chat at the ExpressTaxExempt website.