Below are the steps you will need to take to become and remain a tax-exempt entity with the IRS.
- Step 1: Create an organization under state law, determine the entity's exempt purpose, and acquire an employer identification number. The organization must be organized as a trust, a corporation or an association.
- Step 2: Complete IRS Form 1023-Application for Recognition of Exemption to be recognized as a tax-exempt entity with the IRS.
- Step 3: Wait for the tax exempt approval letter or any other correspondence from the IRS requesting additional information or explanations.
- Step 4: Complete the necessary annual federal and state filings. If these annual forms are not timely filed, the entity could run the risk of having its tax exempt status revoked by the IRS or by the state.