Additional requirements for the 1023 Long and 1024 applications

Additional requirements for the 1023 Long and 1024 applications

Narrative

1023 Long and 1024 applications require a narrative description of the organizations current and planned activities. This narrative is usually about a page in length. It must fully describe the who, what, when, where, why, and how of the organization. All activities must point back to and fulfill the nonprofits primary purpose while complying with the IRS rules for tax exemption.

Budget

1023 Long and 1024 applications also require a three- to five-year projected budget (or actual financial report for organizations currently operating). This budget is divided into multiple categories, explaining where the organization receives revenue and its expenses.

BryteBridge specialists prepare projected budgets based on their consultation with clients. However, organizations currently in operation need to provide financial information on their organization. As discussed in this guide, nonprofits must have a detailed and thorough bookkeeping process.

To learn more about how BryteBridge can help your organization apply for tax-exempt status, visit 

1023 Schedules

Form 1023 Long has several schedules depending on the type of organization. In this context, a schedule is an additional application for a specified purpose. The schedules are:

-    Schedule A: Churches

-    Schedule B: Schools, Colleges, and Universities

-    Schedule C: Hospitals, Clinics, and Medical Research Organizations

-    Schedule D: Supporting Organizations

-    Schedule E: Effective Date of 501c3 Reinstatement

-    Schedule F: Low-Income Housing

-    Schedule G: Successors to Other Organizations

-    Schedule H: Scholarships and Educational Grants

Each schedule requires additional details not covered in the application narrative. For example, Schedule A asks questions about a church’s worship services, the number of people in regular worship, the pastor’s ordination process, and more. These are all details the IRS uses to evaluate the tax-exempt application.

An organization may need to fill out multiple schedules depending on their planned activities and purpose. For example, a nonprofit may have a goal of helping people leaving the prison system find housing and get into college with scholarships. In this case, they would need to fill out Schedule F for low-income housing and Schedule H for scholarships.

Application Window

Generally, the IRS provides a 27-month window from the date an organization began operations or was incorporated (whichever came first). As long as an organization applies for tax-exempt status within this window, their tax-exempt status automatically backdates to the date of incorporation.

Applying outside the window requires form 1023 Long and additional explanations why the organization waited to file for tax-exempt status. Depending on why the organization failed to apply within 27-months, the IRS may not backdate tax-exempt status to the date of incorporation. Instead, the tax-exempt status backdates to the date of submitting the IRS application. If this occurs, the nonprofit may be responsible for corporate taxes during the period it did not have tax-exempt status.

It’s vital to apply for tax-exempt status as soon as possible once an organization begins operating. BryteBridge clients typically are incorporated and have their tax-exemption applications submitted to the IRS within 10 to 15 business days of our consultation call.


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