When Does Tax-Exempt Status Begin

For charities that request tax-exempt status, the question often arises when does the charity’s tax-exempt status begin. Some organizations believe the status effectively begins as of the date of the IRS tax Determination Letter, however the effective date of tax exempt status is often much earlier. If the charity filed for tax-exempt status within 27 months of its legal formation, the effective date will be the date of the organization’s formation. If the charity files after the 27 month cut-off the effective date will be the date it filed for tax-exempt status. This is the case whether the charity filed the IRS Form 1023 or the IRS 1023-EZ.

Labyrinth, Inc. does not help start up new charities. We help existing nonprofits, register in various states so that they can solicit contributions from donors in these states. If you need help starting a nonprofit (i.e. incorporating or getting 501(c)(3) status) we suggest hiring The Marker Law Firm.