Page 101 - Washington Nonprofit Handbook 2018 Edition

the User Fee. If the User Fee check is not promptly cashed, it is an indication that
the application may have been lost in the mail. When the IRS has confirmed
payment, a brief letter is sent to the applicant acknowledging receipt of the
application and describing the IRS process with regard to applications.

d. Processing

The IRS receives more than 70,000 applications for tax-exempt status each
year. Thanks to new processes, the inventory of applications is current. If a Form
1023-EZ application is submitted, expect to be contacted within 90 days from the
date of submission. If a Form 1023 application is submitted, expect to be contacted
within 180 days from the date of submission. Contact Customer Service at (877)
829-5500 if there are concerns regarding processing.

e. Inquiry Letter

Applications that cannot be closed immediately based on the information
initially provided require additional development. Processing of an application that
requires additional development may take as long as six to eight months (or longer)
to complete.

When an inquiry letter is sent, the applicant will normally have 21 days to
respond. Upon request of the applicant, accompanied by an explanation as to why
an extension is required, the agent handling the case will sometimes grant an
extension of ten days to two weeks. An extension is not guaranteed. If a timely
response is not received by the IRS, the IRS may close the case. The file is kept
available for up to one year and reopened automatically when additional

information comes in; however, the IRS will charge a new User Fee if information is
submitted more than 90 days after a case is closed. If the case is closed, the
organization will receive a letter stating the date on which this 90-day period
terminates.

f. Final Disposition

Once all of the IRS agent’s questions are satisfactorily answered, the IRS will
issue a favorable determination letter.

If the IRS denies an application, the IRS must provide a written explanation of
the facts, law, and argument upon which its decision is based, as well as an
explanation of appeal rights.

WASHINGTON NONPROFIT HANDBOOK -90- 2018