Form 1023 Paperwork, In Millions of Hours, 1986 to 2016
Source: U.S. Office of Management and Budget. Click image to learn more.
Form 8940, Request for Miscellaneous Determination, provides a means for an organization that is already exempt from Federal income tax under section 501(c)(3) to ask the IRS to reconsider some aspect of that exempt status, leaving the underlying exemption in place. (Do not try to "amend" Form 1023.) Two common requests are for exemption from the Form 990 filing requirement and requests for reclassification of foundation status.
Exemption from Form 990 Filing Requirement
Form 8940 provides an opportunity for an organization that has been recognized exempt from Federal income tax to claim an exemption from the requirement to file an annual return. Although applicants that use the long-form 501(c)(3) application can use Part I, Question 10 of Form 1023 to claim a filing exemption when submitting Form 1023, errors are sometimes made, applicants may be unaware of filing exemptions that apply to them and, of course, circumstances can change.
The streamlined 501(c)(3) application form, 1023-EZ, does not provide a way for an applicant to claim exemption from annual filing. In fact, the instructions for Form 1023-EZ say than an EZ applicant must use Form 8940 to claim an exemption from the 990 filing requirement.
The 2016 revision of Prepare Your Own 501(c)(3) Application has a new section on completing Form 8940.
Basically, in order to receive a favorable determination, the Form 8940 applicant must establish that the organization is one of the types of organizations legally exempt from filing.
Reclassification of Foundation Status
Form 8940 provides an opportunity for an organization that has been recognized exempt under 501(c)(3) to claim a foundation status other than the one originally recognized. An organization may need to make a such a change because its circumstances have changed, or because haste or lack of knowledge resulted in an error in the initial determination.
The types and proportions of support an organization receives can vary from year to year, but the IRS does not require a public charity to file Form 8940 every time its support computation (Schedule A of Form 990) indicates a public charity status other than the one originally recognized by the IRS. Form 8940 is only necessary if the organization specifically needs an IRS determination letter confirming the changed status.
It is important to File Form 8940, however, and obtain a corrected letter, when an initial determination of private foundation status was in error. Private foundation status can affect an organization's filing requirements and ability to apply for grants. Organizations originally determined to be private foundations that can, nevertheless, show that they have always been publicly supported will need to file Form 8940 to get the record straight with the IRS.
Organizations that were not publicly supported when they received an IRS ruling of private foundation status, but that are now able to meet a public charity test should not request a "reclassification of foundation status" on Form 8940. These charities must go through a "termination of private foundation status," Form 8940, Part II, lines 8h and/or 8i.
This website has only a fraction of the information available in Prepare Your Own 501(c)(3) Application.
For 2016, the User Fee for Form 8940 is $400. Note that the IRS might not generate an acknowledgement letter for the applicant when it receives a Form 8940, Request for Miscellaneous Determination. The IRS requires a separate User Fee for each type of Form 8940 request. As of October, 2016, the current Form 8940 was dated June, 2011; instructions for Form 8940 were dated 8/2015.
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Prepare Your Own 501(c)(3) Application
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Miscellaneous Changes: Form 8940