Private Foundations

CHAPTER TWOStarting and Funding a Private Foundation

1. § 2.5 Acquiring Recognition of Tax-Exempt Status
   1. (a) Preparing Form 1023
   2. *(b) Understanding Impact of Recognition Based on Form 1023-EZ
   3. (c) The Substantially Completed Application
   4. (d) Recognition Application Procedure and Issuance of Determination Letters and Rulings
   5. (e) Application Processing Timeline
   6. (h) Applications Processing Controversy
2. § 2.7 When to Report Back to the IRS
   1. (a) When Should a Ruling Be Requested

§ 2.5 ACQUIRING RECOGNITION OF TAX-EXEMPT STATUS

(a) Preparing Form 1023

p. 45. Add after third paragraph:

Extraordinary turmoil racked the IRS determination process in the recent past, though several changes have improved the work flow. Because the tax code provision that provides an organization's tax exemption is automatically revoked if the entity fails to file a required Form 990 for three consecutive years effective as of the filing due date of the third year,^67.1 more than 500,000 organizations were revoked, including many private foundations. The Cincinnati office that processes applications for recognition of tax exemption was inundated with applications for reinstatement beginning in 2010 as the number of applications significantly increased. Concurrently, that office enhanced their scrutiny of applicants for exemption as social welfare organizations to look for potential participation in promoting the election of persons to public office. They developed a “BOLO” (be on the lookout list) to identify ...