Some organizations that apply for
certification under IRC § 501(c)(3) obtain an advance ruling that
is good for five years. At the end of the five year period, additional
information is submitted to the IRS to obtain a final ruling.
here to see an article entitled Nonprofit 501(c)(3) tax exemptions
and the five-year advance ruling period, written by Brad Caftel, the
Legal Program Manager of The National Economic Development & Law Center,
about what happens to a nonprofit organization's section 501(c)(3) charitable
tax-exempt status at the conclusion of its five year advance ruling period.
Organizations that have not completed
a tax year of at least 8 months must apply for an advance ruling.
It sometimes seems easier to obtain an advance ruling, even if it is possible
to apply for a definitive ruling. Additional information about an
organization's income (similar to that described below) is required to
apply for a definitive ruling.
IRS Form 8734 is used to submit
additional information to the IRS at the end of the five year advance ruling
period to obtain a final ruling. Ordinarily the IRS sends out a letter
before the end of an organization's five year advance ruling period, providing
a copy of Form 8734 and specifying the due date for its filing. However,
the IRS has sometimes been late in sending out Form 8734 -- but timely
filing by the organization is nonetheless required. Click
here for the IRS website's Form 8734, in Adobe PDF format. Click here for a copy
of the IRS instructions for Form 8734.
The information required to complete
Form 8734 is primarily accounting data for the five or six accounting years
that precede the filing of Form 8734. It is helpful to keep this
information as part of the organization's regular bookkeeping. A
sum for each year is required for the following principal categories:
(1) gifts, grants and contributions;
(2) membership fees;
(3) receipts from admissions, merchandise
performed or furnishing of facilities;
(4) income from interest, dividends, rents,
unrelated business income; and additional; and
(5) some more technical and unusual categories
Additionally, Form 8734 requires
a list showing the name and amount contributed by each donor (except government
and grants from other § 501(c)(3) organizations) whose total donations
for all years exceed 2% of your organization's total receipts (excluding
category 3, above.) Your organization also may be required to provide
a list of persons donating more than $5,000 in each year and a list of
donations received each year from your organization's officers, directors
and their family members.
The information described above
is not all that may be required to complete Form 8734. To be prepared
to file Form 8734 at the end of the five year advance ruling period, it
is helpful to obtain a copy of the form early on so that your bookkeeping
allows you to provide the required information.