Form 1023 is the IRS application for recognition of exemption under section 501(c)(3): the form a charity, school, religious or other qualifying nonprofit files to become tax-exempt and able to receive tax-deductible donations. It's filed only online through Pay.gov with a user fee, and if you file within 27 months of the end of the month you were legally formed, an approval is backdated to your formation date.
Forming a nonprofit corporation under state law doesn't make it tax-exempt. Form 1023 does that part, and the IRS answers with a determination letter showing your status, your foundation classification and which annual returns you'll file. Everything below comes from the Rev. December 2024 instructions.
Form 1023 or Form 1023-EZ?
Smaller organizations may be able to use Form 1023-EZ, a streamlined version of the application. The IRS says to complete the eligibility worksheet in the Form 1023-EZ instructions first; if you don't pass it, you file the full Form 1023. Either way the application and user fee go through Pay.gov.
Public charity or private foundation?
Every 501(c)(3) is treated as a private foundation unless it qualifies as a public charity, and Form 1023 is where you ask for your classification. It matters because different tax rules apply to each, including how much donors can deduct. Here's how the instructions split them:
| Classification | Typical examples |
|---|---|
| Public charity by activity | Churches, schools, hospitals, medical research organizations |
| Publicly supported charity | Organizations that normally get substantial support from the public, grants or government |
| 509(a)(2) organization | More than one-third of support from donations, fees and related activities, and not more than one-third from investment and unrelated business income |
| Supporting organization | Organizations that support other public charities, under 509(a)(3) |
| Private foundation | Everything else; usually funds its purpose by making grants |
Don't be misled by names: the IRS points out that plenty of organizations with "foundation" in their title aren't private foundations at all. A private operating foundation, which runs its own programs, gets more favourable rules than other private foundations but has to meet support tests.
The 27-month rule
| When you file | Effective date of exemption (if approved) |
|---|---|
| Within 27 months after the end of the month you were legally formed | Your legal date of formation |
| More than 27 months after that | The date you filed Form 1023 (see Schedule E for exceptions) |
That gap matters because the effective date is when your exemption, and your determination letter's confirmation that you can receive tax-deductible contributions, begins. Filing late can leave months uncovered.
How to file, step by step
- Register for an account on Pay.gov.
- Search for "1023" and select Form 1023.
- Complete the form, including any schedules that apply to you.
- Combine every attachment into one PDF, because Pay.gov accepts only one uploaded file. Start with your organizing document, then any amendments in date order, then your bylaws and the rest.
- Pay the user fee from a bank account or by credit or debit card. You can't submit without paying the correct fee. The amount is set in Rev. Proc. 2020-5, which is updated each year.
Paper applications haven't been accepted since the electronic rule began on January 31, 2020, apart from a short grace period at the time.
Two clauses your organizing document must have
- Purpose clause: it must limit your purposes to those in section 501(c)(3): charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or preventing cruelty to children or animals.
- Dissolution clause: it must permanently dedicate your assets to a 501(c)(3) purpose, so if you wind up, the assets go to another exempt purpose or to a federal, state or local government for a public purpose. In certain states, state law can cover this.
The instructions give sample wording for the dissolution clause, and it's worth using it word for word if your state requires the clause in your articles. If either clause is missing, you may need to amend your articles with the state before the IRS can approve you, and that's a delay you don't want. If you're a subordinate under someone else's group exemption and want your own, tell the parent organization before you file Form 1023 to leave the group.
Schedules you may need
| Schedule | For |
|---|---|
| Schedule D | Section 509(a)(3) supporting organizations |
| Schedule E | Filing more than 27 months after formation, or applying for reinstatement after automatic revocation |
| Schedule F | Low-income housing organizations |
| Schedule G | Successors to other organizations |
| Schedule H | Organizations giving scholarships, fellowships, educational loans or grants to individuals |
After approval: annual returns
Your determination letter tells you which annual return to file. Public charities generally file a Form 990 or 990-EZ, and most small public charities with gross receipts of $50,000 or less can file the Form 990-N e-Postcard instead, as of October 2026. Private foundations file Form 990-PF. Any exempt organization with gross unrelated business income of $1,000 or more also files Form 990-T.
Keep filing. If an organization fails to file a return or notice for 3 consecutive years, its exemption is automatically revoked, and getting it back means a new Form 1023 with Schedule E and another user fee. You must have your own EIN for line 2 of the application; our guide to Form SS-4 covers that.
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The verdict
Get your articles right before you start: the purpose and dissolution clauses are where most new founders trip. Then file within 27 months so your exemption reaches back to day one. Check whether Form 1023-EZ fits first, because if it does, it's a much shorter job.
Newly exempt organisations need books, and our roundup of accounting software for nonprofits compares the tools.
Frequently asked questions
How do I file Form 1023?
Online only, through Pay.gov. You register, complete the form, upload all attachments as a single PDF and pay the user fee.
What is the 27-month rule for Form 1023?
If you file within 27 months after the end of the month you were legally formed and you're approved, your exemption is effective from your formation date.
Is a foundation the same as a private foundation?
No. Classification has nothing to do with the name; many organizations called foundations are public charities.
What does an organizing document need for 501(c)(3)?
A purpose clause limiting purposes to those in section 501(c)(3) and a dissolution clause dedicating assets to exempt purposes.
What happens if a nonprofit doesn't file for 3 years?
Its tax-exempt status is automatically revoked, and it must apply for reinstatement with Form 1023 (or 1023-EZ if eligible) and a user fee.
