The IRS is
9 months behind (as of 2014) 4-6 months behind (as of 2017) 9 months behind (as of 2023) in processing a new 501c3 application. Seriously.
Oh, they’ll cash your
($850 through 2017) $600 application check (as of 2018) on the first day they get your packet, but then you go into a big inbox and wait your turn. Or so I thought…
What’s the Problem?
Many of the applications I’ve helped assemble for new church plants were getting approved and back in more like 2-3 months; others were taking the full 6.
Experience is suggesting to me that the IRS does some kind of application triage on the day they cash your check: someone skims through your 501c3 application and puts it into one of three buckets:
- Nothing questionable: gets the faster processing
- We’ll have questions or need clarification: gets standard processing
- What were you thinking?: please send us a complete application next time [I only imagine this bucket exists]
What to Do
I counsel my church planters to wait until they’ve identified the worship facility and signed their lease, rental agreement, or use permit. This seems to be the biggest determining factor in whether they get escorted into Category 1 or tossed into Category 2.
2023 Update: With the dearth of available facilities during the COVID quarantine, the IRS has been more willing to accept an “we’re still looking for a facility” answer on the application. I am no long recommending that applications be delayed until there is a signed facility lease.
There’s no requirement to include the lease with your application, but I have been doing that consistently and see improved processing times. I’m not sure I can say every one of those applications got fast-tracked,
but I can say that every one of the apps I’ve worked on with no facility got the longer processing (along with a request to clarify where worship services will be held and how they’ll be made known to the public).
So if this theory proves true, or at least largely reliable, then it stands to reason that if you waited a month to submit your 501c3 application while you finalize your facility, it could still save you a good 2 months over standard processing times. Now you stand a chance of getting your 501c3 Determination Letter back before your Grand Opening; if you end up still getting Number 2, well, you weren’t going to get the letter back in time for it to be any use for the Launch anyway.
HEY – this is conjecture. No IRS Agent has leaked this as top-secret intel to me. Please take it for what it is: theory based on personal experience. Make your own decisions about when to apply. And, of course, if you get this one thing right but mess up other sections of the app, be prepared to wait the full 9 months.