Wednesday, March 17, 2021

Applying For NY State and Federal Tax Exemption For Your New York Nonprofit

I've been writing a lot about the basics of forming and running a non-profit in New York.  For this blog post, I want to run down my experience in applying for 501(c)(3) status for a New York non-profit as well as state tax exemption.


Working with nonprofits is one of the more rewarding experiences of my professional career. It is always good to help others do good.  

     Now that you created your New York nonprofit,  let's discuss how your New York nonprofit can apply for state and federal tax exemption.

    After your New York nonprofit has held its first organizing meeting, you will need the continued assistance of an experienced attorney to file documents with the federal government and New York State.  By this point, you should have already consulted an attorney about the formation of your organization and hopefully the attorney made sure that you have created an entity that the IRS will find qualifies for tax exemption.

    For the federal government, you will need to complete and file IRS Form 1023, which is a long and detailed form that asks for extensive information about your New York nonprofit's organization, history, finances, structure, governance policies, operations and more. The IRS Form 1023 should be accompanied by appropriate supporting documents that your attorney will request that you produce. 

    Smaller New York nonprofits may be eligible for the streamlined and simpler IRS Form 1023-EZ that can be submitted online if your New York nonprofit's annual gross receipts are less than $50,000 and total assets are less than $250,000.  Your attorney will know which IRS form best suits your New York nonprofit.

    After submission of your completed application, the IRS may send you a letter asking for clarification of certain issues before issuing a determination letter. This letter often includes a deadline by which you must respond.  This letter is a serious matter and must be handled promptly - an inaccurate, untimely or inappropriate response may jeopardize your application!

    Some time after submission of your responses, you will receive a determination letter stating whether your New York nonprofit qualifies for tax exemption status. 

    For New York State, NY Form ST-119.2 is the appropriate document for you to submit to apply for a tax exemption certificate from the NY State Department of Taxation, but it should be accompanied by your 501(c)(3) determination letter and other documents that your attorney will need to attach. 

    With all applications, patience is key.  Both the federal government and New York State have been known to take several months to process applications for tax exemption.  Your attorney should be the point of contact for all correspondence and interaction on behalf of your New York nonprofit with all levels of government during this process.

While nothing will substitute for the work of a capable attorney, I have found this site to be a great resource for budding nonprofits to use to organize their order of operations and act as a step-by-step guide. Definitely bookmark it! 

Gene Berardelli is a street-smart attorney with with over fifteen years of experience in civil and commercial litigation. Gene has achieved several career achievements, including successfully settling a seven-figure personal injury claim, successfully arguing before the New York State Appellate Division and successfully representing clients in trial litigation, mediations and arbitrations against such recognizable entities as the City of New York, New York City Transit Authority, JPMorgan Chase, TD Wealth Management Services, Inc., The Long Island Railroad, and Macy*s. Gene is also a noted New York Election Law expert who has had his opinions cited in scholarly works and published in news and feature articles.


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