Small homeschool groups receives official IRS Letter without 501c3 status

Hi Carol,

I know I’ve come across this information on your site before, but can’t find it today.  I am a leader for a smaller homeschool support group (50 families).  Each year, only about $1,000 passes through our bank account.  I have obtained an EIN so we can open a bank account but we are also interested in non-profit status.  The main reason for this is so people can make contributions and also so we can avoid paying sales tax.  I read on the IRS site that we do not need a form 1023 if we have less than $5,000 annually.  If that is the case, how do we prove our non-profit status?

Thank you so much for your help.  Your site has been very helpful to us.

Shelley T, Illinois

Shelley,

Good question.  I decided to call the IRS Tax Exempt Customer Service at (877) 829-5500 on your behalf.  First, Mrs Baker, the IRS employee said that you would have no proof of tax exemption because you do not have the IRS determination letter.  That’s the letter the IRS gives nonprofits after their tax exempt application (Form 1023) is approved.

Then she mentioned that the IRS can send a letter stating that some nonprofits such as yours are small enough that they are not required to file Form 1023. I asked for that letter to be mailed to you.  That’s the closest thing you’ll have to “proof.” At least it will be from the IRS and addressed to your group.

I found your mailing address on your website. Good thing you had an EIN, too.  She verified the mailing address I gave her with your EIN.

Look for the letter in 10-14 business days.

Carol Topp, CPA

Follow up: Shelley received her letter from the IRS 14 days later. It simply stated “We have no record that your organization has been recognized as exempt from federal income tax.” It went on to explain the IRS forms and publications to apply for tax exempt status.  The letter closed with a paragraph explaining that “an organization organized and operated exclusively for 501(c)(3) purposes…does not have to file for exemption unless its annual gross receipts are normally more than $5,000.”

Advice to homeschool leaders:

If you are a small homeschool nonprofit (gross revenues under $5,000 a year), and desire a letter from the IRS explaining that you are tax exempt, do what I did for Shelley and call the IRS.  Request a letter explaining the exemption for filing a Form 1023 for small nonprofits.

If your homeschool organization brings in more than $5,000 a year, it is time to apply for tax exempt status with the IRS (or time to start paying tax on your surplus!). Read more here:

When to become a 501c3?

Questions? Send me an email. I can help!

Carol Topp, CPA