Many grantmakers, particularly those that accept the Colorado Common Grant Application (CGA), require “proof of IRS federal tax-exempt status, dated within the last five years.” Proof is generally the organization’s 501(c)(3) IRS Determination Letter. Since an organization’s exempt-status can change (i.e. reclassified under a different IRS code or completely revoked for non-compliance), it is necessary for grantseekers to provide a letter from the IRS dated within the last five years, even though technically, the IRS says they don’t “re-issue new determination letters as an organization’s original determination letter does not expire and is always still valid until the point in which an organization’s exempt status changes.” In this instance the IRS would issue a brand new determination letter.
Rather than requesting a “new determination letter” and confusing the IRS agent, it is best to ask for an “Affirmation Letter” which simply affirms that the organization’s original tax exempt status is still valid. The “Affirmation Letter” dated within the last five years, in most cases, is acceptable proof for grantmakers.
Here are more details about requesting an “Affirmation Letter” from the IRS. The instructions in the CGA user’s guide (page 30) are technically accurate although the User’s Guide doesn’t talk about the “affirmation” language that the IRS uses.
- Dial 1-877-829-5500 (wait times can be long, so keep this in mind)
- Select option 2 (exempt organizations)
- Select option 4 (verify status and other options)
Note: these were the menu options as of 2/12/2014. They may change from time to time.
The caller will need to provide the IRS representative with the following information:
- Organization Name
- Organization Mailing address (including city, state, zip)
Note: If a tax preparer happens to put the tax preparer’s address on the organization’s 990 (instead of the organization’s address), the IRS will typically change/update the organization’s address to the tax preparer’s address. It is important that organizations know this and make sure their 990 preparer doesn’t put the preparer’s address on the organization’s tax return!
- The IRS representative can verify the tax-exempt status of the organization but generally can’t provide specific details such as why an organization’s exempt status was revoked, etc. to a third party caller
- If the organization’s status is still the same as it was when the original determination letter was issued, that letter IS still valid; however, the caller can request that an “Affirmation Letter” be sent the organization’s mailing address on file. The “Affirmation Letter” is what funders will typically want in order to have a letter dated within the last five years verifying the organization’s tax-exempt status has not changed. The organization should ALWAYS maintain their original determination letter in their permanent records even if they have received an affirmation letter that is more current. The affirmation letter is typically sent by the IRS within 10-14 business days (depending on how busy the IRS may be).
- Also note that as of 2008, the IRS no longer issues “advance rulings” so any determination letters issued after 2008 will not have this like the older letters did.