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Wednesday, November 15, 2006

IRS EXPLAINS PROCESSING OF EXEMPT ORGANIZATION APPLICATIONS

The IRS acknowledges that it is behind on processing applications for exempt organization status. In an effort to explain the process (and when a taxpayer should make inquiries regarding status) the IRS is advising on how it processes exempt organization applications it receives, and anticipated timetables for some of the applications.

Upon receipt, exemption applications accompanied by the required user fee are initially separated into three groups:

(1) those that can be processed immediately based on information submitted,

(2) those that need minor additional information to be resolved, and

(3) those that require additional development.

If the application is in the first or second group, the taxpayer should receive either the determination letter or a request for additional information, via phone, fax, or letter, within approximately 60 days of the date the application was submitted. If the application falls within the third group, the taxpayer will be contacted once the application has been assigned to a specialist.

Group 3 applications can have a long wait. The IRS indicates it is only now assigning group 3 cases received in April to specialists.

To help with timing issues, the IRS website will keep this assignment date current. To check on it, go to to this site.

The IRS also posts a flowchart of the steps taken in reviewing an exempt organization application. Click here for a chart illustrating the IRS process for exempt organizations determination letter requests.

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