When the IRS has questions about your application

Filing your exemption application is not the last step. After you submit Form 1023, Form 1023-EZ, Form 1024 or Form 1024-A, the IRS office called EO Determinations reviews it and decides whether to approve it, ask questions, or propose a denial. Questions are normal and do not mean you are in trouble. This guide explains each stage and how to handle it calmly.

The procedures below come from Rev. Proc. 2026-5, the annual revenue procedure for exempt organization determination letters (effective December 29, 2025), and from the IRS's internal manual for determinations staff, IRM 7.20.2.

Stage 1: Acceptance and screening

Confirmation. When you file on Pay.gov, you receive an email confirming that the user fee was paid.

Incomplete applications. An application missing required items is not accepted for processing. Under Rev. Proc. 2026-5, the IRS notifies you, refunds the user fee, and you can submit a new, complete application with a new fee. A Form 1023-EZ is also not considered complete if the organization's name and EIN do not match IRS records.

Three ways a case can go. The IRS manual describes three tracks once a specialist reviews a complete application:

1. Approved on the merits with no contact. The application answers every question.
2. Streamlined questions. A phone call or a short letter clears up a small point, such as an unclear fiscal year end.
3. Full development. A letter with detailed questions about your activities, finances, governance or documents.

A complete application can still draw questions. Rev. Proc. 2026-5 also says the IRS selects a random sample of Form 1023-EZ applications for review before approval. To see how long each stage is currently taking, read our processing time guide.

Stage 2: The request for additional information

The written request is usually Letter 1312, Additional Information Request. People often call it a "development letter." It lists numbered questions and gives a response date.

The deadline. The IRS manual (IRM 7.20.2.3.4, revised May 10, 2024) tells specialists to set a response due date of 28 calendar days from the mailing date of the letter. Go by the date printed on your letter.

Extensions. If you ask before the due date, the specialist can grant an extension of 14 days or less, based on the facts. Managers can approve longer extensions, for example when you need to file an amendment with your state. The manual also tells the specialist to call about two weeks before the due date to see whether you have questions.

If you do not respond. Rev. Proc. 2026-5 warns that failing to respond can result in your application being closed without a determination letter and without a refund of the user fee. The manual adds that a case properly closed this way is generally not reopened just because a late response arrives. You would have to file a new application and pay a new fee.

How to respond well

• Answer every question, in order. Repeat each question's number and answer it directly. "See attached" is not an answer unless you name the page.
• Describe activities concretely. Rev. Proc. 2026-5 says a restatement of your purposes is not enough. Say who does what, where, how often, for whom, and how it is paid for.
• Keep numbers consistent. Budgets should match what you told the IRS earlier, or explain the change.
• Send documents, not promises. If asked to amend your articles, file the amendment with the state and send the stamped copy (see articles of incorporation for a 501(c)(3)). If asked about policies, send the adopted policy, such as a conflict of interest policy, with the board minutes approving it.
• Sign under penalties of perjury. Rev. Proc. 2026-5 requires that any new facts, including facts you mention by phone, be put in writing and signed under a penalties of perjury statement. Your letter will tell you which statement to use.
• Use the channel the letter offers. Rev. Proc. 2026-5 encourages fax and the IRS Document Upload Tool for sending additional information when the specialist provides them.
• Remember the file is public if you are approved. Approved applications and supporting papers, including your responses, are open to public inspection, so leave out Social Security numbers and other private details.

Amending documents can affect your effective date. Publication 557 explains that if you must substantially change your activities or your charter to qualify, the determination letter is effective as of the date it specifies. A nonsubstantive fix, such as adding a dissolution clause, ordinarily still allows exemption back to formation if your activities were consistent with exemption all along. See the 27-month rule for how timing works.

Stage 3: Proposed adverse determination

If the specialist believes your organization does not qualify, the manual tells the specialist (after a manager agrees) to call you first, explain the reasons, describe your appeal rights and options, and, if you say you have more information, give you 14 calendar days to send it.

If the concern remains, the IRS issues a proposed adverse determination letter. Under Rev. Proc. 2026-5, it includes a detailed explanation and tells you about your right to protest and to request a conference with the Independent Office of Appeals, an IRS office that is independent of EO Determinations.

Filing a protest

You have 30 days from the date of the proposed adverse determination letter to submit a protest: a written statement of the facts, law and arguments supporting your position, stating whether you want an Appeals conference. Publication 557 lists what to include:

1. Your organization's name, address, daytime telephone number and EIN
2. A statement that you want to protest the determination
3. A copy of the letter, or its date and office symbols
4. A statement of facts supporting your position on any disputed fact
5. A statement of the law or other authority you rely on
6. Whether you want a conference with Appeals

The statement of facts must be declared true under penalties of perjury.

What happens next. EO Determinations reviews your protest first. If it is persuaded, it issues a favorable letter. If not, it sends the case to Appeals, which may schedule a conference and will then issue a favorable or final adverse determination. New information raised in a protest can send the case back to EO Determinations. If you file no protest, a final adverse letter follows.

Withdrawing instead. You may withdraw your application in writing any time before a determination letter or proposed adverse letter is issued. The user fee generally is not refunded, and the IRS keeps the file and can consider it later.

Stage 4: The court option under IRC 7428

If the IRS issues a final adverse determination, IRC 7428 lets certain organizations ask a court for a declaratory judgment, meaning a court decision on whether the organization qualifies. The case can be filed in the U.S. Tax Court, the U.S. Court of Federal Claims, or the U.S. District Court for the District of Columbia. It covers questions such as 501(c)(3) qualification, private foundation classification, and qualification under other paragraphs of 501(c).

You must use every IRS step first. Rev. Proc. 2026-5 calls this exhausting administrative remedies: filing a complete application, answering every request for information on time, and pursuing the protest and Appeals process. Withdrawing your application or your protest does not count. An organization that filed Form 1023-EZ when it was not eligible to use it has not exhausted its remedies.

The 270-day rule. If the IRS has not decided your case, you may be able to go to court once 270 days have passed after you filed a complete application and took every reasonable step. The time between an IRS request for information and your response does not count toward the 270 days.

The filing deadline. Under IRC 7428(b)(3), when the IRS sends its final determination by certified or registered mail, the court petition must be filed before the 91st day after the mailing date. For a letter mailed September 1, 2026, the 91st day is December 1, 2026, so the last day to file is November 30, 2026.

Court cases are formal and usually involve professional representation. Most applications never reach this stage.

501Nonprofit.com is a private company, not the IRS. This page is general information, not legal or tax advice for your organization. Example organizations and figures are hypothetical.