Form 1023 Instructions Part II: Organizational Structure

In Form 1023 Part II (2), the IRS tries to identify whether you're an eligible entity for tax exemption. The phrase "organization" alone doesn't mean anything to the IRS. A group of cats in the alley meowing can be called an organization, but not a legal entity. The IRS wants to know if you are a legally recognized corporation, unincorporated association, or trust.

This section is where the IRS locks down your legal form, your formation date, your governing documents, and whether you inherited assets or operations from a prior entity. Every question that follows is about whether you were created under recognized law and can be evaluated under the rules that govern tax exemption.

Form 1023 Part II: Organizational Structure and Entity Type

Question: You must be a corporation, limited liability company (LLC), unincorporated association, or trust to be tax exempt. Select your type of organization.

Many of you think that calling your entity an "organization" makes it sound more nonprofit-y than "corporation", but legally speaking, these terms are not interchangeable, they're like eggs and pineapples. You need to call it what it actually is.

To file Form 1023 and get tax exemption, your nonprofit must be a corporation, an unincorporated association, or a trust.

1. If you incorporated with the state as a nonprofit, you're a nonprofit corporation. If you incorporated as a for-profit, you must amend your articles.
2. If you didn't incorporate, you may still qualify as an unincorporated association, but only if you meet strict requirements. An unincorporated association must have at least two members and a written organizing document that creates the entity for a defined purpose. That document must include the organization's name, its purpose, the date it was adopted, and the signatures of at least two individuals. Verbal agreements, informal groups, and loosely affiliated volunteers don't qualify.
3. If you created a legal entity to hold property under a trust instrument, you're a trust. If you are a trust, you must be a charitable trust. Not every trust qualifies. The trust instrument must limit assets permanently to charitable purposes and prohibit distributions for non-charitable interests.

Those are the only answers the IRS recognizes in Part II of Form 1023.

Form 1023 Part II: Formation Date (MM/DD/YYYY)

That date anchors the entire application. The IRS uses it to fix when the organization legally began and when the compliance clock started.

• If you're a corporation, enter the date your Articles of Incorporation were accepted by the state. Nothing else counts.
• If you're an unincorporated association, enter the date the organization first became operational as a defined group, usually the organizing meeting or bylaws adoption.
• If you're a trust, enter the date the trust became effective as a charitable trust. For trusts created by agreement or declaration, that is the date the trust was executed and funded for exclusively charitable purposes. For trusts created by a will, use the date of death or the date any non-charitable interests expired.

This date also controls the 27-month rule. File Form 1023 within 27 months of formation and exemption applies back to that date. Miss it, or misstate it, and recognition starts later, changing how early donations and activity are treated.

Form 1023 Part II: State or Jurisdiction of Formation

Question: Select your state (or U.S. territory) of incorporation or other formation. If you were formed under the laws of a foreign country, select Foreign Country.

This question is not asking where you operate. It's asking which law created you. If you were formed under U.S. state or territorial law, select the jurisdiction where your organizing document was filed and approved. That answer must match your formation documents and EIN record exactly.

If you were formed under the laws of a foreign country, select Foreign Country. Do not force a U.S. state into this field just because you operate or fundraise in the United States. Foreign organizations face additional scrutiny, and they almost never get tax deductibility privileges for their donors.

Form 1023 Part II: Adoption of Bylaws

Question: Have you adopted bylaws? If "Yes," upload a current copy showing the date of adoption. If "No," explain how you select your officers, directors, or trustees.

In Form 1023 Part II Question 4, the answer should be yes for any functioning nonprofit. The IRS expects a nonprofit to have bylaws in place before applying because bylaws are the operating rules that prove the organization is a real legal structure with governance. Technically, you can attach a written explanation instead, but that explanation becomes your bylaws whether you call them that or not.

Don't grab some random template you found elsewhere. Half the bylaws you find online are two page disasters that look like they were typed by a Soviet intern. They don't meet state law, they don't satisfy IRS governance expectations, and they definitely don't protect your board. Using those as your governing document is the legal equivalent of duct taping a steering wheel to a bicycle and calling it a car. See the Nonprofit Bylaws Template page for the correct approach.

Form 1023 Part II: Successor to Another Organization

Let's get the obvious out of the way. If you ran a for-profit, burned it into the ground, and now think a nonprofit label will scrub away taxes or debt, this site is not for you or anyone trying to recycle a failed business into a charity costume.

Now for legitimate cases. If you originally formed as a for-profit because of bad advice, or you incorporated before realizing your activities were charitable, the IRS already has a process for that. You can apply for 501c3 501(c)(3) status in the normal course.

If your new nonprofit took over activities, or 25% or more of the fair market value of net assets, from a prior entity, for-profit or nonprofit, or if it was created through a conversion, you must complete Form 1023 Schedule G. That's where the IRS decides whether the new entity stands on its own or carries the legal weight of its predecessor.