IRS Form 1023 Schedules Instruction & Answers A through H

IRS Form 1023 has 8 schedules numbered alphabetically from A to H. Most straight forward small nonprofit organizations applying for tax exemption usually don’t need to fill out any schedules, however if the form 1023 redirects you to one, it means it is required and has to be answered.

The most common schedules of form 1023 are schedule H which is for providing scholarship, and schedule A which is for churches. Here’s the list of IRS form 1023 schedules and instructions for what to do if you are required to fill one out:

Form 1023 Schedule A. Churches

There is no single definition of the word “church” for tax purposes. When determining whether a section 501c3 religious organization is described as a church (described in section 509(a)(1) and 170(b)(1)(A)(i)), IRS will consider characteristics generally attributed to churches and the facts and circumstances of each organization applying for public charity classification as a “church.”

  • A recognized creed and form of worship,
  • A definite and distinct ecclesiastical government,
  • A formal code of doctrine and discipline,
  • A distinct religious history,
  • A membership not associated with any other church or denomination,
  • Ordained ministers ministering to the congregation,
  • Ordained ministers selected after completing prescribed courses of study,
  • A literature of its own,
  • Established places of worship,
  • Regular congregations,
  • Regular religious services,
  • Sunday schools for the religious instruction of the young, and
  • Schools for the preparation of

Although you don’t need to meet each of the above criteria to be classified as a church, you’re generally required to have a congregation or other religious membership group. For purposes of foundation classification under section 509(a)(1) and 170(b)(1)(A)(i), the term “church” includes, without limitation, mosques, temples, and synagogues, and certain other forms of religious organizations. For more information, see Pub. 1828.

The practices and rituals associated with your religious beliefs or creed must not be illegal or contrary to public policy.

Schedule A Line 1. Describe your written creed, statement of faith, or summary of beliefs.

Schedule A Line 2. Your literature includes any writings about your beliefs, rules, or history.

Schedule A Line 3. A “code of doctrine and discipline” refers to a body of laws or rules that govern behavior.

Schedule A Line 4. A “religious hierarchy or ecclesiastical government” refers to people or institutions that exercise significant influence or authority over your church.

Schedule A Line 5. Answer “Yes,” if you’re part of a group of churches with similar beliefs and structures, such as a convention, association, or union of churches.

Schedule A Line 6. A “form of worship” refers to religious practices that express your devotion to your creed, faith, or beliefs.

Schedule A Line 7. Indicate the regular days and times of your religious services. Describe the order of events during your regular worship service and explain how the

Schedule A Line 7a. Enter the average number of members and non-members who attend your regularly scheduled religious services.

Schedule A Line 8. An “established place of worship” is a place where you hold regularly scheduled religious services. It may be a place that you own, rent, or that is provided free for your use.

Schedule A Line 9. An “established congregation” or “other religious membership group” includes individuals who regularly attend and take part in the religious services of your organization at an established location. An established congregation generally doesn’t include members of only one family. If you answer “No,” because you don’t have an established congregation or other religious membership, you may be a religious organization that doesn’t qualify as a church. If you don’t qualify as a church, you will need to go back to Part VII, line 1, to reconsider your public charity classification.

Schedule A Line 9a. Enter the total number of your current members. If you have no members, enter zero (0).

Schedule A Line 9b. Answer “Yes,” if you have a prescribed way to become a member. Answer “Yes,” even if you just keep records of who is currently a member. Describe any actions required for individuals to become members.

Schedule A Line 9c. Describe any rights and benefits of members. You should include details of any levels of membership and the rights and/or benefits associated with each level.

Schedule A Line 9d.  If your members may be associated with another denomination or church, describe the circumstances in which your members would be members of your church and another church.

Schedule A Line 9e.  See Appendix C for a description of the word “family.”

Schedule A Line 10. Answer “Yes,” if you conduct baptisms, weddings, funerals, or other religious rites.

Schedule A Line 11. A school for the religious instruction of the young refers to any regularly scheduled religious, educational activities for youth.

Schedule A Line 12. A “prescribed course of study” refers to formal or informal training. It doesn’t include self-ordination or paying a fee for an ordination certificate without completing a course of study. Describe the course of study completed by your religious leaders.

Schedule A Line 15. Provide any additional information you would like us to consider that would help us classify you as a church.

 

Form 1023 Schedule B. Schools, Colleges & Universities

An organization qualifies as a school (for purposes of classification under sections 509(a)(1) and 170(b)(1)(A)(ii)) if all the following applies. It:

  • Presents formal instruction as its primary function,
  • Has a regularly scheduled curriculum,
  • Has a regular faculty of qualified teachers,
  • Has a regularly enrolled student body, and
  • Has a place where educational activities are regularly carried

The term “school” includes primary, secondary, preparatory, high schools, colleges, and universities. An organization won’t be described as a school under sections 509(a)(1) and 170(b)(1)(A)(ii) if it engages in both educational and non-educational activities, unless the latter are merely incidental to the educational activities. Non-traditional schools such as an outdoor survival school or a yoga school may qualify. However, an organization may further an educational purpose without satisfying all the conditions listed above that describe a school. Such organizations may qualify as public charities based upon their sources of support as organizations described in sections 509(a)(1) and 170(B)(1)(A)(vi) or section 509(a)(2).

Schedule B Line 1. Answer “Yes,” if you have a regularly scheduled curriculum, a regular faculty of qualified teachers, a regularly enrolled student body, and facilities where your educational activities are regularly carried on.

If you answer “Yes,”you should maintain in your records evidence that you meet these factors, such as:

  • A list of required courses of study, dates and times courses are offered, and other information about how to complete required courses;
  • Certification by the appropriate state authority or successful completion of required training for qualified teachers;
  • Records of regular attendance by students at your facility; and
  • A lease agreement or deed for your

If you answer “No,” you may not meet the requirements of a school and you may need to go back to Part VII, line 1, to reconsider your foundation classification if you requested classification as a school under sections 509(a)(1) and 170(b)(1)(A) (ii).

Schedule B Line 2. Answer “Yes,” if your primary function of the school is the presentation of formal instruction. If you answer “No,” you may not meet the requirements for classification as a school and may want to go back to Part VII, line 1, to reconsider your foundation classification if you requested classification as a school under sections 509(a)(1) and 170(b)(1)(A)(ii).

Schedule B Line 3. Answer “Yes,” if you’re a public school and explain how you’re operated by the state or a subdivision of a state, including if you have a signed contract or agreement with a state or local government under which you operate and receive funding. If you answer “Yes,” don’t complete the remainder of Schedule B.

Schedule B Line 4. Answer “Yes,” if you were formed or substantially expanded when public schools in your district or county were desegregated by court order. If you’re unsure whether to answer “Yes,”contact an appropriate school official.

Schedule B Line 5. Answer “Yes,” if a state or federal administrative agency or judicial body ever determined your organization to be racially discriminatory. Identify the parties involved and the forum in which the case was presented. Explain the reason for the action, the decision reached, and provide legal citations (if any) for the decision. Also, explain in detail any changes made in response to the action against your organization or the decision reached.

Establishment of Racially Nondiscriminatory Policy

A section 501c3 organization that is a private school must publish a notice of its racially nondiscriminatory policy as to students as follows.

The M school admits students of any race, color, national origin, and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. It doesn’t discriminate on the basis of race, color, national origin, and ethnic origin in administration of its educational policies, admission policies, scholarship and loan programs, and athletic and other school-administered programs.

A private school must also be certified annually that it meets the requirements of Rev. Proc. 75-50, as modified by Rev. Proc. 2019-22, by filing Schedule A (Form 990, or Form 990-EZ). Schools that don’t file Form 990 or 990-EZ must make the certification by filing Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt From Federal Income Tax.

Schedule B Line 7. Answer “Yes,” if your organizing document or bylaws contain a nondiscriminatory statement as to students similar to the one shown above or if you adopted such a policy by resolution of your governing body. State where your policy is located in your organizing document, bylaws, or if it is in an adopted resolution. If you answered “No,” you must adopt a nondiscriminatory policy before submitting this application.

Schedule B Line 8. Answer “Yes,” if your brochures, application forms, advertisements, and catalogues dealing with student admissions, programs, and scholarships contain a statement similar to the following:

The M school admits students of any race, color, and national or ethnic origin.

Schedule B Line 8a. If you answered “No” to Line 8, check the box on line 8a if you agree that all future printed materials, including website content, will contain a statement of nondiscriminatory policy as to students similar to the one provided above.

Schedule B Line 9. You must make your nondiscriminatory policy known to all segments of the general community served by the school. One way to meet this requirement is to publish your nondiscriminatory policy annually in a newspaper or over broadcast media. Rev. Proc. 2019-22 now allows this publication requirement to be satisfied by continuously displaying your nondiscrimination statement on your Internet site, as described below.

Check “Yes,” if you make your racially nondiscriminatory policy known to all segments of the general community you serve by:

  • Publishing a notice of your policy in a newspaper of general circulation that serves all racial segments of the community;
  • publicizing your policy over broadcast media in a way that is reasonably expected to be effective; or
  • display a notice of your policy at all times on your primary, publicly accessible website in a manner reasonably expected to be noticed by visitors.

Schedule B Line 9a. If you answered “No,” to line 9, check the box on line 9a if you agree that you will publicize your nondiscriminatory policy in a way that meets the requirements of Revenue Procedure 75– 50, as modified by Revenue Procedure 2019-22.

Schedule B Line 11. Enter the racial composition of your student body, faculty, and administrative staff in the spaces provided. Enter actual numbers, rather than percentages, for the current year and projected numbers for the next academic year. If the number is zero, then enter “0.”

If you’re not operational, submit an estimate based on the best information available (such as the racial composition of the community you serve).

Schedule B Line 12. Enter the racial composition of students to whom you award loans and scholarships in the spaces provided. Enter actual numbers, rather than percentages, for the current year and projected numbers for the next academic year. If the number is zero, then enter “0.” If you won’t provide any loans or scholarships, check the box provided.

  • Copies of brochures, application forms, advertisements, and catalogues dealing with student admissions, programs, and financial aid.

Schedule B Line 13. Identify each of your incorporator/s, founders, board members, donors of land, and donors of buildings by name (whether individuals or organizations).

Schedule B Line 14. Answer “Yes,” if any individuals or organizations on your list have an objective to keep public or private school education segregated by race and explain how these individuals or organizations promote segregation in public or private schools.

Schedule B Line 15. Answer “Yes,” if on a continuing basis, you will maintain for a minimum period of 3 years the following records.

  • Your racial composition (similar to the information requested on Schedule B, line 11).
  • Evidence that your scholarships and loans are awarded on a racially nondiscriminatory basis (similar to the information requested on Schedule B, line 12).

 

Form 1023 Schedule C. Hospitals & Medical Research Organizations

Hospital – An organization is a “hospital” if its principal purpose or function is providing medical or hospital care or medical education or research. Medical care includes treatment of any physical or mental disability or condition, on an inpatient or outpatient basis. Thus, if an organization is a rehabilitation institution, outpatient clinic, or community mental health or drug treatment center, it is a hospital if its principal function is providing treatment services, as described above.

A hospital doesn’t include convalescent homes, homes for children or the aged, or institutions whose principal purposes or function is to train handicapped individuals to pursue a vocation.

Medical research organization – An organization is a “medical research organization” if its principal purpose or function is the direct, continuous, and active conduct of medical research in conjunction with a hospital. The hospital with which the organization is affiliated must be described in section 501(c)(3), a federal hospital, or an instrumentality of a governmental unit, such as a municipal hospital.

“Medical research” means investigations, experiments, and studies to discover, develop, or verify knowledge relating to the causes, diagnosis, treatment, prevention, or control of human physical or mental diseases and impairments. For more information, see Regulations section 1.170A-9(c)(2).

Cooperative hospital service organization – A cooperative hospital service organization performs one or more of the specific services listed below for one or more exempt hospitals on a cooperative basis. The services listed below are exclusive. A cooperative service organization that provides services other than those listed below, or that provides services to an organization other than an exempt hospital, doesn’t qualify for exemption under section 501(c)(3). The list of services includes:

  1. Data processing;
  2. Purchasing (including the purchasing of insurance on a group basis);
  3. Warehousing;
  4. Billing and collection (including the purchasing of patron accounts receivable on a recourse basis);
  5. Food;
  6. Clinical;
  7. Industrial engineering;
  8. Laboratory;
  9. Printing;
  10. Communications;
  11. Record center; and
  12. Personnel services (including selection testing, training, and education of personnel).

Schedule C Line 1. Answer “Yes,” if your organization is a medical research organization, as described above.

Schedule C Line 1a. As a medical research organization, you must be associated with a hospital described in section 501c3, a federal hospital, or an instrumentality of a government. Provide the name of the hospital(s) you’re associated with and describe the relationship(s).

Schedule C Line 1b. List your assets and their fair market value and the portion of your assets directly devoted to medical research. Don’t complete the remainder of Schedule C.

Schedule C Line 2. Answer “Yes,” if you’re a cooperative hospital service organization and describe the services you provide to your member hospitals and the exempt status of your membership. Don’t complete the remainder of Schedule C.

Schedule C Line 3. Answer “Yes,” if all the doctors in your community are eligible for staff privileges at your facility. You must answer “Yes,” even if staff privileges at your facilities are limited by capacity, provided that all qualified medical professionals in your community may seek and would be considered for eligibility.

Answer “No,” if all doctors in your community aren’t eligible for staff privileges at your facility.

If you answer “No,” describe in detail how you limit eligibility for staff privileges at your facility. Include details of your eligibility criteria and selection procedures for your courtesy staff of doctors.

Schedule C Line 4. Answer “Yes,” if you admit all patients in your community who can pay for themselves or through some form of third-party reimbursement (for example, private health insurance, Medicare, or Medicaid).

Answer “No,” if you limit admission for these individuals in any way and describe your admission policy in detail, including how and why you restrict patient admission.

Schedule C Line 5. Answer “Yes,” if you offer emergency medical or hospital care at your facility on a 24-hour basis, seven days a week.

Schedule C Line 5a. Answer “Yes,” if the reason you don’t maintain a full-time emergency room is either because you’re a specialty hospital where emergency care would be inappropriate for the services you provide or another emergency medical care facility that provides such services is located so near to you as to make such services as you might provide duplicative.

Schedule C Line 6. Answer “Yes,” if you provide free or low-cost medical or hospital care services. If you answer “Yes,” describe your policy and to whom you provide these services. Include details on how these services promote benefits to the community. For example, you may want

to indicate how you determine who is eligible for the services, how you inform the general public about your policy, any requirements you require of patients to receive reduced cost or free care, and any agreements you might have with municipalities or government agencies to subsidize the cost of admitting or treating patients through this policy.

Schedule C Line 7. Answer “Yes,” if you have a formal program of medical training and research. If you answer “Yes,” describe your program, including the programs you offer, the scope of such programs, and affiliation with other hospitals or medical care providers with which you carry on the medical training or research programs.

Schedule C Line 8. Answer “Yes,” if you have a formal program of community educational programs and describe your programs, including the types of programs offered, the scope of the programs, and affiliation with other hospitals or medical care providers with whom you offer community educational programs.

Schedule C Line 9. Answer “Yes,” if you have a board of directors that is representative of the community you serve or if an organization described under section 501c3 with a community board exercises rights or powers over you.

Answer “Yes,”if you’re subject to a state corporate practice of medicine law that requires your governing board to be composed solely of physicians licensed to practice medicine in the state.

Schedule C Line 9a.  List each board member by name and describe that person’s relationship to you. Also, for each board member, describe if and how that individual represents the community.

Generally, hospital employees and staff physicians aren’t individuals considered to be community representatives. If you operate under a parent organization whose board of directors isn’t comprised of a majority of individuals who are representative of the community you serve, provide the requested information for your parent organization’s board of directors as well.

Schedule C Line 10. Section 501(r). Answer “Yes,” if you operate a facility that is required by a state to be licensed, registered, or

similarly recognized as a hospital. Organizations that respond “Yes,” to this question are required to meet additional requirements described in section 501(r) to be considered a hospital exempt from taxation by section 501(c).

Schedule C Line 10a. A community health needs assessment (CHNA) is an assessment of the significant health needs of the community. To meet the requirements of section 501(r)(3), a CHNA must take into account input from persons who represent

the broad interests of the community served by the hospital facility, including those with special knowledge of or expertise in public health, and must be made widely available to the public. Each hospital facility must conduct a CHNA at least once every 3 years and adopt an implementation strategy to meet the community health need identified through such CHNA.

Answer “Yes,” if the hospital facility conducted a complying CHNA in the current tax year or in either of the 2 immediately preceding tax years or if the hospital facility intends to conduct a CHNA before the end of its first 3-year period.

Schedule C Line 10b. A financial assistance policy (FAP), sometimes referred to as a charity care policy, is a policy describing how an organization will provide financial assistance at its hospital(s) and other facilities, if any. Financial assistance includes free or discounted health services provided to persons who meet the organization’s criteria for financial assistance and are unable to pay for all or a portion of the services. Financial assistance doesn’t include:

  • Bad debt or un-collectible charges that the organization recorded as revenue but wrote off due to a patient’s failure to pay or the cost of providing such care to such patients;
  • The difference between the cost of care provided under Medicaid or other means-tested government programs or under Medicare and the revenue derived therefrom;
  • Self-pay or prompt pay discounts; or
  • Contractual adjustments with any third-party

Answer “Yes,” if the hospital facility has adopted a written financial assistance policy and a written policy relating to emergency medical care as required by section 501(r)(4).

Schedule C Line 10c. Under section 501(r)(5), the maximum amounts that can be charged to FAP-eligible individuals for emergency or other medically necessary care are the amounts generally billed to individuals who have insurance covering such care.

Answer “Yes,” if the hospital facility:

  1. Limits or will limit any charges to FAP-eligible individuals to whom the hospital facility provided emergency or other medically necessary services to not more than the amounts generally billed to individuals who had insurance covering such care; and
  2. Prohibits, or upon beginning operations will prohibit, the use of gross charges as described in section 501(r)(5).

The hospital facility may check “Yes,” if it charged more than the amounts generally billed to individuals who had insurance covering such care to an individual if:

  • The charge in excess of the amounts generally billed (AGB) wasn’t made or requested as a pre-condition of providing medically necessary care to the FAP-eligible individual;
  • As of the time of the charge, the FAP-eligible individual hadn’t submitted a complete FAP application and hadn’t otherwise been determined by the hospital facility to be FAP eligible for the care; and,
  • If the individual subsequently submits a complete FAP application and is determined to be FAP-eligible for care, the hospital facility refunds any amount that exceeds the amount he or she is determnined to be personally responsible for paying as a FAP-eligible individual, unless such excess amount is less than $5.

Schedule C Line 10d. Answer “Yes,” if the hospital facility has, or will have at the beginning of operation, either a separate written billing and collections policy, or include in a written FAP:

  • A description of any actions that the hospital facility (or other authorized party) may take related to obtaining payment of a bill for medical care, including, but not limited to, any extraordinary collection actions (ECAs);
  • The process and time frames the hospital facility (or other authorized party) uses in taking those actions (including, but not limited to, the reasonable efforts it will make to determine whether an individual is FAP-eligible before engaging in ECAs); and
  • The office, department, committee, or other body with the final authority or responsibility for determining that the hospital facility has made reasonable efforts to determine whether an individual is FAP-eligible and may therefore

 

Form 1023 Schedule D. Section 509a3 Supporting Organizations

Supporting organizations are described in section 509(a)(3). The term “supported organization” refers to an organization that a supporting organization benefits. A supporting organization may support more than one supported organization.

An organization qualifies as a supporting organization (for purposes of classification under section 509(a)(3)) if:

  • It is organized and at all times thereafter is operated exclusively for the benefit of, to perform the function of, or to carry out the purposes of one or more public charities described in section 509(a)(1) or 509(a)(2);
  • It meets one of three required relationship tests with the supported organization(s); and
  • It isn’t controlled by disqualified persons,” directly or indirectly. See Appendix C for a definition of a “disqualified person.”
  • A supporting organization can also support the charitable purposes of organizations that are exempt under sections 501(c)(4), (5), or (6).

Schedule D Line 1. List the name, address, and EIN of each organization you support.

Schedule D Line 2. Answer “Yes,” if each supported organization has a letter from the IRS recognizing it as a public charity under section 509(a)(1) or 509(a)(2). Before you file your application, use Tax Exempt Organization Search on IRS.gov to confirm whether each of your supported organizations is currently recognized as exempt and is classified as a public charity.

Schedule D Line 2a. Answer “Yes,” if any supported organization you listed on line 1 received a letter from the IRS stating that it’s exempt under sections 501(c)(4), (5), or (6) and meets the public support test under section 509(a)(2). See Pub. 557 for information on the public support test for section 509(a)(2).

If you answer “No,” describe how each organization you support is a public charity under section 509(a)(1) or 509(a)(2). For example, if you support a church or foreign organization that hasn’t received a determination letter recognizing it as a public charity, you should describe how this organization qualifies as a public charity under section 509(a)(1) or 509(a) (2).

Schedule D Line 3. Relationship test. To qualify under section 509(a)(3), you must show that you meet one of three relationship tests with your supported organization(s). Select the option that best describes your relationship with your supported organization(s).

  1. Type I (“operated, supervised, or controlled by” relationship; comparable to a parent–subsidiary relationship): A majority of your governing board or officers are elected or appointed by the governing body, members of the governing body, officers acting in their official capacity, or the membership of your supported organization(s).
  2. Type II (“supervised or controlled in connection with” relationship; comparable to a brother–sister relationship): Your control or management is vested in the same persons who control or manage your supported organization(s).
  3. Type III (“operated in connection with” relationship; responsive to the needs or demands of, and having significant involvement in the affairs of, the supported organization(s)): One or more of your officers, directors, or trustees are elected or appointed by the officers, directors, trustees, or membership of your supported organization(s); one or more of your officers, directors, trustees, or other important office holders are also members of the governing body of your supported organization(s); or your officers, directors, or trustees maintain a close and continuous working relationship with the officers, directors, or trustees of your supported organization(s).

If you don’t meet one of these three relationship tests, you aren’t described in section 509(a)(3) and should review the other foundation classification options in Part VII, line 1.

Schedule D Line 4. Describe how your governing board and officers are selected, including where (if applicable) this information is in your governing document, bylaws, or other internal rules and regulations.

Type III organizations must also describe how your officers, directors, or trustees maintain a close and continuing relationship with the officers, directors, or trustees of your supported organization(s).

Schedule D Line 5. Prohibited control by disqualified person. You can’t be described in section 509(a)(3) if you’re directly or indirectly controlled by disqualified persons. You are controlled if disqualified persons:

  • Can exercise 50% or more of the total voting power of your governing body;
  • Have authority to affect significant decisions, such as power over your investment decisions, or power over your charitable disbursement decisions; or
  • Can exercise veto power over your actions.

Although control is generally demonstrated where disqualified persons have the authority over your governing body to require you to take an action or refrain from taking an action, indirect control by disqualified persons will also disqualify you as a supporting organization.

Public charities and foundation managers who otherwise are disqualified persons only because they are foundation managers aren’t disqualified persons for this purpose.

Schedule D Line 7. Organizational test. If you answered “No,” you are a Type III supporting organization, you must amend your organizing document to specify your supported organization(s) by name; or you won’t meet the organizational test under section 509(a)(3) and need to reconsider your requested public charity classification in Part VII, line 1.

Schedule D Line 7a. If you answered “No,” you won’t meet the organizational test under section 509(a)(3) unless you amend your organizing document to specify your supported organization(s) by name, purpose, or class, and need to reconsider your requested public charity classification in Part VII, line 1.

Schedule D Line 8. When responding to this question, don’t include donors that are section 509(a)(1), (2), or (4) organizations.

This prohibition on contributions from controlling donors only applies to Type I and Type III supporting organizations.

Schedule D Line 9. Type III responsiveness test. Answer “Yes,” if, because of your relationship described in line 3, the supported organization has a significant involvement in your investment policies, making and timing of grants, and directing the use of your income and assets, and explain how your supported organization is involved in these matters.

Schedule D Line 10. Type III notification require-ment. A Type III supporting organization must provide the notice described in this question. If you’re a Type III supporting organization, you’ll be required to answer this question annually on your annual information return (Schedule A of Form 990 or 990-EZ).

Schedule D Lines 11–13. Type III integral part test. An organization seeking classification as a Type III supporting organization must meet an integral part test, which is satisfied by maintaining significant involvement in the operations of one or more supported organizations and providing support on which the supported organization(s) are dependent. A Type III supporting organization may be functionally integrated (lines 11–12) or non-functionally integrated (lines 13 and 13a–c) depending on the manner in which it meets the integral part test. Functionally integrated Type III supporting organizations are subject to fewer restrictions and requirements than non-functionally integrated Type IIII supporting organizations.

Schedule D Line 11. Answer “Yes,” if you’re the parent of all your supported organizations because you:

  • Have the power to appoint or elect, directly or indirectly, a majority of the officers, directors, or trustees of each supported organization; and
  • Exercise a substantial degree of direction over the policies, programs, and activities of each supported organization.

For example, N, an organization described in section 501(c)(3), is the parent organization of a healthcare system consisting of two hospitals (Q and R) and an outpatient clinic (S), each of which is described in section 509(a)(1), and a taxable subsidiary (T). N is the sole member of each of Q, R, and S. Under the charter and bylaws of each of Q, R, and S, N appoints all members of the board of directors of each corporation. N engages in the overall coordination and supervision of the healthcare system’s exempt subsidiary corporations Q, R, and S in approval of their budgets, strategic planning, marketing, resource allocation, securing tax-exempt bond financing, and community education. N also manages and invests assets that serve as endowments of Q, R, and S.

Schedule D Line 12. Answer “Yes,” if you conduct activities that the supported organization would otherwise need to conduct in furtherance of its exempt purposes and describe the activities that you conduct.

Holding title to and managing assets that are used (or held for use) directly in carrying out the exempt purposes of your supported organization (exempt-use assets) are activities that directly further the exempt purposes of your supported organization. Conversely, with certain exceptions, fundraising, making grants (whether to the supported organization or to third parties), and investing and managing non-exempt-use assets aren’t activities that directly further the exempt purposes of the supported organization. See Regulations section 1.509(a)-4(i)(4) (ii) for more information.

Schedule D Line 13. To satisfy the integral part test as a non-functionally integrated supporting organization, you must distribute at least 85% of your annual net income or 3.5% of the aggregate fair market value of all of your non-exempt-use assets (whichever is greater) to your supported organization(s). You can use Part V of Schedule A (Form 990 or 990-EZ) to help determine your answer to this question.

The distributable amount for the first tax year an organization is treated as a non-functionally integrated Type III supporting organization is zero.

For purposes of this line, “net income” has the same meaning as the term “adjusted net income.” In general, “adjusted net income” is the excess of gross income, including gross income from any unrelated trade or business, determined with certain modifications, reduced by total deductions. Gross income doesn’t include gifts, grants, or contributions. See Appendix C.

For purposes of this line, “non-exempt-use assets” are all assets of the supporting organization other than:

Assets described in Regulations section 53.4942(a)(2)(c)(2)(i) through (iv), and Exempt-use assets, which are assets that are used (or held for use) directly in carrying out the exempt purposes of your supported organization. See Regulations section 1.509(a)-4(i)(8) for more information.

Schedule D Line 13a. List the total amount you distribute(d) annually to each supported organization. Also, indicate how each amount will vary from year to year.

Schedule D Line 13b. List the total annual income for each supported organization. If you distribute your income to, or for the use of, a particular department or program of an organization, list the annual revenue of the supported department or program.

Schedule D Line 13c. Answer “Yes,” if your funds are “earmarked” for a particular program or activity conducted by your supported organization.

 

Form 1023 Schedule E. Effective Date

The questions in this schedule will help us determine the effective date of exemption if you’re either seeking reinstatement after automatic revocation or you’re filing this application more than 27 months after the end of the month in which you were legally formed.

Schedule E Line 1. Answer “Yes,” if your exempt status was automatically revoked under section 6033(j)(1) for failure to file required annual returns or notices for 3 consecutive years and you’re applying for reinstatement.

Rev. Proc. 2014-11, 2014-3 I.R.B. 411, at IRS.gov/irb/2014-03_IRB establishes several different procedures for reinstating an organization’s exempt status depending upon its size, the number of times it’s been automatically revoked, and the timeliness of filing for reinstatement. Review the revenue procedure to determine which section applies to you.

Schedule E Line 1a. Select the section of Rev. Proc. 2014-11 under which you’re applying for reinstatement.

Schedule E Section 4. Select this section if:

  • You were eligible to file either Form 990-EZ or Form 990-N for each of the 3 consecutive years that you failed to file;
  • This is the first time you’ve been automatically revoked pursuant to section 6033(j)(1); and
  • You’re submitting this application no later than 15 months after the later of the date of your Revocation Letter or the date on which the IRS posted your name on the Auto-Revocation List at irs.gov/app/eos/.

By selecting this item, you’re also attesting that your failure to file wasn’t intentional and you’ve put in place procedures to file required returns or notices in the future.

If you were classified as a private foundation prior to your automatic revocation, you weren’t eligible to file either Form 990-EZ or Form 990-N and, therefore, aren’t eligible to request reinstatement under Section 4.

If your exempt status was automatically revoked more than once, you’re not eligible for reinstatement under Section 4; however, you may apply for reinstatement under Section 5, Section 6, or Section 7.

Schedule E Section 5. Select this section if:

  • You’re ineligible to file for reinstatement under Section 4, and
  • You’re submitting this application not later than 15 months after the later of the date of your Revocation Letter or the date on which the IRS posted your name on the Auto-Revocation List at apps.irs.gov/app/eos/.

By selecting this item, you’re also attesting that you filed the required annual returns, your failure to file was not intentional, and you have put in place procedures to file required returns or notices in the future.

Describe how you exercised ordinary business care and prudence in determining and attempting to comply with your filing requirements in at least 1 of the 3 years of revocation. Include a detailed explanation of all the facts and circumstances that led to the failure, the discovery of the failure, and the steps you have taken or will take to avoid or to mitigate future failures to file timely returns or notices.

Schedule E Section 6. Select this section if you are applying for reinstatement of your tax-exempt status more than 15 months from the later of the date of the Revocation Letter or the date on which the IRS posted your name on the Auto-Revocation List at apps.irs.gov/app/eos/.

By selecting this item, you’re also attesting that you filed the required annual returns, your failure to file wasn’t intentional, and you have put in place procedures to file required returns or notices in the future.

Describe how you exercised ordinary business care and prudence in determining and attempting to comply with your filing requirements in each of the 3 years of revocation. Include a detailed explanation of all the facts and circumstances that led to the failure, the discovery of the failure, and the steps you have taken or will take to avoid or mitigate future failures to file timely returns or notices.

Schedule E Section 7. Select this section if you’re seeking reinstatement with an effective date of reinstatement of the date of submission of this application.

Schedule E Line 2. Generally, if you didn’t file Form 1023 within 27 months of formation, the effective date of your exempt status will be the date you filed Form 1023 (submission date). IRS may grant requests for an earlier effective date when there’s evidence to establish you acted reasonably and in good faith, and the grant of relief won’t prejudice the interests of the government.

Select the appropriate box to indicate whether you accept the submission date as the effective date of your exempt status or whether you are requesting an earlier effective date.

Schedule E Line 2a. You may be eligible for consideration for relief from the requirement that you file Form 1023 within 27 months of formation if you can establish that you acted reasonably and in good faith, and that granting an extension won’t prejudice the interests of the government.

Describe in detail your reasons for filing late, how you discovered your failure to file, any reliance on professional advice or advice from the IRS, and any other information you believe will support your request for relief. Also, you may want to provide a comparison of (1) what your aggregate tax liability would be if you had filed this application within the 27-month period with (2) what your aggregate liability would be if you were exempt as of your formation date.

IRS may consider the following factors.

  • You filed Form 1023 before IRS discovered your failure to file.
  • You failed to file because of intervening events beyond your control.
  • You exercised reasonable diligence, but you weren’t aware of the filing requirements. (The complexity of your filing and experience in these matters may be taken into consideration.)
  • You reasonably relied on written advice from us.
  • You reasonably relied on the advice of a qualified tax professional who failed to file or advise you to file Form 1023.

 

Form 1023 Schedule F. Low-Income Housing

To qualify for tax exemption, low-income housing must provide affordable housing for a significant segment of individuals in your community with low incomes. Your low-income housing may serve a combination of purposes, such as for poor, frail, and elderly persons.

Schedule F Line 1. The “type” of facility may be an apartment complex, condominium, cooperative, or private residence, etc.Schedule F Line 6. Answer “Yes,” if you charge daily, weekly, monthly, or annual fees or maintenance charges.

Schedule F Line 8. Government programs include federal, state, or local government programs.

 

Form 1023 Schedule G. Successors to Other Organizations

You should consider this schedule as a successor organization if any of the following situations pertain to you.

  • You took or will take over activities previously conducted by another organization.
  • You took or will take over 25% or more of the fair market value of the net assets of another organization.
  • You were established upon the conversion of an organization from for-profit to non-profit status.

The other organization is the predecessor organization. You should complete this schedule regardless of whether the predecessor (other organization) was exempt or not exempt from federal income tax.

For purposes of this schedule, a “for-profit” organization is one in which persons are permitted to have an ownership or partnership interest, such as corporate stock. It includes sole proprietorships, corporations, and other entities that provide for ownership interests.

Schedule H. Scholarships, Fellowships, Educational Loans & Grants

Complete this schedule if you provide scholarships, fellowships, grants, loans, or other distributions to individuals for educational purposes. When answering the questions on this schedule, you should demonstrate how these distributions further your exempt purposes.

If you’re a private foundation, you’re subject to the rules under section 4945 and may incur an excise tax if you make grants for the purpose described above without seeking advance approval of your grant-making procedures (see Schedule H–Section II).

Generally, distributions made to individuals may advance educational purposes if selection is made:

  • In a non-discriminatory fashion in terms of racial preference;
  • Based on need and/or merit; and
  • To a charitable class in terms of being available to an open-ended group, rather than to pre-selected individuals.

A scholarship or fellowship is tax free to the recipient only if he or she is a candidate for a degree at an eligible educational institution and uses the scholarship or fellowship to pay qualified education expenses.

Qualified education expenses include tuition and fees; and course-related expenses such as books, supplies, and equipment. Room and board, travel, research, clerical help, and non-required equipment aren’t qualified education expenses. See Pub. 970, Tax Benefits for Education, for additional information.

Selection of individuals using a lottery system generally hasn’t been approved by the IRS.

Schedule H Section I

Schedule H Line 1. If you conduct more than one grant program, describe each program separately.

If you make educational loans, describe the terms of the loan (for example, the factors you consider in selecting or approving loan recipients, interest rate, duration, forgiveness provision, etc.). Also, describe whether any financial institutions or other lenders are involved in your program.

Explain how you will publicize your program and whether you publicize to the general public or to another group of possible recipients. Include specific information about the geographic area in which your program will be publicized and the means you will use, such as through newspaper advertisements, school district announcements, or community groups.

Schedule H Line 2. Organizations that make grants to individuals must maintain adequate records and case histories showing the name and address of each recipient, pursuant Rev. Rul. 56-304, 1956-2 C.B. 306 but don’t provide this information as part of your application.

Schedule H Section II

If you requested public charity classification in Part VII, line 1, don’t complete Schedule H – Section II.

Schedule H Line 1. Answer “Yes,” if you’re a

  • Private Foundation and you’re requesting advance approval of your grant-making procedures under section 4945(g).
  • Answer “No,” if you’re a private foundation but don’t wish to request advance approval of your grant-making procedures under section 4945(g).

If you answer “No” the amounts you distribute as educational grants provided to individuals may be considered taxable expenditures under section 4945.

Schedule H Line 1a. Check the box for section “4945(g)(1)” if your award qualifies as a scholarship or fellowship grant that’s awarded on an objective and nondiscriminatory basis and is used for study at a school (see Schedule B for what is considered a school).

Check the box for “4945(g)(3)” if the purpose of your award is to achieve a specific objective, produce a report or other similar product, or improve or enhance a literary, artistic, musical, scientific, teaching, or other similar capacity, skill, or talent of the recipient. Include your educational loan program under this section.

You may check more than one box.

If your award qualifies as a prize or award that is subject to the provisions of section 74(b) and your recipient is selected from the general public, you don’t have to request advance approval of your grant-making procedures since a prize or award isn’t subject to the advance approval procedure requirements because it isn’t a grant for travel, study, or other similar purposes. See Rev. Ruls. 77-380, 1977-2 C.B. 419; 76-460, 1976-2 C.B. 371; and 75-393, 1975-2 C.B. 451.

Schedule H Line 4. Answer “Yes,” if you award scholarships on a preferential basis because you require, as an initial qualification, that the individual be an employee or be related to an employee of a particular employer.

Schedule H Line 7. For purposes of this schedule, a program for children of employees of a particular employer includes children and family members of employees.

 

Nonprofit Bylaws - Nonprofit Articles of Incorporation - Nonprofit Conflict of Interest Policy

NOTE: If you’d like to receive the following organizing documents:

  • Nonprofit Articles of Incorporation,
  • Nonprofit Bylaws,
  • Nonprofit Conflict of Interest Policy,
  • Conflict of Interest Policy Acknowledgment,
  • Form 1023 Attachment with all the answers,
  • Form 1023 Expedite Letter template,
  • and Donor Contribution Form

in Microsoft Word Document format, please consider making a donation and you’ll get to download them immediately. Not only they're worth well over $1000 in value, they will save you weeks of copy pasting and formatting as they are ready to go templates which only need changing names and addresses.

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