If your organization is applying for 501c3 within 27 months of the incorporation date, then the effective date of your status will be retroactive to your incorporation date. Therefore, all donations collected since the incorporation date will be tax deductible upon IRS approval.

If the organization is applying past 27 months of the incorporation date, then it may request for an extension of time to apply for exemption and get recognized as exempt from the date you got incorporated. In this case, the organization must explain further why it did not file the application within the 27-month period.

Once our clients sign up for a nonprofit package, they receive a “Memo of Retroactive

Deductibility” as part of their corporate governance document package to provide to prospective donors. This document explains the IRS language regarding getting a tax deductible donation, even if the organization has not yet received its IRS Letter of Exemption yet, dated retroactively.