More than 89% of applications for tax-exempt status were approved by the Internal Revenue Service (IRS) in the most recent fiscal year, with the number of tax-exempt organizations eclipsing 1.9 million.
The numbers are found in the recently released Internal Revenue Service (IRS) Data Book, covering the federal fiscal year running from September 2019 to October 2020.
Of the 95,864 applications for tax-exempt status during the 2020 fiscal year, 85,509 (89.2%) were approved and 94 (0.098%) were disproved. There were 10,261 applications resolved in other ways, i.e., withdrawn, lacked required information, otherwise incomplete.
There were 1.36 million tax-exempt organizations that filed tax returns during the period, 14.4% fewer than the 1.59 million in 2019. The number of returns filed electronically was 1,138,931. The top five states by number of returns filed were:
- California – 130,839
- Texas – 89,460
- New York – 85,559
- Ohio – 76,810
- Florida – 76,750
There were 1.907 million tax-exempt organizations and certain trusts, almost three-quarters of which were 501(c)(3) organizations (1.404 million). The second-highest category was 501(c)(4) social welfare organizations (79,050).
Of the 85,499 applications within Section 501(c):
- 79,730 – Religious, charitable and similar organizations
- 1,435 – Social welfare organizations
- 1,282 – Business leagues
- 1,155 – Social and recreation clubs
- 999 – Other
- 480 – Labor and agriculture organizations
- 418 – Supplemental unemployment compensation trusts
There were 3,219 notices of intent to operate under 501(c)(4), social welfare organizations. Of those, 2,796 were “acknowledged” and 423 were rejected.
The IRS examined 11,160 returns of tax-exempt organizations, employee retirement plans, government entities and tax-exempt bonds, including 1,417 Forms 990, 990-EZ, and 990-N; 178 Forms 990-PF, 1041-A, 1120-POL, and 5227, and 427 Forms 990-T