IRS Form 8718 Guide: Exempt Organization User Fee Rules

Introduction: What is IRS Form 8718?

IRS Form 8718, titled User Fee for Exempt Organization Determination Letter Request, is an administrative payment schedule administered by the Internal Revenue Service (IRS) Exempt Organizations division under the Department of the Treasury. It is authorized under Internal Revenue Code (IRC) Section 7528 and annual IRS Exempt Organizations Revenue Procedures.

This form is used by charities, non-profit organizations, social welfare groups, trade associations, and private foundations to determine and submit the mandatory federal user fee when applying for formal tax-exempt recognition under IRC Section 501(c). It serves as the official payment transmittal document accompanying foundational non-profit exemption applications, including Form 1023, Form 1024, and Form 8940.

Purpose of the Form: Why Form 8718 Exists

Applying for federal tax-exempt status requires extensive legal review by IRS tax-exempt specialists. The IRS must evaluate an organization’s governing bylaws, articles of incorporation, charitable programs, financial budgets, and conflict of interest policies to ensure compliance with federal law.

Because these evaluations require substantial government resources, Congress enacted IRC Section 7528 requiring the IRS to assess user fees for all determination letter requests. Form 8718 categorizes the specific type of non-profit application, establishes the correct statutory user fee based on current IRS fee schedules, and ensures payment is verified before the IRS begins its substantive review.

Who Needs to File This Form?

Form 8718 is submitted by founders, board officers, non-profit attorneys, and CPAs on behalf of organizations seeking formal IRS recognition or determination rulings, including:

• 501(c)(3) Charities & Private Foundations: Organizations applying for public charity or private foundation status using Form 1023 or Form 1023-EZ.
• 501(c)(4) Social Welfare Organizations: Civic leagues, community advocacy organizations, and local associations of employees using Form 1024-A.
• Other 501(c) Non-Profit Entities: Social clubs (501(c)(7)), business leagues and chambers of commerce (501(c)(6)), fraternal beneficiary societies (501(c)(8)), and veterans’ organizations (501(c)(19)) applying on Form 1024.
• Organizations Submitting Miscellaneous Requests: Non-profits filing Form 8940 to request advance approval of grant-making procedures, termination of private foundation status, reclassification of public charity status, or group exemption rulings.

Who Is Exempt / Not Required to File?

An organization does not need to submit Form 8718 or pay user fees in the following situations:

• Churches and Integrated Auxiliaries (IRC § 508(c)(1)(A)): Churches, synagogues, mosques, conventions of churches, and integrated auxiliaries are automatically tax-exempt under federal law without needing to file an application or pay an IRS user fee (unless they voluntarily choose to apply for a formal determination letter).
• Small 501(c)(3) Organizations (Under $5,000): Non-private foundations that normally have annual gross receipts of $5,000 or less are automatically tax-exempt under IRC Section 508(c)(1)(B) without filing an application.
• Existing Tax-Exempt Entities: Organizations that already hold a valid, active IRS Determination Letter and are filing standard annual information returns (such as Form 990, Form 990-EZ, or Form 990-PF).
• Form 990-N (e-Postcard) Filers: Small non-profits filing their annual online notice do not pay user fees.

When to File: Deadlines and Timing

Form 8718 is an event-based form that is submitted simultaneously with your underlying tax-exemption application (Form 1023, 1023-EZ, 1024, 1024-A, or 8940).

Under IRC Section 508, newly formed 501(c)(3) organizations should submit their exemption application and user fee within 27 months from the end of the month in which the entity was legally organized (e.g., the date articles of incorporation were stamped by the state). Filing within this 27-month window ensures that your tax-exempt status is retroactive to the original date of incorporation.

Where and How to File Form 8718

Under modern IRS electronic filing mandates, tax-exemption applications and user fee payments are processed digitally:

• Electronic Submission via Pay.gov: Applications for tax exemption (Forms 1023, 1023-EZ, 1024, 1024-A, and 8940) must be submitted electronically through the federal Pay.gov portal. Form 8718 fee calculations and payment authorizations are integrated directly into the Pay.gov application workflow.
• Payment Methods: User fees are paid instantly on Pay.gov using an Automated Clearing House (ACH) direct debit from an organizational bank account or via a major credit or debit card.
• Paper Filings (if authorized): In rare administrative scenarios where paper submissions are permitted by IRS guidance, Form 8718 is placed on top of the physical application packet and mailed directly to the IRS address as per instructions for Exempt Organizations Determinations in Cincinnati, Ohio.

Step-by-Step Instructions to Fill Out Form 8718

Form 8718 is a concise, single-page schedule organized into organization identification, fee category selection, and payment verification. Complete each section using the guidelines below:

Part / Section	Field Description	Instructions
Header Details	Organization Identification	Enter the organization’s full legal name, Employer Identification Number (EIN), complete mailing address, contact person’s name, and daytime telephone number.
Part I	User Fee Category Selection	Check the single box that corresponds to the specific application being filed (e.g., Form 1023, Form 1023-EZ, Form 1024, Form 1024-A, or Form 8940).
Part II	Total User Fee Amount	Enter the total fee required based on current IRS Revenue Procedure schedules for the checked application category.
Payment Verification	Electronic Payment Receipt	Confirm electronic payment authorization details (Pay.gov tracking number or ACH confirmation).

Standard IRS User Fee Categories for Non-Profits

The IRS publishes updated fee schedules annually in the first Exempt Organizations Revenue Procedure of each calendar year. Typical user fee tiers include:

• Form 1023 (Full 501(c)(3) Application): The standard comprehensive application fee (typically $600).
• Form 1023-EZ (Streamlined 501(c)(3) Application): A discounted user fee for small charities with gross receipts under $50,000 and assets under $250,000 (typically $275).
• Form 1024 / Form 1024-A (Other Non-Profits): Standard application fee for non-501(c)(3) tax-exempt categories (typically $600).
• Form 8940 (Miscellaneous Determination Requests): Standardized fees for foundation reclassifications, advance grant approvals, and voluntary terminations (typically $600).
• Group Exemption Letters: Higher fee tiers for master ruling requests covering multiple affiliated subordinate organizations.

Required Documents and Information Needed Before Filling

Before completing Form 8718 and paying your user fee, ensure that your founding board has assembled the following core documents:

• Completed Application Form: A finalized draft of Form 1023, 1023-EZ, 1024, 1024-A, or 8940 with all narrative descriptions and financial budgets attached.
• Employer Identification Number (EIN): The organization’s verified 9-digit federal tax ID number obtained from the IRS.
• Organizing Documents: State-certified Articles of Incorporation, Articles of Organization, or a signed Constitution/Trust Agreement.
• Bylaws & Conflict of Interest Policy: Adopted organizational bylaws and a formal board conflict of interest policy.
• Payment Method: A corporate bank account routing and account number or credit card ready for payment on Pay.gov.

Common Mistakes to Avoid

• Selecting the Wrong Fee Category: Checking the Form 1023-EZ fee tier when submitting a full Form 1023 application. The IRS will reject the application at intake.
• Submitting Disconnected Paper Checks: Attempting to mail a physical paper check separately from an electronic Pay.gov submission. All fees must be paid directly through the online application portal.
• Using Outdated Fee Schedules: Relying on prior-year fee amounts. Always verify current rates in the latest annual IRS Exempt Organizations Revenue Procedure.
• Assuming Fees Are Refundable: Believing you will get your money back if the IRS denies your tax-exempt status. IRS user fees are strictly non-refundable once technical review begins.
• Applying Without an EIN: Attempting to complete Form 8718 using an individual founder’s Social Security Number. The non-profit entity must have its own EIN.

Consequences of Non-Filing or Fee Errors

Submitting an exemption application without Form 8718 fee payment carries immediate administrative consequences:

• Immediate Intake Rejection: The IRS Exempt Organizations intake unit will reject and return the entire application package without conducting any review.
• Loss of 27-Month Retroactive Window: Delays caused by fee rejections can cause you to miss the 27-month deadline, meaning your 501(c)(3) tax exemption will only be effective from the postmark date rather than the date of incorporation.
• Donor Deduction Delays: Major donors and corporate grant foundations cannot make tax-deductible contributions until the IRS issues an official favorable Determination Letter.

Related Forms or Schedules

• Form 1023: Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.
• Form 1023-EZ: Streamlined Application for Recognition of Exemption Under Section 501(c)(3).
• Form 1024 / Form 1024-A: Applications for recognition of exemption under Section 501(a) or 501(c)(4).
• Form 8940: Request for Miscellaneous Determination (used for post-exemption rulings).
• Form 8717: User Fee for Employee Plan Determination Letter Request (the companion form used for retirement plans).
• Form 990 / Form 990-EZ: Return of Organization Exempt From Income Tax (annual reporting returns).

Frequently Asked Questions

1. Is the Form 8718 user fee tax-deductible?

For the non-profit organization, the user fee is an ordinary organizational start-up expense. If an individual founder pays the user fee on behalf of the newly formed charity out of personal funds, it can generally be treated as a tax-deductible charitable contribution once the 501(c)(3) status is approved.

2. Can an organization receive a fee waiver due to low income or poverty?

Unlike employee retirement plans, there is no statutory small-business or low-income waiver for Form 8718. All applying organizations must pay the required user fee, though smaller organizations can take advantage of the discounted Form 1023-EZ fee ($275) if they meet the streamlined eligibility requirements.

3. How long does the IRS take to issue a determination letter after paying the fee?

For streamlined Form 1023-EZ filings, determinations are typically issued within 2 to 4 weeks. For full Form 1023 and Form 1024 applications, processing times generally range from 3 to 6 months (or longer if the IRS requests additional documentation).

4. Are user fees refunded if our 501(c)(3) application is denied?

No. Under IRS administrative procedures, user fees are non-refundable once the IRS begins its substantive review, regardless of whether your tax-exempt status is approved or denied.

5. Can I pay the user fee using a debit card?

Yes. The Pay.gov system accepts electronic payments via Visa, MasterCard, Discover, American Express, and Automated Clearing House (ACH) direct bank debit.

6. What is the difference between Form 8718 and Form 8717?

Form 8718 is used exclusively for tax-exempt non-profit organizations applying for 501(c) determination letters. Form 8717 is used exclusively for employer retirement plans (such as 401(k)s and pensions) applying for qualified plan determination letters.

Conclusion: Key Takeaways

IRS Form 8718 is the essential administrative schedule that ensures your application for tax-exempt status is properly funded, categorized, and reviewed by the IRS Exempt Organizations division. By establishing the correct user fee under IRC Section 7528, it unlocks formal federal recognition for your non-profit organization.

To ensure a smooth application process, verify your fee category against current IRS Revenue Procedures, complete your Form 1023 or 1024 package thoroughly, submit your filing through Pay.gov, and maintain complete records of your electronic payment confirmation.