If the organization files its Form 1023, Application for Recognition of Exemption, within 27 months of the date the entity is legally formed, and is ultimately successful in obtaining tax-exempt status, the IRS’s determination of exemption will be retroactive to the entity’s date of formation. Newly formed organizations may need to register to solicit funds (or apply for an exemption) depending on where they are soliciting. Once the organization is registered, until the IRS determination letter is issued, new entities should explain to potential donors that an application for tax-exempt status is pending. Donors who claim a charitable contribution deduction for their gifts before then take the risk of an adverse IRS decision.