How Much Does it Cost to File for 501c3 Tax Exemption

Cost of 501c3

How much does it cost to file for 501c3 tax exemption?  Let me answer this question in two parts:

First, there is the required IRS Form 1023 application fee, which is either $400 or $850 depending on your organization’s projected income over the next three years.  If your organization’s projected annual revenue averages $10,000 or more during the next three years, then your application fee is $850.  If your organization’s projected annual revenue averages less than $10,000 during the next three years, then your application fee is $400. 

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New $275 Form 1023-EZ User Fee (July 1, 2016)

Beginning July 1, 2016, the IRS has changed the User Fee for IRS Form 1023-EZ from $400 to $275 for all applicants.  This new fee applies only to those Form 1023-EZ applications prepared and submitted after July 1, 2016. In addition to lowering the application fee, we also expect the IRS to add several new safeguards to the Form 1023-EZ application process to continue discouraging non-qualified applications.  These new safeguards could include revisions to the actual Form 1023-EZ and increased follow-up correspondence with the IRS to verify appropriate formation documents and tax exempt provisions contained within those formation documents (Articles of Incorporation and Bylaws).  Overall, we expect the IRS to […]

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IRS Form 1023-EZ Help and Services

IRS Form 1023-EZ Help, Cost and Services Searching for IRS Form 1023-EZ help, cost or filing services?  Nonprofit Elite can help! We are excited to offer a more affordable and faster 501c3 application process to small and mid-size nonprofit organizations seeking to obtain tax exempt status from the IRS. The newly-released 501c3 application is called IRS Form 1023-EZ and is appropriate for most nonprofit organizations with projected annual receipts of $50,000 or less and total assets of $250,000 or less (excluding churches, schools, hospitals, medical research organizations, and a few other types).  The IRS User Fee for this new Form 1023-EZ is $400 for all […]

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501c3 Application Approval in Six Weeks

Just weeks ago we posted that our clients were reporting an even slower 501c3 approval process, as happens from time-to-time.  Ok, no big deal.  We just buckle down and begin reminding everyone that things may take a little longer.  Patience…out of our hands…stay encouraged…

Then last Sunday we received this email:

Dear Ben,

Just wanted to let you know the wonderful news.  I received my approval letter from the IRS!!!  I mailed the application on Sept. 6 and it was approved on Oct. 18.  Wow!  I’m thankful that this went through so quickly and smoothly! :-)

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Can I Speed Up the 501c3 Application Review Process?

The IRS allows for expedited requests of Form 1023 under two specific circumstances: First, if your organization is applying in direct response to a national disaster that demands urgent action, such as a major hurricane or other natural disaster.  And second, if your organization has a significant (very large) grant that is pending IRS approval and will be lost if your approval is not awarded quickly.  Even in these situations, however, expedited applications are rare.

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IRS Taking Longer to Review 501c3 Applications / Form 1023

The last few months we’ve noticed a significant increase in the amount of time that the IRS is taking to review and approve applications for 501c tax exemption. During the first six months of 2012, our clients were receiving their Letters of Determination on average within 3-5 months.  More recently, a number of our clients are well into their fifth and sixth month of waiting.  Since there is no effective way to expedite the process, we encourage you to plan accordingly and to contact us if you have questions.

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501c3 Application Process and Timeline

501c3 Application Process
What steps are involved in the 501c3 application process, and how long does it take to gain approval?  For a brand-new nonprofit organization, the 501c3 application process usually includes the following:

– Create Articles of Incorporation (Certificate of Formation) and file with state

– Apply for EIN (Tax ID#)

– Create Bylaws

– Prepare IRS Form 1023 or Form 1024, Application for Recognition of Exemption, including narratives, financial information, schedules, and additional notes

– Respond to any IRS follow up questions or requests

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501c3 Application Mistakes

501c3 Application Mistakes

Sometimes we’re approached by clients who have already filled out IRS Form1023 but want us to review their work before filing —  and we are happy to do it.  Here are three common mistakes that we see again and again: 

1. Incomplete Purpose Clause and/or Missing Dissolution Clause in Organizing Document (Articles of Incorporation) – Section 501c3 of the Internal Revenue Code requires that your organizing document state your exempt purpose(s), such as charitable, religious, educational, and/or scientific purposes.  Likewise, the code states that upon dissolution of your organization, your remaining assets must be used exclusively for exempt purposes, such as charitable, religious, educational, and/or scientific purposes.

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How Long Does it Take to Get 501c3 Tax Exempt

Waiting on 501c3 Application
Understandably, this is one question that we hear over and over again from startup nonprofit organizations.  Just yesterday I heard from a woman who told me that an online startup “service” had told her it was possible to have her application successfully processed within 30 days.  Of course, now she wanted to know if we could do it even faster.

The truth is, the IRS can take between 2-5 months to review your 501c3 application packet, depending on a number of circumstances. 

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