How Much Does it Cost to File for 501c3 Tax Exemptionfile for 501c3 tax exemption? Let me answer this question in two parts:
Part One: IRS Form 1023-EZ – If you are NOT a church, a school, a hospital, a foreign organization, or a medical research organization, and if your total projected revenue (gross receipts) is less than $50,000 per year, then there’s a good chance you might qualify for tax exemption using IRS Form 1023-EZ. IRS Form 1023-EZ is a substantially easier and less expensive option for startup nonprofit organizations, and the IRS User Fee is only $400. The IRS estimates less than 20 hours of total preparation time for completing this application, as opposed to the 100+ hours for completing the more expansive IRS Form 1023.
Give us a call at 800.268.4388 and we’ll be glad to walk you through the process, helping you get set up quickly and affordably.
Part Two: IRS Form 1023 – IRS Form 1023 is the traditional application method that many new organizations must file with the IRS to obtain their tax exempt status. First, there is the required IRS Form 1023 User Fee, which is either $400 or $850 depending on your organization’s projected income over the next four years. If your organization’s projected annual revenue averages $10,000 or more during the next four years, then your user fee is $850. If your organization’s projected annual revenue averages less than $10,000 during the next four years, then your user fee is $400. This application fee is made payable by check to the United States Treasury and sent in as part of your 501c3 application packet. This User Fee payment is non-refundable.
Second, there is the cost of hiring an experienced advisor or professional to prepare your 501c3 application packet, and you have several options:
(1) Do the work yourself and pay nothing. Although completing IRS Form 1023 is possible for you to do on your own, it will require many hours of research, writing, and the risk of making mistakes is high. Even the IRS projects 100+ hours of preparation time for a first-time applicant. If you do decide to prepare this IRS Form 1023 on your own, we strongly recommend that you allow Nonprofit Elite to review your final application the same way the IRS will, so that you can be assured of success. Yes, we do charge a fee for this service, usually around $250, but it is well worth the peace-of-mind to know that your 501c3 application will be approved.
(2) Use a CPA or attorney. CPA’s and attorneys who specialize in nonprofit organizations routinely charge $2,500 – $5,000+ for preparation of IRS Form 1023 applications for small organizations, and $10,000-$15,000 for more complex ventures. We know this because many of them outsource their nonprofit work (Form 1023 Applications) directly to us.
(3) Online, template-based services. With a quick search on the web you’re sure to find published fees as low as $500-$600 (think Legal Zoom or similar type services). Just be careful to read the fine print and ask enough questions to make certain you’re getting exactly what you need. Often these “discounted” fees are for document preparation only and do not include the additional work of editing formation documents (often required) or responding to IRS follow-up inquiries down the road. Also, many of these companies send you long questionnaires so that you’re basically filling out the forms yourself, and then you’re to blame if something goes wrong. Too often the initial promise of a $500 preparation fee ends up at three times that amount with a lot of extra time and frustration on your part.
Of course, we believe your best option for obtaining 501c3 tax exempt status quickly and efficiently is to partner with Nonprofit Elite. If you choose to work with us, we’ll take on full responsibility for the success of your 501c3 application, and we’re almost always able to do it for less than half of what you’ve already been quoted. We provide both startup consultation and document preparation hand-in-hand, so that you understand exactly what’s going on every step of the way. More important is the peace-of-mind we provide, backed by our 100% approval rate with the IRS and full money-back guarantee.
Here’s what’s included in the cost for our 501c3 application services:
— Prepare or review your state Articles of Incorporation (Certificate of Formation) for appropriate Purpose, Dissolution, and Nonprofit clauses. These important sections of your formation documents are often left out, even by attorneys and CPAs, and this is the number one reason why so many IRS Form 1023’s are rejected by the IRS.
— Prepare or review your organizational Bylaws.
— Obtain your Employee Identification Number (Federal Tax Identification Number), if needed.
— Prepare IRS Form 1023 – Application for Recognition of Exemption, including all schedules, financial projections, narratives, and attachments.
— Continue working on your behalf, including IRS follow-up correspondence, until you have received your successful Letter of Determination from the IRS.
If you have additional questions about the cost of your 501c3 application or would like to know more about Nonprofit Elite and the services we provide, please contact us today. We are easily accessible and always glad to help!