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

501c3 Application Filing Cost

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

Part One: IRS Form 1023-EZIf 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 will qualify for tax exemption using IRS Form 1023-EZ.  IRS Form 1023-EZ is a substantially shorter and less expensive option for startup nonprofit organizations, and the IRS User Fee is only $275 (as of July 1, 2016).  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 established (regular) IRS Form 1023.  On top of all this, the turnaround time for IRS approval is much faster than when filing the regular IRS Form 1023.

Give us a call at 800.268.4388 and we’ll be glad to walk you through the process, answering your questions and 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 our Form 1023 Review Service, 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 $6,000-$15,000 for more complex ventures.  We know this because many of them outsource their nonprofit work (Form 1023 Applications) directly to us.  Instead of paying these high prices, give us a call (800.268.4388) for the same results in usually a lot less time!

(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!

32 Comments
  1. 1.CPA’s and attorneys who specialize in nonprofit work routinely charge $1,500 – $3,500 for preparation of IRS Form 1023 for small organizations, according to your article…what is an estimate of what your company’s fee for providing your comprehensive 100% approval rate and full money-back guaranteed package….

    2. Does that fee include the actual incorporation of the non-profit

    3. Are there any other hidden fees…our organization is small anticipated income over the next 3 years will exceed $10,000 assuming that we are successful

  2. Bill, I am sending you an email with answers to your questions. -BW

    • I also have similar questions as Bill. We are just a group of 3 whose purpose is to help the homeless and those in need. We don’t anticipate ever having more than $1,000… therefore knowing the all of the fees and being able to afford them is critical.

      Thank you for your time

  3. I have heard 2 sides of the story some people say you can collect donations and/or gifts to pay for your 501c(3) filing fee and some say it’s illegal. I am very confused! Can anyone clear that up?

    • Very good question. As long as you file your organization’s IRS F1023 Application within 27 months of the date of your incorporation, and as long as your application is approved by the IRS, then your approval as an exempt organization is retroactive back to the date of your incorporation. Practically, this means that you may indeed begin operating as a tax exempt organization prior to receiving your Letter of Determination, including making and accepting tax-deductible donations. So yes, you are able to make/accept donation to your organization and then use those funds to pay for your startup filings, you just don’t have any proof of status to show people.

      However, you must follow through with obtaining your successful IRS Letter of Determination within 27 months, or else your your exemption goes away (actually it never happened to begin with), leaving you with the responsibility of making the appropriate changes to all of your preceeding accounting records. Hope this helps!

  4. I run a youth football and cheerleading program and I am very confused as to how this process works and what your fees would be to complete the application process. Could you please let me know? The main problem I have a hard time understanding is if an organization has a revenue of $10,000. Since we are a non-profit youth organization everything goes right back into the program for the kids. Does this count as revenue?

    • The short answer is yes…any money that comes in to your organization, whether it’s through donations or through your own programs, is considered revenue. Send us an email at Info@NonprofitElite.org with your contact information (or call) and we’ll get in touch with you to help!

  5. same questions as bill Hunter
    Addition What are state fees

    • State fees for incorporation vary from state to state and can range from $25 to $100. Email us at info@nonprofitelite.org and we can answer your questions more specifically.

  6. Hello. I have my tax id already. i need help with everything else. how much will that cost me?

  7. Will you lease donate your services free of charge to my organization?

  8. Hello Tami, Please give us a call at 800-268-4388 and we can discuss your situation in more detail. Looking forward to hearing more about your plans.

    Kind regards, Ben

  9. Hello,
    I would like to start a private family charitable foundation. Don’t have the funds to fund it yet, but expect to soon. How do I do this.

    • Hello Helen, Thanks for commenting! We work with many private family charitable foundations, and would be glad to help you get set up when the time is right. Please contact us at 800-268-4388 or info@nonprofitelite.org and we can visit in more detail. Looking forward it! Ben

  10. hello, i have a question regarding tax exemption for a non-profit organization with a 501(c)(3) status.

    can a professional, such as yourself, make a tax exemption claim for your time spent helping a non-profit organization? for examples, if you were to normally charge 50$ an hour for your service and you were to spent 4 hours helping and advising a charititable organisation on tax related matters, will you then able to claim that you have donated $200 to the charity on your tax document for that year? of course the time that you spent were either recorded on a time sheet that is approved by the head of the organization, or through an itemized invoice that adequately justifies to the IRS should a question arises.

    I am writing a business plan for a non-profit organization that helps provide housing for those in need such as immigrants, abused victims, homeless, and non-violent criminals seeking redemption.

    i appreciate your advice and look forward to talking to you. have a nice day.

    kevin m.
    408-439-8177

    ps. i’ve only registered my website domain today and am still in the process of setting it up.

  11. Hello Kevin, Give us a call if you want to talk in more detail, but typically you can not deduct the value of your volunteered service, but you can deduct expenses incurred such as supplies — links to all the related forms and limitation information are available from the IRS website (Google search IRS Website and then use their search function) or IRS Publication 526.

    Hope this helps! Ben

  12. 1.CPA’s and attorneys who specialize in nonprofit work routinely charge $1,500 – $3,500 for preparation of IRS Form 1023 for small organizations, according to your article…what is an estimate of what your company’s fee for providing your comprehensive 100% approval rate and full money-back guaranteed package….

    2. Does that fee include the actual incorporation of the non-profit

    3. Are there any other hidden fees…
    We are just a group of 3 whose purpose is to help the homeless and those in need. We don’t anticipate ever having more than $1,000… therefore knowing the all of the fees and being able to afford them is critical.
    Thank you for your time

    • Hi Lauri,

      Please give us a call at the number at the top of our website and we can go over these details with you. Glad to help! Ben

  13. How long does it usually take for a filing to be approved? As you mentioned above, we are able to operate, but have 27 months from the date of incorporation to obtain 501c3 status. With that in mind, I’d like to get a head start on operations, but would like to give our donors their tax exempt forms sooner than later. Can you tell me how long I should tell my donors that the their tax forms will be in the mail?

  14. Hello Mar! If you’re working with us and end up filing the IRS Form 1023-EZ application then you can expect about a 3-6 week approval process depending on whether or not the IRS sends you a letter of inquiry to check on the legitimacy of your formation documents. If you file the long form 1023 application (traditional) then right now we’re seeing anywhere from 1-5 months for our clients approval…but usually on the shorter end of that spectrum. A lot of it depends on the circumstances of your organization’s current and planned activities. Hope this helps…give us a call or use our contact form if you would like to talk to someone in more detail. Always glad to help!

  15. Like to set up non profit

  16. Hello Ray, please contact us using the phone number at the top of this web page, or using the contact form and we’ll be happy to help!

    Kind regards, Ben

  17. Not knowing exactly what our revenue will be short-term or long-term, what issues arise from filling out the 1023-EZ form instead of the traditional form.

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