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.  Unless you can point to these specific sections with this kind of exact language within your organizing articles, your 501c3 application will not be approved.

2. Submitting the Wrong User Fee – If your average annual gross receipts have exceeded or will exceed $10,000 annually over a 4-year period, you must submit payment of $850. If your gross receipts have not exceeded or will not exceed $10,000 annually over a 4-year period, the required user fee payment is $400.  Disregard the instructions on page 12 of IRS F1023.  They are outdated and have been replaced by IRS Notice 1382.

501c3 application mistakes

3. Not Providing Enough Information to the IRS – In your Narrative Description of Activities, be sure to describe with as much detail as possible the past, present, and planned activities of your organization, specifically the  ”what, when, where, how, and why.”  A clear and concise Narrative Description of Activities will go a long way toward a quick approval of your application.  Similarly, make certain to give an accurate accounting of your financial information on p. 9, Part IX.

For more information about the 501c3 application process, contact Nonprofit Elite or send us an email.  We’re glad to help.