The process for filing your 501c3 application can be delayed if you make mistakes. Many people try to complete the entire process themselves without any help from an experienced nonprofit expert. Not only can this delay the process, but it can even get your nonprofit denied. A nonprofit’s bylaws are an extremely important, legally binding document that basically governs how the nonprofit will function. The language used in certain sections of your bylaws can also be the difference in being approved or denied your 501c3 status. The IRS is very particular about it. Here are some essential components to include in your bylaws to ensure an easy process. The Basic Information It’s probably obvious, especially to you, but you should still include all of the basic information about your nonprofit in your bylaws. This information includes, but is not necessarily limited to: Name of the organization. Location of your organization (if you have more than [...]
Are you looking to apply for tax exemption status from the Internal Revenue Service? Then you’re going to need to know which forms need to be filled out and how to prepare for the federal filing requirements for nonprofits. In order to file for 501c3 status you need to establish your nonprofit corporation on both the Federal and State level. Here's the process and what you need when filing for 501(c)(3) status. What are are the exemption requirements for a 501c3 Organization While we’ve covered the steps to start a nonprofit, today we’re going to look more at the specific requirements from the IRS in establishing a nonprofit organization. The steps to establish your corporation as a nonprofit include: Choose Directors for your Nonprofit - In Texas, you must have at least 3 members on your board of directors. These directors may be a natural person of at least 18 years or older, a corporation, or [...]
How much does it cost to file for 501c3 tax exemption? That depends on which IRS form you use to file, and you have two options: IRS Form 1023-EZ or IRS Form 1023. Let’s take a look at both options in more detail: Option One: IRS Form 1023-EZ – If you are NOT a church, a school, a hospital, a foreign organization, or a medical research organization/hospital, 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 501c3 tax exemption using IRS Form 1023-EZ. IRS Form 1023-EZ is a shorter and less expensive option for startup nonprofit organizations, and the IRS User Fee is only $275 (as of March, 2018). The IRS estimates less than 20 hours of total preparation time for completing this application, as opposed to 100+ hours for completing the traditional IRS Form 1023. Also, the turn around time for IRS [...]
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 be more involved in checking in with applicants during the Form 1023-EZ review process. To date, we have noticed more instances where the IRS requests copies of the applying organization's formation documents, narrative description of activities, and three years of projected financial budgets. If you are beginning the 501c3 application process yourself, or have questions about which form (and user [...]
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 applicants, and the IRS is promising a significantly faster review process and response rate than the traditional 6-12 months. If your new nonprofit organization is eligible to file this new IRS Form 1023-EZ then it is almost certainly in your best interest to do so. Otherwise, filing the traditional IRS Form 1023 could cost you significantly more time and money - up to $1500 [...]
As the U.S. government shutdown continues into day fifteen with no end in sight, many anxious startup organizations are wondering how the shutdown will affect their applications currently under review by the IRS. Having already waited months for a determination letter, should you now expect even longer delays? And if so, how long? From what we can gather the IRS is not taking any customer service phone calls regarding applications for exemption, nor are they processing actual applications at this time. The delay is almost certainly adding to the ever-present log jam of applications piling up on various agent's desks, and we would expect there to be even longer wait periods once the government shutdown comes to an end. For those of you already waiting on your organization’s approval letter, it is likely that any progress toward a final determination has been stopped for now, to be continued once the shutdown is over and IRS employees are back at work. Whether [...]
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!
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.
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.
[custom_frame_right shadow="on"][/custom_frame_right] 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