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

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 approval is [...]

2021-10-29T06:52:46-05:00By |

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 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 [...]

2021-10-17T21:55:01-05:00By |

IRS Form 1023-EZ Help and Services

IRS Form 1023-EZ Help, Cost and Services [custom_frame_right shadow="on"] 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 [...]

2021-10-17T21:55:53-05:00By |

Is the Government Shutdown Affecting Your 501c3 Application?

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 [...]

2021-10-17T21:59:12-05:00By |

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! :-)

2021-10-17T22:07:23-05:00By |

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.

2021-10-17T22:08:02-05:00By |

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.

2021-10-17T22:08:46-05:00By |

501c3 Application Process and Timeline

[custom_frame_right shadow="on"]501c3 Application Process[/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

2021-10-17T22:09:37-05:00By |

501c3 Application Mistakes

[custom_frame_right shadow="on"] 501c3 Application Mistakes[/custom_frame_right] 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.

2021-10-17T22:10:37-05:00By |

How Long Does it Take to Get 501c3 Tax Exempt

Understandably, this is one question that we hear over and over again from startup nonprofit organizations looking for 501c3 tax exemption from the IRS. Just yesterday I heard from a woman who told me that an online startup “service” had told her it was possible to have her 501c3 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. These include the time of year, type and classification of the nonprofit organization, and complexity of your application. Most recently, our clients have received their Letters of Determination within 2-3 months, a relatively quick response compared to previous years. While a 30 day response is not totally out of the question, especially for churches or nonprofit organizations with no paid employees, such a turnaround is extremely rare. [...]

2021-10-17T23:50:42-05:00By |
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