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 [...]
As of January, 2022, the IRS filing fee (or User Fee) for filing IRS Form 1023 is $600 regardless of your organization's previous revenue or projected revenue. The IRS filing fee or (or User Fee) for filing IRS Form 1023-EZ is now $275, regardless of your organization's previous revenue or projected revenue. This is the same as the filing fee since 2018. For more information on 501c3 application costs or help with formation documents, please call 1-800-268-4388 or email info@NonprofitElite.org .
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 [...]
Nonprofit organizations filing IRS Form 1023 – Application for Recognition of Exemption must include a Form 1023 User Fee payment as part of their application for either $400 or $850, made payable by check to the United States Treasury. The Form 1023 filing fee amount is determined by your organization’s annual revenue over the next four years, and the IRS uses $10,000 per year as its benchmark. For example, if your organization’s projected annual revenue averages $10,000 or more during the next four years, then your application fee is $850. If your organization’s projected annual revenue averages less than $10,000 during the next four years, then your application fee is $400.
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 [...]
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.