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 faster with the 1023-EZ than when filing the longer Form 1023. If you’re able to file the 1023-EZ, this is what we recommend at Nonprofit Elite.

Give us a call at 800.268.4388 and we’ll be glad to walk you through the process, answer your questions, and help you get your nonprofit set up quickly and affordably.

Cost of 501c3

Option Two: IRS Form 1023 – IRS Form 1023 is the traditional application method that many new organizations must file with the IRS to obtain their 501c3 tax exempt status. Form 1023 is much longer than the 1023-EZ, and you will almost certainly require professional help to navigate the form, attachments, and additional schedules.

The cost of the traditional Form 1023 is also a bit more than the EZ Form, and there are two parts to consider:

First is the required IRS Form 1023 User Fee, which is now $600 (as of March, 2018) regardless of your organization’s current or projected future income. This application fee is made online as part of your application to the United States Treasury and submitted 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 – IRS Form 1023. This is what we do at Nonprofit Elite, and we are very good at it. Call 800-268-4388 and we’ll be glad to help.

What about other options to complete your 501c3 application?

(a) Do the work yourself and pay nothing other than the required IRS fees. Although completing IRS Form 1023 is possible 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 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 charge a fee for our IRS Form 1023 Review Service, but it’s well worth the peace-of-mind to know that your 501c3 application will be approved. We always guarantee our work!

(b) Use a family CPA or specialized 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 startups. We know this because nearly 40% of our work at Nonprofit Elite comes from CPAs and attorneys who outsource their work directly to us! Instead of paying these high costs, give us a call (800.268.4388) and achieve the same results in less time and for less money!

(c) Online, template-based services. With a quick online search you’re sure to find published fees as low as $400-$600 (think Legal Zoom or similar type services). Just be careful to read the fine print and ask the right questions to make sure 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 Articles of Incorporation (often required) or responding to IRS follow-up inquiries down the road. Also, many of these companies are impersonal and send you long questionnaires so that you’re basically filling out the forms yourself…of course 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 much more frustration on your part.

Of course, we believe your very 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. Most 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 (state formation documents) for appropriate purpose, dissolution, and nonprofit clauses. These important paragraphs in 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 for any IRS red flags. Bylaws are your organization’s governing document and are necessary for filing for federal tax exempt status.
  • Obtain your Employee Identification Number (Federal Tax Identification Number), if needed.
  • Prepare IRS Form 1023-EZ or 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 granting your organization 501c3 tax exempt status.

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 (800.268.4388) and always glad to help!