Whitfield & Associates | 501c3 Applications | Sample Form 1023 Narrative | Church CPA
Whitfield & Associates | 501c3 Applications | Sample Form 1023 Narrative | Church CPA

I’m going to give you this really simple – well kinda simple checklist to get your 501c3.  It’s not all inclusive, but its here just to give you an overview of the process assuming you’re starting from scratch.

1.  Get Incorporated – Visit the Secretary of State (SOS) website for your state to incorporate your organization.

You can use your favorite search engine to find your SOS website,  But be careful, there’s a lot of junk sites out there.  Most of the SOS websites have SOS in the weblink.

Your articles will need to have the required language.  If it doesn’t you’ll have to file articles of amendment to amend them by filing Articles of Amendment.  Some states have these clauses as part of their standard incorporation forms.  Others (like Illinois don’t).  I’d be careful about using an online service for obtaining the articles.  Contact your state and make sure the online process is set-up to include the 501c3 required language or at least allows you to add it.  If it doesn’t file paper forms.

Here’s a sample the IRS provides online:http://www.irs.gov/charities/charitable/article/0,,id=123028,00.html

2.  Obtain your EIN number. The IRS makes it really easy to obtain this number online.

Visit http://www.irs.gov/businesses/small/article/0,,id=102767,00.html.

Once you get this number and have your articles in hand, you can open a bank account for your organization.

3.  Register with your state attorney general’s office to get approval to solicit donations.

Once you’re registered you can start soliciting donations in your state ONLY.   You don’t need to get your 501c3 approval to start soliciting donations.

Important! The clock is ticking – you have 27 months to get your application out the door.   After that, things get complicated. But if you’re on time and your application is approved, your 501c3 will be effective the day you’re incorporated.  If not, it will be effective the day of the postmark on the envelope when you send your application.

4.  Check with your state for other filing requirements (e.g. business income tax exemption, sales tax exemption, employee income taxes, collecting sales taxes for merchandise you sell, etc.)

You can usually gather information on your state’s Department of Revenue or Taxation website.  Some states have a Starting your Non-Profit Organization web page with a checklist of what’s required for your state.

5.  Prepare your 501c3 application using IRS Form 1023.

Take your time and go through IRS publication 557 and the instructions for form 1023. The IRS charges $400 or $850 to review your application.  Will your organization earn $10,000 or more in any year for the next 4 years? Or did your organization earn $10,000 or more in any previous years? If so, you’ll pay the $850 fee.

The IRS doesn’t have a fixed time frame to review the applications.  Most of mine get approved in 4 to 6 weeks once the IRS gets it.  Still the application could require additional review and take longer.  The IRS has a “Where is My Exemption Application?” page that shows their process and how they are coming along with processing returns.  Here’s the link: http://www.irs.gov/Charities-&-Non-Profits/Where-Is-My-Exemption-Application.

Need Help?

Click here for a mini-course the IRS put together to help you.

If you’re comfortable dealing with all the paperwork and you’ve managed to get through steps 1 – 4 on your own, PRAISE THE LORD!  You could probably benefit from using one of ourSample 501c3 Application kits.

If you prefer to delegate, delegate, delegate, then we’re here to help.   I specialize in 501c3’s for religious and charitable organizations. Check 0ut my 501c3 Application Services page for more details.

IRS planned to lower fees from $850 to $200 for 501c3 application fees this year. Plans delayed till who knows when. They are not saying.

Still you may be scratching your head and wondering when did the fees jump to $850? User fees increased for all 1023 returns filed after January 4, 2010.

Organizations with annual gross receipts under $10,000 during preceding 4 years will pay a $400 user fee. Organizations with annual gross receipts greater than or equal to $10,000 during preceding 4 years will pay a user fee of $850.

Note that the IRS did not update page 12 of Form 1023. Instructions for the increase in the 501c3 application fee were noted on their website and as an instruction cover page to the downloadable form 1023 pdf file.

Learn more at: http://www.irs.gov

Did you start a 501c3 a few years ago and never filed an annual report with the IRS? Don’t lose your 501c3 Status.

Many small not-for-profit organizations are in jeopardy of losing their 501c3 status due to recent regulations requiring organizations to file form 990N online.

In the past most organizations with annual revenues under $25,000 were not required to file.

The Pension Protection Act of 2006 requires the IRS to revoke the federal tax exemption of any organization that is required to file an annual return (Form 990-N, 990-EZ, 990, or 990-PF) and has failed to do so for three consecutive years. Nonprofits that wish to have their exemptions reinstated will be required to re-apply to the IRS for tax-exempt status. This process can take several months.

The IRS will begin revoking exemptions on May 17, 2010 October 15, 2010, but will wait until 2011 to send revocation notices. (The May 17 October 15 deadline applies to exempt organizations whose fiscal year ends on December 31.

“Ultimately, the revocation process will benefit the nonprofit sector by weeding out defunct organizations and nonprofits that are not meeting their reporting responsibilities,” explained Bob Ottenhoff, president and CEO of GuideStar. “In the short run, however, it will cause hardship for some organizations.”

Learn more at: http://bit.ly/drgU99

Whitfield & Associates | 501c3 Applications | Sample Form 1023 Narrative | Church CPA
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