Are these some of your questions?
What are valid 501(c)(3) Tax Exempt Ministry purposes? What are advance and definitive rulings? What activities may a 501(c)(3) non-profit Ministry corporation engage in under federal law? How do you qualify for 501(c)(3) public charity status? What are the public support tests? And so on and so on...
501(c)(3) Tax Exempt rules can be very confusing!
WARNING! Unless you and your accountant or lawyer are preparing 501(c)(3) applications on a daily basis, I would think twice before engaging any one to do this. (Ask for references) If done improperly you can delay the process up to 9 months, obtain an adverse determination letter and even lose your user fee. We receive many attempted applications with adverse "90 day" determination letters from lawyers, accountants and amateur people. They cry HELP!
Don't let this be you.
Below, we have provided a brief summary of the IRS 501(c)(3) application process.
501(c)(3) Tax Exempt Status 1023-EZ
To become qualified to take advantage of the new Form 1023-EZ, organizations will need complete an eligibility checklist worksheet and have estimated yearly gross receipts not more than $50,000 in any of the next 3 years, and annual gross receipts not greater than $50,000 in any of the previous 3 years. Additionally, the organization’s total assets mustn't go beyond $250,000.
In the event you satisfy the above qualification requirements, we will file the 1023- EZ Form. (The I.R.S Processing USER fee is $275.00)
Churches, schools, colleges, universities, hospitals, supporting organizations, HMOS, ACOs, and entities with donor-advised CAN NOT file using the Form 1023-EZ.
Warning! The immediate dilemma for a new organizations is: Who should really submit the Form 1023-EZ and who should keep with the conventional Form 1023? A number of issues to consider are related to this question.
There are actually certain risks utilizing the Form 1023-EZ Application. First, if you fail to meet the criteria for 501(c)(3) status, it could possibly later be revoked by the Internal revenue service. Applicants need to ensure that the overseeing documents incorporate language regarding their business purpose, proper dissolution language, and private foundation prohibitions. These procedures are necessary and could be easily ignored. Additionally, nonprofits will have to make certain they are qualified to file Form 1023-EZ. Furthermore, filers needs to ensure they satisfy the financial thresholds regarding eligibility.
The IRS will hold organizations that apply for exempt status under the 1023-EZ form liable for erroneous financial projections that can make them qualified to take advantage of the shortened form, while in reality, their actual results will extend past the utmost receipts and/or total assets thresholds.
Finally yet importantly, if you are seeking Grants from State, Federal, and Foundations, they will want to see the full long form 1023 along with the IRS determination letter, due to the fact that specific information and facts that is certainly on the original Form 1023.
You could be turned down for many opportunities for grants.
501(c)(3) Tax Exempt Status Long Form 1023
The only way to establish a bonified tax exempt recognition with the IRS and the community is to apply for and must be granted the exempt status under the section 501(c)(3) of the IRS code. However, the IRS establishes a number of overriding restrictions and limitations that apply to your Non Profit. Meeting these rules is critical to qualifying for and maintaining your non-profit tax-exempt status. These laws are complex.
We will prepare the 501(c)(3) tax-exempt application and all schedules, affidavits, forms, detailed financial statements, (revenue and expenses and proposed budgets for 2 years) and attachments for you and make sure that you will met all legal and technical requirements needed for the 501(c)(3) status.
For example, we will make sure you'll meet the organizational test for exemption, which includes amending your Articles of Incorporation. Our Experience shows that 90 percent of the Articles of Incorporation we receive needs to be amended before submitting to IRS
We will also prepare all of your internal rules of operation. These rules are subordinate to the organization's charter and make provisions for the qualification of its membership, their voting rights, election of its board of directors & officers, duties of board members and officers, terms of office, meetings, dues and assessments, if any.
We will be with you all the way until you get your 501(c)(3) and of course afterwards for compliance.
Upon receipt of the completed application and attachments the Internal Revenue Service will send you a Letter of Acknowledgment of your request and assign a document locator number. Technically they have up to 120 days to respond.
We will have you sign a limited power of attorney and Declaration of Representative Form 2848 this will enable us to correspond with the "Exempt Organization Specialist" that will be assigned to your case. Applications are handled and approved on a case by case basis.
This specialist will go over the entire application and attachments, in which it can take up to four months to finish the process. During this time we will correspond with the agent and make sure you meet all the technical and legal requirements. Because of our Excellent, thorough work and professional relationship with the IRS we have been receiving 501(c)(3) status for our clients on an average of 60 days!
According to the IRS not all organizations will receive a favorable determination letter. We will make sure you will receive your 501(c)(3) and will money back guarantee it.
What happens next?
After the technical review, which can take up to 4 months, you will receive a "determination letter" (this is your 501(c)(3) status) direct from the Director of Exempt Organizations. This letter will state that you are exempt from federal income taxes under section 501(c)(3). Churches receive Definitive Rulings under section 170(b)(1)(A)(i) Note! The IRS does not give 501(c)(3) identification numbers. This exemption will be retro active to the date of incorporation, which means any contributions you receive since you have been incorporated will be fully tax deductible.
Your letter is important as it shows to your grantors and contributors and the public that you are indeed a 501(c)(3) organization. The letter will also spell out restrictions and conditions that apply if you are to remain tax-exempt under sec. 501(c)(3). Moreover, the letter will address your Information and Annual Reporting Requirements to IRS.
INCLUDED AT NO EXTRA CHARGE!
YOUR STATE TAX EXEMPTION AND NON-PROFIT REGISTRATION
State Tax Exemption
If your State has Solicitation Registration Regulations, we will also register your organization with your State. All charitable organizations must register with the state prior to engaging in solicitation activities. (Please see your individual state requirement) and renew annually thereafter. We will register your organization with the State and inform you of this disclosure requirement.
Sales Tax Exemption
Exemption from State Sales Tax is granted only to non-profit organizations that meet the criteria set forth in State Sales Tax Section in your State Statutes. We will prepare your application for "Sales Tax Consumer's Certificate of Exemption."
Subject to the provisions of your State Immunity Statute: We will also include an indemnification agreement indemnifying all your directors and officers of the organization.
IRS Contributions Substantiation and Disclosure Requirements
Under the new law, section 170 and new section 6615 of the Internal Revenue Code, Non Profit's will need to provide new kinds of information to donors. Thus, taxpayers may no longer rely solely on a canceled check for deductions. Failure to do so may result in denial of deductions to donors and the imposition of penalties on non-profits. To help comply with this law, we will provide you with IRS-compliant forms (as templates with your letterhead on top) to copy and to give out to your donors and contributors.
Internal Revenue Service (IRS) Application User Fee
We look forward to working with you to ensure that your organization is safeguarded through IRS exemption recognition and becomes an organization recognized by the IRS as exempt from federal (and state) income taxes, and eligible to receive tax deductible contributions from its donors and supporters, as well as Federal and State grants.