Nonprofit Resources

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An Overview of Form 1023

A 501(c)(3) organization is a tax-exempt charitable organization that can receive tax-deductible contributions and is organized and operating exclusively for exempt purposes. Though many times, the terms nonprofit and 501(c)(3) are used interchangeably, they don’t necessarily mean the same thing. A nonprofit organization is an entity that is formed under state law; whereas, 501(c)(3) is a status determined by the federal government. In order to receive certain funding and to be exempt from income, sales and property taxes, nonprofit organizations should also have their 501(c)(3) status. Your organization’s structure and budget will help determine what type of paperwork needs to be filed to receive this status from the IRS.

 

Generally, nonprofit organizations will apply for their 501(c)(3) status using Form 1023. This is the standard application and asks for information on your structure, policies, charitable activities, financial data, and other supporting information and documents. The fee to apply using Form 1023 is $600 and approval can take between 3-12 months. You can check on the status of applications on the IRS website HERE.

However, some organizations may qualify for expedited processing of their application. The IRS may consider processing an application faster if there is a compelling reason, which includes (from the IRS website):

  • A pending grant, where failure to secure the grant will have an adverse impact on the organization's ability to continue operating

  • A newly created organization providing disaster relief to victims of emergencies

  • IRS errors have caused undue delays in issuing a determination letter

This request must be in writing and is decided at the discretion of the IRS.

For organizations that meet certain criteria - and project their annual gross receipts will not exceed $50,000 for the next three years - can apply using Form 1023-EZ and may receive notification of their 501(c)(3) status even faster, usually within 2-4 weeks. Nonprofit organizations can file the Form 1023-EZ online and must pay a $275 fee when submitting their application.

 

Please note, this information on this website does not constitute legal advice. It is provided for general information purposes only. For more information, please visit the IRS website at https://www.irs.gov/charities-and-nonprofits.