EO Exemption Application User Fees to Increase in 2010

Here’s a tip for nonprofits planning to apply for tax exempt status:  submit the application for exemption in 2009, before the fees increase.

The IRS has announced it is implementing an online application system known as Cyber Assistant in 2010. Once it’s launched, the application fees will change again and there will be a reduced fee for organizations applying via Cyber Assistant, regardless of size.

If you are waiting for Cyber Assistant to apply for 501(c)(3) status, consider that your exemption will not be retroactive to the date the organization was formed if it is filed more than 27 months later.

From the IRS website:

EO Exemption Application User Fees to Increase in 2010

User fees will increase for all applications for exemption (Forms 1023, 1024, and 1028) postmarked after January 3, 2010:

• $400 for organizations whose gross receipts are $10,000 or less annually over a 4-year period
• $850 for organizations whose gross receipts exceed $10,000 annually over a 4-year period
• $3,000 for group exemption letters.

A complete schedule of all user fees will be published in the annual procedure released in January 2010.

Cyber Assistant, a Web-based software program designed to help 501(c)(3) applicants prepare a complete and accurate Form 1023 application, will become available during 2010. Once the IRS announces the availability of Cyber Assistant, the user fees will change again:

• $200 for organizations using Cyber Assistant (regardless of size) to prepare their Form 1023
• $850 for all other organizations not using Cyber Assistant (regardless of size) to prepare their Form 1023.

IRS will announce when Cyber Assistant is available and the effective date of the user fee change. Subscribe to the EO Update to automatically receive an alert that Cyber Assistant is available.

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