Category Archives: Form 1023

IRS Posts Standard Form 1023 Questions

The IRS has posted in links to the questions Exempt Organizations specialists are instructed to ask in relation to various issues raised by applications for exemption and miscellaneous determination requests.Continue Reading

IRS Announces Streamlined Procedures to Reinstate Tax-exempt Status

This very helpful Procedure sets forth streamlined processes organizations whose tax-exempt status has been automatically revoked for failure to file required annual returns or notices for 3 consecutive years to regain their tax-exempt status retroactive to the date of of revocation. Continue Reading

When to Start a Nonprofit

We are used to hearing lots of folks – including yours truly – complain about the “nonprofit birth control” problem in this country. While it is true that too many nonprofits are formed for the wrong reasons – there are also many good reasons to form a new nonprofit. The trick is to learn to tell the difference. Continue Reading

Hurry up and Wait – Expediting Applications for Exemption

In general, 1023 exemption applications are processed in the order of receipt by the IRS, and expedited processing is available only if there is a “compelling reason” for it. There are reports that over 80% of requests for expedited processing are denied. If the organization needs its determination letter in a hurry because of circumstances that are within its control, the IRS is not likely to feel that the situation justifies expedited handling.Continue Reading

New Interactive Form 1023 Available for Review

In an effort to make applying for tax exemption easier, the IRS Exempt Organizations (EO) office is developing an Interactive Form 1023, Application for Recognition of Exemption (“i1023”). Continue Reading

Where The &%!?# Is My Exemption Application?

Just a few months ago, we were still telling clients to expect the process to take approximately one year. Now we are telling clients to prepare to wait two full years before they receive a determination letter.Continue Reading

Is it time for a Legal Audit?

A legal audit is an overview of an organization’s non-financial compliance, governance and risk management issues. Organizations typically consider a legal audit when new management takes over and wants to ensure they are starting with a clean slate or the in the wake of a costly mistake. Continue Reading

Sandy Deja’s 2012 Update of Prepare Your Own 501(c)(3) Application

In 2010, I blogged about Sandy Deja’s ebook, Prepare Your Own 501(c)(3) Application. Ms. Deja has recently updated her popular guide to tackling the exemption process. While not much has changed with the application itself (something Ms. Deja notes may not be true much longer), much has changed in the nonprofit world in the past few years.Continue Reading

Forming a 501(c)(3) Booster Club

Section 501(c)(3) of the Internal Revenue Code allows for tax exemption for organizations organized and operated to foster national or international amateur sports competition so long as no part of the net earnings inure to the benefit of any private shareholder or individual. A parent run booster club must be organized so that it benefits the entire class of athletes or participants and does not benefit certain individuals over others.Continue Reading

Start-up Nonprofits Beware: Ensure your Tax Preparer is Registered with the IRS

Charities should be aware that it is now illegal for anyone to receive compensation for preparing a return for someone else if they have not obtained a PTIN from the IRS first; a paid preparer who is not registered with the IRS is perpetrating fraud. If a charity chooses to work with an unregistered paid preparer, it opens itself up to IRS scrutiny and, possibly, denial of tax exemption plus additional attorneys’ fees to resolve any issues arising from the initial filing. Charities also need to keep in mind that the organization, regardless of whether or not a paid preparer was used, is ultimately responsible for the information in it’s exemption application.Continue Reading

Nonprofit Startups: Repurposing An Existing Nonprofit

Often prospective clients call us wanting to know whether we know of any dormant nonprofits that are going out of business that they could take over. The idea is that taking over an existing entity avoids the hassle and expense of incorporation, creating a governance structure and obtaining tax-exempt status for a brand new entity. Presumably, a new board of directors would be substituted in place of the old board and new officers would be elected.Continue Reading

New Form 8940 for Miscellaneous IRS Approval Requests

The IRS has released a new form for tax-exempt organizations to use when they request determinations (other than initial exemption applications) about their tax-exempt status. In addition to foundation status issues, organizations will use Form 8940, Request for Miscellaneous Determination, to obtain advance approval of certain activities and exemption from Form 990 filing requirements. PriorContinue Reading

Sweet Relief! IRS Announces Retroactive Relief Program for Revoked Nonprofits

Today, the IRS has made public the long awaited list of organizations that automatically lost their tax-exempt status due to their failure to file a Form 990, 990-EZ or 990-N for three consecutive years. The IRS announced that it has revoked the tax-exempt status of approximately 275,000 such organizations, including over 4,000 in Arizona.Continue Reading

CyberAssistant – Not Worth The Wait

The IRS’ continuing delays in launching the CyberAssistant program have left many would be nonprofit founders struggling with the question of whether CyberAssistant and its promise of significantly lower filing fees is worth the wait. Due to the ongoing delays and lack of information regarding an expected launch date, we think not. Continue Reading

Nonprofit Business Planning – Steal All the Underpants!

Finding support and funding in the nonprofit world is often more challenging than finding funding for a for-profit venture. In addition, contrary to the belief of many nonprofit founders, foundation grant dollars do not grow on trees and are, in fact, the most competitive and scarce source of funding available.Continue Reading

What is an American “Friends of” Organization?

To qualify as a U.S. “Friends of” affiliate of a foreign charity, U.S. law dictates how the U.S. organization must relate to its foreign affiliate. Under United States tax law, U.S. Friends of organizations must be operated independently of the foreign organizations they support.Continue Reading

Fiscal Sponsorship vs. Fiscal Agency

The term “Fiscal Sponsorship” describes an arrangement between a non-profit organization with 501(c)(3) tax exempt status and a project, often a new charitable effort, conducted by an organization, group, or an individual that does not have 501(c)(3) status. Fiscal sponsorship permits the exempt sponsor to accept funds restricted for the sponsored project on the project’s behalf. The sponsor, in turn, accepts the responsibility to ensure the funds are properly spent to achieve the project’s goals. This arrangement is useful for new charitable endeavors that want to “test the waters” before deciding whether to form an independent entity as well as temporary projects or coalitions that are looking for a neutral party to administer their funds.Continue Reading

Review of “Prepare Your Own 501(c)(3) Application” by Sandy Deja

Review of “Prepare Your Own 501(c)(3) Application” by Sandy DejaContinue Reading

IRS Cyber Assistant – Is it Worth the Wait?

In 2003, the number of applications for exemption had gone up by over 40% with no corresponding increase in the number of IRS Exempt Organization employees. This motivated the IRS to consider how to streamline the application for exemption process to make processing easier for both the IRS and the applicant. The IRS invited a panel of experts from the nonprofit legal community to make recommendations to improve the application process. The panel’s key recommendation was that the IRS revive earlier plans to develop and fund an interactive online Form 1023 filing tool accessible through the IRS website known as the “Cyber Assistant.”
UPDATE: On May 7, 2010, IRS announced in IRS Exempt Organization Update 2010-11, that Cyber Assistant is delayed – no release this year. Continue Reading

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 forContinue Reading