Category Archives: Form 1024

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

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

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

Self-Declared Exempt Organizations – A Guide to Ensure IRS Compliance

In its 2012 workplan, the IRS announced it will be paying closer attention to self-declared 501(c)(4), (c)(5) and (c)(6) organizations. These groups include social welfare organizations; labor, agricultural and horticultural groups; as well as business leagues and chambers of commerce. Such organizations consider themselves to be tax-exempt because of the nature of their activities, butContinue 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

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

Nonprofit Law Jargon Buster: Social Welfare Organizations

A social welfare organization is an nonprofit organization exempt under Code Section 501(c)(4). It is similar to a 501(c)(3) organization in that its income is generally exempt from tax and is subject to the same limits on private inurement and excessive payments to insiders. It is different, however, in that contributions to it are not deductible as charitable contributions and it is able to conduct unlimited lobbying activities. Section 501(c)(4) exempts:

* nonprofit civic organizations operated exclusively for the promotion of social welfare; and
* local associations of employees whose earnings are devoted to charitable, educational, or recreational purposes.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

Part III: Starting a Nonprofit in Arizona – Applying for Tax-Exempt Status

Forming a nonprofit corporation is not the same as being tax-exempt. To obtain 501(c)(3) status, newly formed entities must apply to the IRS for a formal determination of exemption. Entities seeking 501(c)(3) status apply by filing Form 1023. (Entities seeking exemption under other sections of 501(c) file Form 1024.)

Newly formed organizations applying for exemption face a chicken and egg dilemma. Form 1023 requests considerable detail regarding the charity’s planned programs and activities. The attitude of the IRS is that requiring applicants to articulate detailed plans is a small price to pay for the significant tax benefits associated with 501(c)(3) status.
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