The IRS has issued a new Form 1024-A, Application for Recognition of Exemption under Section 501(c)(4) of the Internal Revenue Code for an organization that chooses to apply for recognition of exempt status under Section 501(c)(4).
The IRS has revised Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, and its instructions which went into effect January 10, 2018. The $275 1023-EZ user fee remains the same. The changes are designed to reduce filing errors and increase compliance with respect to those eligible to file Form 1023-EZ. Form 1023-EZ filers must now complete the following:
The IRS recently issued a favorable ruling for nonprofits looking to move their domicile from one state to another. Common reasons that nonprofits seek to change their state of incorporationinclude a change in physical location, increasing regulatory burdens, or a lack of meaningful connection to the original state of incorporation. In such cases,
On September 28, 2017, the IRS Tax Exempt and Government Entities division released its FY 2018 work plan. Of interest to nonprofits and their advisors, the IRS is planning to make changes to Form 1023-EZ early in 2018. These changes are in response to the concerns of stakeholders regarding whether the 1023-EZ process requires too little information.
Newly formed charities often encounter a chicken and egg problem. They wish to begin their operations before they receive formal approval of their tax-exempt status but they can’t attract funding until they receive their federal 501(c)(3) determination.
The recently enacted Protecting Americans from Tax Hikes Act (“PATH Act”) imposes a new requirement for Code Section 501(c)(4) social welfare organizations to notify the IRS of their existence within sixty (60) days of their incorporation.
The group exemption permits a central or parent organization to certify that each subordinate qualifies for exemption and to include it under its umbrella for tax-exemption purposes. The process is designed to reduce paperwork for both taxpayers and the IRS where affiliated entities are similar in their purpose, structure and operations.
Today, the Internal Revenue Service released the new Form 1023-EZ application form to reduce processing delays and help small charities apply for 501(c)(3) tax-exempt status more easily.
The goal of the streamlined application process is to permit small charities without complex issues to get up and running more quickly. The streamlined application will also permit the IRS to spend less time reviewing applications and more time focusing its energies on monitoring compliance for organizations that have been approved.
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.
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.
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.
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.
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”).
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.
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.
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, but they have not filed for nor received a formal determination letter from the IRS. These groups are allowed to operate without an official IRS determination because, unlike the 27 month filing deadline for 501(c)(3) charities, they are not subject to a deadline for filing an application for exemption.
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.
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.
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.