Trying to out wait the Internal Revenue Service (IRS) is not always a wise strategy. However, for small non-profits hoping to operate the first few years on a shoestring budget, if time allows, postponing the submission of IRS Form1023, the Application for Recognition of Exemption, may be wise. The IRS recently announced that use of the online Cyber Assistant – which triggers the fee reduction – will not begin in 2010 as originally planned.
Discounted User Fee Available for Online Form Preparation
If gross receipts average less than $10,000 per year, the user fee for an organization claiming not-for-profit status is $400. Non-profit corporations accruing more than $10,000 annually must pay $850. After the Cyber Assistant is activated – there is no IRS estimate of when that may be – if the paperwork is completed online, the user fee is only $200. The complete application package must still be printed and mailed to the IRS by the user.
Waiting indefinitely is not really an option for most not-for-profit corporations. According to the form instructions, IRS rules require that the Application for Recognition of Exemption be submitted, "Within twenty-seven months after the end of the month in which you were legally formed."
Types of Assistance in Completing IRS Form 1023
Just as keeping up with the plethora of business tax laws has created a legal niche, filling out the ponderous IRS Form 1023 has spawned a new cottage industry of micro specialists. Business lawyers specializing in non-profits are the most expensive type of assistance but most likely to foresee any problems before they appear on the horizon. Other professionals such as a Certified Public Accountant (CPA) who specializes in the Form1023 may be as effective at providing assistance with slightly lower fees.
Another type of assistance is represented by the book, Prepare Your Own 501(c)(3) Application written by former IRS agent, Sandy Deja. For anyone who prefers to handle the paperwork themselves, Deja's book is easier to understand than the IRS forms.
The Internal Revenue Service Instructions for Form 1023 is 38 pages long, including a seven-page glossary of terms but not including the two-page Form 1023 Checklist of materials that must be included in the completed package. The instruction package provides copious notes and examples of how to fill out the form. The IRS also provides a website for nonprofit do-it-yourselfers. If all else fails, the Exempt Organization Account Services Branch of the IRS offers a toll-free number, 1-877-829-5500.
Recognizing the need for customer assistance, even among those who do not pay, the Internal Revenue Service will be introducing an online Cyber Assistant to make completing Form 1023 less confusing. Although the forms must still be printed and hard copies mailed to IRS, they will be coded and eligible for a reduced user fee of $200, a significant savings.
Mistie Shaw - Writing for nearly half a century, Shaw's interests and education meander from music to the military, and from faith to fun.
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