THE STEPS necessary to establish a non-profit, tax-exempt organization, and prepare and process the Application with the IRS, are as follows:
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| 1. |
Ascertain availability of name for non-profit corporation and reserve corporate name |
| 2. |
Form a non-profit California (or any other state) corporation by preparing and filing specialized non-profit Articles of Incorporation with the Secretary of State |
| 3. |
Prepare Organizational Minutes |
| 4. |
Prepare By-Laws for non-profit corporation |
| 5. |
Prepare initial Membership Certificates |
| 6. |
Prepare and file Form SS-4 (Application for Employer Identification Number) |
| 7. |
Prepare and file Form 2848 (Power of Attorney and Declaration of Representative) |
| 8. |
Prepare IRS checklist for submission with Application |
| 9. |
Prepare and file Form 1023 (Application for Recognition of Exemption Under Section 501(c) (3) of the Internal Revenue Code) |
| 10. |
Prepare all highly detailed schedules and exhibits to the Application |
| 11. |
Respond to IRS questions or requests for additional information regarding application for exemption. |
The processing time, from start to finish, in completing steps (1) through (10) above should be accomplished within two to three weeks from the date you provide us with the necessary information to prepare Articles Of Incorporation and the Application. Once received by the IRS, there is an administrative holding period of approximately 60 to 120 days per IRS guidelines. During that time, there is usually no response from the IRS. The actual processing time often varies depending upon the IRS workload at the time. However, your organization's tax exempt status should be issued retroactive to the date the IRS received your Application. No assurance can be given that the IRS will approve your Application, although in our almost 30 years of practice the IRS has never declined to issue a favorable determination letter based upon an Application prepared by our office.
It will be necessary to file a similar application for tax exempt status with the California Franchise Tax Board (or similar governmental entity in your State) on Form 3500, which I usually prepare prior to receiving a favorable determination letter from the IRS. We have found that filing the State exemption application prior to the IRS issuing a favorable determination letter speeds the review process on the State level. We will provide this additional service for a legal fee of $350, plus $25.00 in out-of-pocket costs for filing Form 3500. These fees and costs vary from state to state.
After qualification as a nonprofit, tax exempt entity, bequests, legacies, devises, transfers or gifts from you and others to your organization will be deductible for federal estate and gift tax purposes to the extent provided for under Section 170 of the Internal Revenue Code (provided that such contributions meet the applicable provisions of Sections 2055, 2106 and 2522 of the Internal Revenue Code).
We hope this information is helpful to you in learning about, creating and processing nonprofit, tax exempt organizations with the IRS. As you can see, there is a lot of "paper work" involved and I pride myself in being able to complete this process swiftly, professionally and for a reasonable fee (especially when compared to the much higher fees often charged by our professional colleagues who practice in this area of law and who may take much longer than we do to perform).
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