This is hard to estimate because much of the process is determined by how long it takes for us to gather the required information from you, the time it takes for you to review and approve drafts, and the time it takes for each government entity to approve our filings.  On average, it takes about 6-12 months from the point we start working on your project and the point you have received all your state and IRS exemptions.  Keep in mind this average time is to complete all the items in the startup packages, not just file and receive your IRS tax exemption, and the average wait times to receive an IRS determination letter and confirmation from your state.  Though we have rush services available for our work at an additional cost, the IRS generally does not expedite exemption applications nor have rush services available.  States generally do not have rush services either for exemption filings.

It depends on several factors, but on average, our part can take 3-4 weeks to prepare a completed draft of the materials that need to be filed with the IRS.  Rush services are available but will add to the flat-fee quote.

The time it takes for the IRS to issue a determination letter can take as short as a few weeks to as long as several months.  Once the application is filed, the IRS typically takes approximately three weeks to acknowledge receipt.  The IRS then screens the applications.  Those that the IRS determines do not raise issues of fact or law are processed in as little as a few weeks up to a few months.  However, if the IRS has any issues or concerns, it assigns the application to a reviewer.  Once the case has been assigned to a reviewer, obtaining a final result can take an additional several weeks to several months.  Once assigned, the reviewer will typically contact us with follow-up questions within a few weeks.  The questions are usually clarifications or confirmation of information that has been provided.  However, there are some cases that require multiple responses to resolve all of the IRS reviewer’s concerns.

Yes.  Clients are also responsible for the fee to file the articles of incorporation in their state, ranging from $50 to $400, and for the IRS filing fees, which are currently $600 for the 1023, 1024, and 1024-A, and $275 for the 1023EZ.  Occasionally, we will charge for other expenses such as postage and package delivery fees.  We do not routinely charge for copies, phone calls, or other routine administrative expenses for fixed-fee engagements.  These are all included in the startup package.  Any additional fees will be outlined in the engagement letter.

Not usually.  Generally, applications are processed in the order received by the IRS.  Sometimes, however, the IRS will work a case outside the regular order.  For expedited processing to be granted, however, there must be a compelling reason to process the case ahead of others.  Compelling reasons include the following:

• A pending grant, where failure to secure the grant will have an adverse impact on the organization’s ability to continue operating.
• A newly created organization providing disaster relief to victims of emergencies.
• IRS errors that have caused undue delays in issuing a determination letter.

For a pending grant, be prepared to substantiate a request for an expedited review with a letter from the grantor.  Letters from members of Congress in support of an application for exemption can also be helpful.

Nonprofit status is a state law concept.  Nonprofit status may make an organization eligible for certain benefits, such as state sales, property, and income tax exemptions.  Although most federal tax-exempt organizations are nonprofit organizations, organizing as a nonprofit organization at the state level does not automatically grant the organization exemption from federal income tax nor make donations tax-deductible.  To qualify as exempt from federal income tax, an organization must meet requirements set forth in the Internal Revenue Code.  To receive tax-deductible donations, an organization must qualify as a 501(c)(3) tax-exempt organization.

Technically, as soon as you legally form your new nonprofit, but there are several caveats and it’s not recommended until you have at least filed your IRS exemption application.

If your application for exemption is filed within 27 months of the date your new nonprofit is legally formed, and is ultimately successful in obtaining tax-exempt status, the IRS’s determination of exemption will be retroactive to the nonprofit’s date of formation.  That means any donation received in the retroactive period will be tax-deductible.

Your new nonprofit may need to register to solicit funds (or apply for an exemption) depending on where it is soliciting donations.  Once your new nonprofit is registered, until the IRS determination letter is issued, you should explain to potential donors that an application for tax-exempt status is pending and should delay claiming a deduction for their donations until you have received a successful determination.  Donors who claim a charitable contribution deduction for their gifts before a successful determination take the risk of an adverse IRS decision.

You can see if the funder will allow you to defer acceptance of the grant, or you can find a fiscal sponsor.  A fiscal sponsor is a recognized charitable organization that can share its tax exemption with you until you receive your own tax-exempt status.  Fiscal sponsorships typically provide several other services and benefits as well, but also have drawbacks, so they shouldn’t be considered lightly.  If you are interested in a fiscal sponsorship or are already considering one, please contact us for guidance.

If you don’t need all the services included in the Basic or Advanced package, we can create a custom package for you or you can pay for services individually.  However, these packages were designed to provide the best price for a group of services, and a specific service can’t be broken apart from the overall value.  We will not discount the Basic or Advanced package if you don’t use one of the services.  You will probably find that it still will be cheaper or worth it to use one of these packages, even if you don’t use all of the included services, than creating a custom package or paying for services individually, if you need more than a couple of services.  We will go over the options during our initial conversation.

Absolutely!  For those with more time than money on their hands, you can self-prepare the documents.  We are happy to recommend resources to assist you.  When you are ready, we can review your documents on an hourly-fee basis, during which we will review your documents, make comments, and provide suggested language, where appropriate.  However, we provide no guarantees for any documents we do not prepare and file for you.