Non-Profiting

Tax Exempt

The most common type of tax-exempt nonprofit organization falls under category 501(c)(3),
whereby a nonprofit organization is exempt from federal income tax:
    charitable,
    religious,
    educational,
    scientific,
    literary,
    testing for public safety,
    fostering amateur sports competition, or
    preventing cruelty to children or animals.

IRS entity definitions (and associated schedules/forms)
  • a - churches (techically/constitutionally not required to file)
  • b - schools (perhaps after school programs)
  • c - medical research
  • e - outside 27 month window orgs?
  • f - homes for elderly/disabled
  • h - educational/scholarships/loans/grants (how to qualify, who excluded, how tracked?)

The 501(c)(4) and 501(c)(6) categories are for
    politically active nonprofit organizations,
    which have become increasingly important since the 2004 federal elections.

nt - Click this link to Print this page
http://www.irs.gov/uac/Form-1023,-Application-for-Recognition-of-Exemption-Under-Section-501%28c%29%283%29-of-the-Internal-Revenue-Code

http://www.irs.gov/Charities-&-Non-Profits/Charitable-Organizations/Where%27s-My-Application
The IRS gets > 70,000 applications for tax-exempt status each year. 
Thanks to new processes and the 2014 introduction of Form 1023-EZ, our inventory of applications is current. We’ve retired the monthly date for the average age of pending applications and provided the following guidelines for when you can expect to hear from us.
If you submitted a Form 1023-EZ application, you can expect to be contacted within 90 days from the date you submitted the application.  
After 90 days, if you haven't been contacted, you can call the toll-free Customer Account Services number, Monday through Friday, 8 a.m. – 5 p.m. (local time), at 877-829-5500 to check on the status.  
If you submitted an application on Form 1023, 1024, 8940 or by letter request, 
you can expect to be contacted within 180 days from the date you submitted the application.  After 180 days, if you haven't been contacted, you can call the toll-free Customer Account Services number, Monday through Friday, 8 a.m. - 5 p.m. (local time), at 877-829-5500 to check on the status.  
You will need the following information when calling:
  • Your name
  • Your employer identification number (EIN)
  • A proper power of attorney submitted with your exemption application, unless you are an officer or director and legally authorized to represent the applicant


http://www.irs.gov/Charities-&-Non-Profits/Top-Ten-Reasons-for-Delays-in-Processing-Exempt-Organization-Applications


Top Ten Tips to shorten the tax-exempt app process

save time and effort

 
10.   Provide the required information on the principal officers and board of directors. List the following information for the principal officers and board of directors:
        a) Names; b) Mailing addresses; c) Titles and Positions; d) Annual compensation

9.   Ensure a director, trustee, principal officer or other authorized individual signs the Form 1023. Generally, a principal officer is the president, vice president, secretary or treasurer. The person signing the application must indicate his or her title or other authority to sign. A taxpayer's representative may not sign the application. An original signature is required. Neither a stamped signature nor a faxed signature is permitted.

8.   Don't forget to submit a copy of adopted by-laws, code of regulations or any other document that sets out the organization's rules of operation, but only if adopted.

7.   Include all of the necessary financial data. See the instructions to Form 1023 to determine how much information you need to provide, based on how long your organization has existed.

6.   Include the month the organization's annual accounting period ends. The accounting period ending date on the application should match the date stated in your by-laws, on financial statements, and on any prior returns filed.

5.   Attach all required schedules. Some lines require supporting schedules. Check all line items on financial statements.

4.   Complete all required pages. The information contained on each page and schedule of Form 1023 and Form 1024 is necessary for the IRS to make a determination about your tax-exempt status. Form 1023 has various schedules and pages that must be filled out for churches, schools, hospitals, scholarships, supporting organizations and certain other organizations.

3.   Provide enough information about the organization's activities to show us how it will achieve the exempt purpose. Please don't restate the purpose. Explain the specific activities that will achieve that purpose. Consider a "who, what, when, where, why and how" approach. Explain past, present, and planned activities. If you haven't started activity yet, develop plans that provide a clear understanding of how your organization will operate. It is not necessary to describe activities that are speculative at this time.

2.   Attach a complete copy of the organizing document and all amendments. If a corporation, include a complete copy of the articles of incorporation that shows it has been filed with and approved by the state.
If the applicant is not incorporated, include a similar organizing document such as
a constitution,
articles of association, or by-laws.
At a minimum, it should state the legal name, the purposes and the date of adoption. At least two members of the organization should sign the document. A trust document must be signed by the trustees and show the date of formation. For section 501(c)(3) applicants, the organizing document must comply with the organizational test for exemption. 

1.   The Number 1 tip to reduce delays in processing exempt organization applications is . . .
INCLUDE THE CORRECT USER FEE!
Ensure the application includes a check or money order made payable to the United States Treasury for the appropriate user fee.
Following these ten tips can help shorten the time it takes to process an application for tax-exempt status. A correctly completed application, sent with all required documents and schedules has a good chance of being accepted with no further contact. If contact is necessary, the IRS agent can address the technical issues that need resolution without taking up time to get a completed application.



http://www.irs.gov/Charities-&-Non-Profits/Form-1023:-Amount-of-User-Fee

Form 1023: Amount of User Fee

How much is the user fee for an exemption application?
The amount of the user fee depends on the applying organization's average annual gross receipts. 
If the organization's average annual gross receipts have exceeded or will exceed $10,000 annually over a four-year period, the fee is $850.  
If gross receipts have not exceeded or will not exceed $10,000 annually over a four-year period, the user fee is $400.  
An applicant must certify its gross receipts in Part XI. 

Apply:

http://www.irs.gov/pub/irs-pdf/p4220.pdf

$850 for long form 1023 application (30 pages)  Line 7 who represents you
EZ form is shorter
$400 streamline/abreviated online is even shorter

application becomes public record
 it lists includes things like who gets paid, etc

Sometimes they will even back-date the app (based on when you started doing the work and when you filed)

Getting on the "hot-list" can slow down approval (foreign dealings, foreclosure consulting, etc)

42 states also require registration


Concepts

Officers - daily operationsDirectors - oversee things

Corp/LLC/hybrid

State laws

ByLaws - Constitution (IRS compliant, but not filed)

Articles of Incorporations

Have the following required language (paragraphs)

statement of purpose

   ...same as mission statement?

dissolution clause


conflict of interest statement

    you can pay yourself but you must disclose it
    you can rent bldg from your mom as long as fair market value and disclosed
     include the relationship: blood/fam/biz
     include a rent study
     and that you looked for other alternatives

"not a direct benefit"

if u also own a profit biz
 you can have "common control" (u own both)

Catagories

foundation vs public charities
  "3" or "6" ?

you can even get a re-determinations (if you change model/except category)

Realistic Financials
  how to support the basic financial needs

4 yr projections

gifts/grants
contributions
income (merchandise sales or services sales, girl scout cookies, etc)
paid out costs    (overhead, materials/supplies/bldg_rent, utilities, janitorial, etc)

profits cannot benefit person

be prepared for audits

detailed program description and narratives

Like a book report or term paper

Describe org activities ...for "except" purpose
   ...how often meetings,
how conducted
what materials needed
who/how invited
how fund raising (sell items, open-house, contexts, grants)

how to respond to IRS questions

14 days to respond!
  could be 5 pages of questions 

power of atty can respond on your behalf

"Mark" from Anderson Advisors has a good team.

Interesting Stats

  • 10% waiting with no determination
  • 65,000 non profits apply per year
  • 40% >6mo
  • 25% had professional prepare/file/apply ($3000 to $15k) ...need limited power of atty

http://www.in.gov/sos/business/2428.htm

Corporations Information Line  317-232-6576

Business Services Division 
302 W. Washington Street
Room E018
Indianapolis, IN 46204

To form a Nonprofit Corporation, Articles of Incorporation must be filed.
The Articles of Incorporation must include the following: (IC 23-17-3-2)
  • the name of the corporation (which must include "Corporation", "Company," "Incorporated," "Limited," or an abbreviation thereof);
  • a statement as to whether the corporation will be a public benefit, religious or mutual benefit corporation;
  • the name and address of the Registered Agent;
  • the name and address of all the incorporators;
  • a statement as to whether the corporation will have members;
  • a statement regarding the distribution of assets upon dissolution (IC 23-17-22-5); and
  • a $30.00 filing fee.
If you intend to apply for IRS federal tax exemption as a charitable organization, your articles of incorporation must contain a required purposed clause and a dissolution of assets provision. Valuable information on 501(c)(3) qualification is on the IRS website http://www.irs.gov/. It includes sample articles of the incorporation. Click the "Charities and Nonprofits" link and then theLife Cycle of a Public Charity.
Note: NONPROFIT CORPORATIONS: Before filing or completing Articles of Incorporation, you should first contact the IRS. The IRS will recognize and provide tax exempt status to a nonprofit corporation only if it meets certain criteria and guidelines. The IRS publishes a booklet which is helpful in this process: "Tax Exempt Status for Your Organization" Publication #557. This publication can be obtained by calling 800-829-3676 or by writing your local IRS Forms Distribution Center: IRS; Cincinnati, OH 45999.
Internal Revenue Service conducts one-day workshops on basic tax compliance issues for small and mid-sized exempt organizations. The workshops will cover the procedures tax-exempt organizations must follow to maintain their tax-exempt status and comply with their tax obligations. The workshops are designed for board members, officers and staff of small and mid-sized tax-exempt organizations and the practitioners who work with them. You may view the schedule by clicking here

Indiana

Certificate of Existence Sample


https://secure.in.gov/sos/online_corps/example.pdf

They can also administratively end/revoke your org

Selecting A Name For Your Business

https://secure.in.gov/sos/online_corps/name_availability.aspx

http://www.in.gov/sos/business/2436.htm

Indiana Law requires that the name of a Corporation, L.L.C., L.P., and an L.L.P. must be distinguishable from the names of other businesses of the same type on the records of the Secretary of State's office. To determine if a particular name is available, please call the NAME AVAILABILITY LINE - (317) 232-6576 or do a name availability check via our website athttps://secure.in.gov/sos/bus_service/online_corps/default.asp. This is a preliminary check only. You should not rely, in any way, upon this preliminary information. If the name is available, you may either file an application to reserve the name for 120 days ($20.00 fee) or file documents to organize the business under that name.

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