Our law office forms non-profit, tax-exempt organizations in every State of the United States that function on a state-wide, national, and worldwide basis.  We provide our legal services quickly and very affordably, and we have never failed to obtain favorable tax-exempt status with the IRS for a nonprofit organization we have formed.  Marshall A. Glick, an attorney with over 55 years of law practice experience, authored two books for a national legal publishing company on the subject of forming and advising nonprofit, tax-exempt organizations, and is a nationally recognized expert on forming and advising charities.

In addition to forming charities, we assist our clients with:

• Continuing Reporting Obligations (including annual filings of Form 990, Form 990PF, Form 990EZ, Form 990-N, RFF-1 (CA), and Form 199-CA)
• Recordkeeping Responsibilities, such as corporate minutes
• Operational Requirements
• Welfare Exemptions (for the reduction or elimination of real estate taxes on property owner or used for charitable purposes by exempt organization)

The following information is provided regarding the formation of a federal and State non-profit, tax-exempt organization (a “charitable foundation”), which may have one or more of the hundreds of tax-exempt purposes which are currently recognized by the IRS.

Steps to Attain Federal Tax-exempt Status

The steps necessary to establish a non-profit, tax-exempt organization, and prepare and process the Application with the IRS, are as follows:

1. Ascertain availability of name for non-profit organization and reserve corporate name if applicable;
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; and
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 (11) 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.  In some cases, it may be possible to file a request for expedited processing of your application, which if accepted by the IRS may reduce the processing time to weeks (and in a few cases days) instead of months. No assurance can be given that the IRS will approve your Application, although in our over 55 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 we 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.  The 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 “paperwork” involved and we pride ourselves 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).

Fees and Costs

The estimated legal expense with our office for forming your organization and applying for federal tax-exempt status depends in large part upon the simplicity or complexity (as the case may be) of the nonprofit organization you wish to form.  In each case, our services include preparing a detailed Application For Recognition of Exemption Under IRC Section 501(c)(3) (the “Application”) (including all detailed schedules and complex exhibits that are required or recommended for submission to the IRS), which must be filed in order to obtain federal tax-exempt status.

You are invited to contact us for a free consultation, or for information as to the costs of forming a non-profit, tax-exempt corporation in your state.  Click here for a representative sample of charities we have formed and for which we prepared and filed Form 1023 applications with the IRS and related State applications for tax-exempt status.