Obtaining 501c3 Status Form 1023 with Tracy L. Boak

In order to obtain a 501 c 3 status, certain IRS filings are required. There are two types of application forms for the recognition of tax-exempt status, Form 1023 and 1023ez. Additionally, the IRS requires filing the Employer Identification Number, Form SS-4. Depending on what you plan to do you may also have additional filings, such as the election to use lobbying expenditures test (Form 5768) and the power of attorney (Form 2848).

Tracy L. Boak is a partner with Perlman & Perlman, LLP, which specializes in providing legal counsel and compliance services to organizations and professionals in the nonprofit sector. Previously, she was the Director of the Pennsylvania Department of State’s Bureau of Charitable Organizations where she was responsivle for the management of the office that oversees the administration and enforcement of the State’s charitable solicitation law. Prior to working for the Commonwealth, Ms. Boak was in private practice in Harrisburg, PA, where she practiced commercial litigation.

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Navigating the Maze: A Road Map to Compliance for Charitable Organizations

In this CLE video clip, Tracy discusses Obtaining 501(c)(3) Status.

Obtaining 501 c 3 Status with Tracy L. Boak.

If you plan to have your attorney handle your IRS issues on your behalf, you will be required to file the power of attorney form 2848. The IRS will not speak to your attorney without form 2848 on file. Typically filing occurs after incorporation, so you will want file for nonprofit exemption in the state you filed for incorporation.

Many organizations choose Delaware as the state they want to be incorporated in, even if they are not located there. Then where they are actually located, they would have to file a separate foreign qualification application with that state. This application lets the state know you are not incorporated in that state, but intend on doing business there. The organization will also need bylaws and a set budget, all of these things are required if you are filing the full 1023, yet it is highly recommended these forms also be filed if you are using the 1023ez form.

Churches are automatically c3 organizations, so they do not need to file the 1023c3 form with the IRS. If you are looking at becoming something other than a c3, remember the 1023 is only for c3 organizations. Other organizations that seek tax exempt status would have to file a form 1024.

It is a fairly lengthy process to complete the form 1023. The basic goal of the form is to help an organization prove to the IRS that it satisfies the “organizational test” and the “operational test” for 501 (c)(3) status. These test demonstrate that not only has the entity organized as a charity, it will continue to operate in the 501 c3 status.

For a 501 c3, this means that no operations will be political in nature. Meaning, the organization can not become involved in a political campaign. However, a 501 c3 organization can conduct some forms of lobbying.

Form 1023

  • Statement of Activities
  • Estimated or actual budgets for three years
  • Compensation information
  • Additional Information, including international activities, development of intellectual property, and fundraising activities.

Form 1023-EZ

  • Alternative to 1023 released in 2014
  • Organization self-certifies that it meets the requirements for exemption
  • Expected to annual gross receipts ,/=$50,000
  • Assets <$250,000
  • Must be formed in the U.S. and have a U.S. address
  • Filing Fee