Does my organization qualify for 501(c)(3) status?
In order to qualify as tax-exempt under the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes: charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. “Charitable” purposes includes relief of the poor, distressed, and underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.
What are the benefits of obtaining 501(c)(3) tax-exempt status with the IRS?
Obtaining 501(c)(3) tax-exempt status with the IRS is beneficial for three principal reasons:
Once your 501(c)(3) application is approved by the IRS, your tax-exempt nonprofit organization enjoys several federal, state income, sales, property, and other tax exemptions.
Your tax-exempt status increases your opportunity to receive numerous government and private grants, along with donations from individuals because contributions are tax-deductible to donors. Tax deductions inevitably encourage more individuals and corporations to donate to your charitable cause, allowing your nonprofit tax-exempt organization to expand and further develop your activities. A number of corporations are typically required by their operating rules to only donate their funds to 501(c)(3) tax-exempt organizations, so obtaining tax-exempt status is key to receiving donations.
Additionally, tax-exempt status opens doors to low cost mailing, advertising, and purchasing rates, along with other discounts and preferences.
How complex is it to form a 501(c)(3) tax-exempt nonprofit organization?
Forming a 501(c)(3) nonprofit corporation with Paint My Charity involves a simple process.
1. Answer to the best of your ability our series of questions online. Your answers are important for the completion of your 501(c)(3) tax-exempt application. Please note that this is a preliminary application form and we will follow up with a set of inquiries via email when more information is necessary.
2. We prepare and file your Articles of Incorporation with the designated Secretary of State. (This step only applies to Package 1). If your nonprofit organization is already incorporated, please be prepared to send us a copy of the filed Articles via fax/email so that we can ensure that your articles language complies with the IRS requirements.
3. After reviewing your online application in detail, we will ensure that you have answered completely and thoroughly. We will send you a set of inquiries via email when we require more information regarding your nonprofit organization. Utilizing your answers, we carefully draft your customized 501(c)(3) tax-exempt application. Please note that your communication and accessibility during this process is absolutely essential for the successful creation of your 501(c)(3) nonprofit organization.
4. We obtain your Federal Employment Identification Number (EIN). (This step only applies to Package 1).
5. We prepare customized Bylaws on behalf of your nonprofit organization. (This step only applies to Package 1).
6. Once all steps are completed, we will mail you a hard copy of all the documents so that you can sign the documents and mail it to the IRS.
I mailed out my completed application to the IRS. How long does it take to receive the 501(c)(3) approval notice?
The IRS 501(c)(3) approval process typically takes anywhere between 6 to 16 weeks. At times it may take less time or more time depending primarily on the complexity of your nonprofit and upon the volume of applications received by the IRS. If there are any follow-up inquiries by the IRS, Paint My Charity will provide assistance to your organization at no additional cost to ensure your organization’s approval.
On a case by case basis, expedited processing may be granted at the discretion of the IRS if there is a compelling reason, including:
1. A pending grant, where failure to secure the grant will have an adverse impact on the organization's ability to continue operating.
2. A newly created organization providing disaster relief to victims of emergencies.
3. IRS errors have caused undue delays in issuing a determination letter.
If you meet any of the compelling reasons aforementioned above, and you would like for us to request an expedited review with the IRS, please inquire with us directly.
What are the filing requirements each year once I am officially approved as a 501(c)(3) organization?
Once you receive your determination letter from the IRS, you will need to ensure that the organization is in compliance with federal and state filing requirements or you may jeopardize your status. The organization must submit a Form 990 on an annual basis. Forms 990, 990-EZ, and 990-N need to be filed by the 15th day of the fifth month after the close of the organization’s annual accounting period. Organizations that are not required to file Forms 990 or 990-EZ include churches and certain church-affiliated organizations, specific organizations affiliated with governmental units, subordinate organizations included in a group return filed by the parent organization, and organizations whose annual gross receipts are generally $25,000 or less. Any charity that is not required to file Forms 990 or 990-EZ need to file Form 990-N electronically. Only churches, their integrated auxiliaries, and conventions or association of churches, and subordinate organizations included in a group return are exempt from filing Form 990-N.
Each year the organization must also file an annual report with their designated state to ensure that their corporation remains in good standing.