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Frequently Asked Questions

What are the requirements for an organization to qualify for 501(c)(3) tax-exempt status?

To qualify for 501(c)(3) tax-exempt status, an organization must meet certain requirements and follow specific procedures. The process involves filing an application with the IRS, which includes providing a description of the organization's activities, its articles of incorporation, an Employer Identification Number (EIN), policies and bylaws, publications, printed materials, and financial information. A filing fee of $600 is also required. The application process can be challenging, and it's recommended that organizations hire an attorney specializing in nonprofits to assist with the application. The IRS typically takes three to six months to review the application, but this can be delayed if there are errors or incomplete information. Smaller organizations with projected annual revenue below $50,000 can file Form 1023-EZ, which is a simplified application process. This form can only be submitted online and usually takes two to four weeks to process. Regardless of the form used, preparation and attention to detail are crucial for a smooth application process and quick approval. Organizations should understand what 501(c)(3) means, the qualification requirements, and the incorporation laws of their state. They should also ensure their organizational structure meets the requirements for both incorporation and tax-exempt status.
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