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Blank receipt form for non-profit organizations

so how do you obtain the status there are required filings with the IRS you have to first get an employment identification number the form ss4 it's fairly basic it's just outlining who you are what kind of organization so that you can decide that you qualify to have the tax identification number and then you have to either file depending upon what your current status is either a 10 23 or a 10 23 easy depending also and what activities you plan to do you may also have to file additional filings such as the lobbying expenditure test form 5768 and the power of attorney form in our firm we have that power of attorney form filed so that we can communicate with the IRS on behalf of our clients the IRS will not talk to us if we don't have that form and again this is after you've already formed as an organization so typically in as a nonprofit corporation you'd have to file with whatever states that you want to be incorporated in many organizations choose Delaware as the state that they want to be incorporated in even if they're not located there and then depending on where they are then they would have to file a separate foreign qualification application with the state that says hello I'm not incorporated in your state but I want to do business here and they'll have to have that in place before they can be able to continue to do business at the state level they'll also need to have bylaws and have to have a budget all of those things are required if you're doing the full 10 23 but we would recommend that you have them also prepared at the if you're doing the easy status because again depending upon what state you're in and if you're going to be doing fundraising those forms will have to be filed with the state as well as I mentioned earlier churches RCR automatically see trees and they do not have to file the 10 23 if you're looking at becoming other than a c3 the 10 23 is only for C 3 organizations the other organizations that would seek taxes and status would have to file a 1024 [Applause] so let's talk about the form 1023 it's a pretty lengthy process but the purpose of it really is for an organization to demonstrate one that it is going to serve the public in some way and two it has to satisfy what's called the organizational test and the operational test so it has to satisfy that it's going to be organized for ac3 purpose and then afterwards it has to demonstrate that it will continue to operate in that status it in part of underlying that will be for c3 it means that you cannot engage in any activity that would be political meaning you cannot get involved in any election campaign activity you can do some limited lobbying in fact I would encourage any organization to do some lobbying you're permitted to under the rules you just it just can't become a substantial part of your activity if you want to engage in lobbying you should look at becoming a c4 instead of a c3 the four on the organization would identify itself as a public charity or a private foundation and there is a filing fee it's it's based upon what the gross receipts are going to be it's 850 I believe if the annual gross receipts are expected to be over 10,000 otherwise it's a four-hundred-dollar filing fee so I mentioned that the purpose of the form is to really demonstrate that you're going to be a public charity that you're going to organize and operate for that purpose the other thing I should mention part of that is to that you there's no private inurnment to any individual you can pay compensation to your employees it's permitted although discouraged at the state level to pay officers and boards of directors but it is permissible as long as it's not excessive compensation and but what that really means is that you cannot have any dividends you can't have investors who can receive any kind of return on their investment so when you're filling out the form there are these are the sort of the main sections a statement of activities what is your estimate an actual budget for three years what do you or I'm sorry estimated our actual budget for three years what do you think you're going to be raising and how compensation information is going to be important here and they're going to be looking for additional information about whether or not you're going to have any international activities are you going to develop any intellectual property and they're going to want to know about your fundraising activities you should include with your application a copy of your organizing document your articles of incorporation and it should be signed the organ should be signed by a principal officer if you're including your articles you should document that they actually were filed at the state where you've been incorporated and usually you'll get something back that has marked filed on it by the state so that you can document that it was actually filed the bylaws are not organizing documents however if they have been adopted you should include a copy of that bylaws which is a whole separate CLE presentation but as a general matter bylaws are your governing document it says how you will operate you can probably find simple ones online but we would encourage when you're adopting bylaws to think carefully about how you want to govern yourselves it is the Bible so to speak whenever we're looking at challenges with our clients particularly if they're having some sort of internal dispute we have to go by what the bylaws say and you can think oh they're going to be pretty basic and we're going to be good when you get involved into a legal dispute you find out that there are a lot of challenges and so we would encourage that you think carefully when you're adopting the bylaws in addition some states have very specific requirements New York is one of them on what has to be contained in the bylaws and then unless you're doing the 10 23 easy as i mentioned you'll have to include information of financial data about how your organization is going to be funding itself and operating going forward the effective date of the exemption will recognize that it will be effective as of the date of formation so if you formed yourself as a corporation on a certain date as long as that's within twenty seven months of when the application was filed and the statuses acknowledged it will be effective back to that date if it falls outside of that 27 months then it's going to be the date that they acknowledged the application or the status if during the time period before you got the saddest you had to pay any taxes but you get the retroactive exempt status you can apply to the IRS for a refund of those texts in general the IRS processes applications in the in the order in which they were received however there is an ability to seek an expedited status I've never had to seek that I don't have personal experience and working with it but if you're a kind of organization like a disaster relief organization for obvious reasons if you're starting up something you need to be able to achieve that status quickly there is a process in order to be able to do that so achieving the status um has been historically lengthy in the process of doing that again as I said as long as you get that filed and the and I think I misspoke earlier when I said something the 27 months applies to the data when you file so as long as you file within twenty seven months of when you're formed the acknowledgment status will be retroactive so you have to pay attention to the calendar when you file your articles of incorporation so that you get your application filed in time to be able to get the status the other thing that's important to remember is once you submit that application your start to become obligated to file a Form 990 and depending upon when your fiscal year ends that could happen pretty quickly so you'll want to pay attention to the dates on that the requirement to file a Form 990 is five months and four months and 15 days after the end of your fiscal year so if you're in a a status of a 1231 May fifteenth would be your initial filing date you can get extensions up until November of that year the following year so because of the delays in processing through 10 23 and because of some concerns that were raised by the sector that the process is unduly burdensome you have a small organization that once they get started why should they have to go through this whole burden of filing out a full 10 23 they came up with a streamlined process called the 10 23 easy it's effectively a self certifying form there are concerns in the sector about the form that I mean some people have raised questions about fraud I wouldn't say that people would be intentionally engaging in any kind of fraud and using a 10 23 easy versus the full form but having been involved in this work for a long time both as a regulator and on this side of it I think the thing that I've learned the most is organizations don't know what they don't know and so if you're going to fill out a 10 23 easy it's not asking all of the same kinds of questions it's not asking about well fully what are your activity is going to be maybe or certain things that will cause you to sort of stop and think oh okay am I going to be doing those things am I going to be impacted by saying yes or no one to answer this if people are doing it without the benefit of counsel then they're not going to have the benefit necessarily of someone who can advise them properly about what some of those questions mean and at the end of the day when you're saying yes I certify that I'm going to be acting properly as a 501 C 3 it's a little dangerous however having said that the IRS is processing numerous of the 10 23 easy forms and so far they are having the ability of taking a look they have a follow-up audit process so hopefully they're going to be catching any of these concerns that I share as well as anyone who might deliberately try to use the process for fraudulent purposes and I can think of an example again going back to the disaster relief I think where we see a lot of fraud and organizations that crop up quickly and they could easily say yes we certify we're going to follow the process they get set up they get their status they accept tax-deductible contributions and then they flee before anybody can figure out what has happened truthfully though they don't need the 10 23 easy form or the C 3 status in order to be able to make that happen it happens routinely the the challenge for the regulator's is when they discover it oftentimes they've picked up and they're gone hence they're trying to catch the people that have done it is challenging so as a side message be careful who you donate to after a disaster so what is the easy form well it was released in 2013 and allows the self certification there are some organizations however that cannot use this process it really is intended for the small sort of grassroots organizations who who want to get started and gradually sort of get into the full sort of full-blown C 3 status and so it has to be somebody whose gross receipts are expected to be less than sorry can in advance for you guys it has to be somebody who's expected grocery seats are less than fifty thousand dollars and they have to have assets of less than 250,000 and this is the most important you must be formed in the United States and must have a United States address there is a filing fee associated with this I believe that is also the same four hundred dollars that would be for a full-blown 1023 easy for somebody who's less than ten thousand on the gross receipts the the IRS had issued a statement in connection with fault forming the 10 23 easy form and I think that it's interesting to just read part of it it said that the IRS receives more than 70,000 taxes and status applications for tax-exempt status each year thanks to new processes in the 2014 introduction of the easy our inventory of applications is current we've retired the monthly day for average age of pending applications and provided the following guidelines so at that time they were suggesting that within 90 days you could be expect to be contacted and after 90 days if you hadn't you could call a toll-free customer account number if you submitted an application form 1023 they were saying you could be expected to be contacted within 180 days I think that the 180 days is still fairly routine we just talked about this at a meeting inside our office the other day that we're seeing about six months on average for the status of a regular 1023 form I neglected to ask if the 90 days is still holding true for the easy but I have to assume that if one is still in place so is the other