Income earned by the organization is exempt from federal income tax. Donations are tax deductible for donors.
Eligible to receive private and public grants. Credibility in the nonprofit community.
Lower postage rates on corporate mailings. Reduced rates for radio and public service announcements in the local media.

Federal Tax-Exempt Status

$299*+ IRS fee
  • *Annual revenue must be under $50k
  • Get Tax Exempt Status While You Wait
  • IRS Fee: $400 for short form + 3% CC fee
  • Fast, Accurate Processing
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  • Approval or Money Back
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How it works

1. Complete our online form

Get started on our easy step-by-step form, or call us at 877-394-6299. Our experts are here to consult with you and walk you through the form.

2. We file the documents

We prepare and file the necessary paperwork with your state government. Our experts review each application to ensure accurate and correct filings.

3. Receive approved articles.

Once approved by your state, your approved articles of formation will delivered to you via e-mail or physical mail (varies by state). That’s it!
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The benefits of having 501(c)(3) status include exemption from federal income tax and eligibility to receive tax-deductible charitable contributions. To qualify for these benefits, most organizations must file an application with, and be recognized by, the IRS as described in this publication. Another benefit is that some organizations may be exempt from certain employment taxes.

Individual and corporate donors are more likely to support organizations with 501(c)(3) status because their donations can be tax deductible. Recognition of exemption under section 501(c)(3) of the IRC assures foundations and other grant-making institutions that they are issuing grants or sponsorships to permitted beneficiaries.

An IRS determination of 501(c)(3) status is recognized and accepted for other purposes. For example, state and local officials may grant exemption from income, sales or property taxes. In addition, the U.S. Postal Service offers reduced postal rates to certain organizations.

Typically, IRS 501(c)(3) approval takes between 2 and 12 months, inclusive of likely written follow-up questions. Sometimes it takes a little less; sometimes a little more.

While the IRS is processing your application, you are allowed to operate with tax-exempt status. Why Wait? Get Started Today!

There are three key components for an organization to be exempt from federal income tax under section 501(c)(3) of the IRC. A not-for-profit (i.e., nonprofit) organization must be organized and operated exclusively for one or more exempt purposes.

Organized — A 501(c)(3) organization must be organized as a corporation, trust, or unincorporated association. An organization’s organizing documents (articles of incorporation, trust documents, articles of association) must: limit its purposes to those described in section 501(c)(3) of the IRC; not expressly permit activities that do not further its exempt purpose(s), i.e., unrelated activities; and permanently dedicate its assets to exempt purposes.

Operated — Because a substantial portion of an organization’s activities must further its exempt purpose(s), certain other activities are prohibited or restricted including, but not limited to, the following activities. A 501(c)(3) organization:

must absolutely refrain from participating in the political campaigns of candidates for local, state,or federal office;
must restrict its lobbying activities to an insubstantial part of its total activities;
must ensure that its earnings do not inure to the benefit of any private shareholder or individual;
must not operate for the benefit of private interests such as those of its founder, the founder’s family, its shareholders or persons controlled by such interests;
must not operate for the primary purpose of conducting a trade or business that is not related to its exempt purpose, such as a school’s operation of a factory; and
may not have purposes or activities that are illegal or violate fundamental public policy.
Exempt purpose — To be tax exempt, an organization must have one or more exempt purposes, stated in its organizing document. Section501(c)(3) of the IRC lists the following exempt purposes: charitable, educational, religious, scientific, literary, fostering national or international sports competition, preventing cruelty to children or animals, and testing for public safety.

501(c)(3) Organizations

The most common types of 501(c)(3) organizations are charitable, educational, and religious.

Charitable organizations conduct activities that promote:

relief of the poor, the distressed, or the underprivileged
advancement of religion
advancement of education or science
erection or maintenance of 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
combating community deterioration and juvenile delinquency
Educational organizations include:

schools such as a primary or secondary school, a college, or a professional or trade school
organizations that conduct public discussion groups, forums, panels, lectures, or similar programs
organizations that present a course of instruction by means of correspondence or through the use of television or radio
museums, zoos, planetariums, symphony orchestras, or similar organizations
nonprofit day-care centers
youth sports organizations
Religious

The term church includes synagogues, temples, mosques, and similar types of organizations. Although the IRC excludes these organizations from the requirement to file an application for exemption, many churches voluntarily file applications for exemption. Such recognition by the IRS assures church leaders, members, and contributors that the church is tax exempt under section 501(c)(3) of the IRC and qualifies for related tax benefits. Other religious organizations that do not carry out the functions of a church, such as mission organizations, speakers’ organizations, nondenominational ministries, ecumenical organizations, or faith-based social agencies, may qualify for exemption. These organizations must apply for exemption from the IRS. See Publication 1828, Tax Guide for Churches and Religious Organizations, for more details.

Public Charities and Private Foundations

Every organization that qualifies for tax-exempt status under section 501(c)(3) of the IRC is further classified as either a public charity or a private foundation. Under section 508(b) of the IRC, every organization is automatically classified as a private foundation unless it meets one of the exceptions listed in sections 508(c) or 509(a).

For some organizations, the primary distinction between a classification as a public charity or a private foundation is the organization’s source of financial support. Generally, a public charity has a broad base of support while a private foundation has very limited sources of support. This classification is important because different tax rules apply to the operations of each. Deductibility of contributions to a private foundation is more limited than deductibility of contributions to a public charity. See Publication 526, Charitable Contributions, for more information on deductibility of contributions.

In addition, private foundations are subject to excise taxes that are not imposed on public charities. For more information about the special tax rules that apply to private foundations, see Publication 4221-PF, Compliance Guide for 501(c)(3) Private Foundations and the Life Cycle of a Private Foundation website on www.irs.gov/eo.

Organizations statutorily classified as public charities under section 509(a) of the IRC are:

churches;
schools;
organizations that provide medical or hospital care (including the provision of medical education and in certain cases, medical research);
organizations that receive a substantial part of their support in the form of contributions from publicly supported organizations, governmental units, and/or from the general public;
organizations that normally receive not more than one-third of their support from gross investment income and more than one-third of their support from contributions, membership fees and gross receipts from activities related to their exempt functions; and
organizations that support other public charities.
If the organization requests public charity classification based on receiving support from the public, it must continue to seek significant and diversified public support in later years. Beginning with the organization’s sixth year of existence and for all succeeding years, the organization must demonstrate in its annual return that it receives the required amount of public support. If the organization does not meet the public support requirement, it could be reclassified as a private foundation.

In addition, to avoid unexpectedly losing its public charity classification, the organization should keep careful track of its public support information throughout the year, so that it will have the information it needs to complete Schedule A, Form 990 or 990-EZ. Unless the organization is committed to raising funds from the public, it may be more appropriate to consider an alternate statutorily based public charity classification. See Publication 557, Tax-Exempt Status for Your Organization, for assistance with determining how your organization would be classified.

While conferring benefits on 501(c)(3) organizations, federal tax law also imposes responsibilities on organizations receiving that status.

Recordkeeping,

Section 501(c)(3) organizations are required to keep books and records detailing all activities, both financial and nonfinancial. Financial information, particularly information on its sources of support (contributions, grants, sponsorships, and other sources of revenue) is crucial to determining an organization’s private foundation status. See Publications 4221-PC and 4221-PF, Publication 557, and the instructions to Forms 990, 990-EZ, and 990-PF for more information.

Filing Requirements,

Annual Information Returns – Organizations recognized as tax exempt under section 501(c)(3) of the IRC may be required to file an annual information return: Form 990, Form 990-EZ, 990-N (see below) or Form 990-PF along with certain schedules that may be required for your organization. Certain categories of organ- izations are excepted from filing Form 990 or Form 990-EZ, including churches.

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See the instructions with each of these forms for more information. See the listed publications and instructions in the “Recordkeeping” section above for more infor- mation and guidance.

Annual Electronic Notice – To meet their annual filing requirement, organizations with gross receipts normally $50,000 or less may choose to submit an annual electronic notice using Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required To File Form 990 or 990-EZ. The e-Postcard can only be filed electronically; there is no paper version. For more information about the e-Postcard, go to www.irs.gov/Charities-&-Non-Profits.

Any organization that fails to file a required annual return or notice for three consecutive years will automatically lose its tax-exempt status, by act of law, as of the due date of the return for the third consecutive year.

Unrelated Business Income Tax – In addition to filing Form 990, 990-EZ, or 990-PF, an exempt organization must file Form 990-T if it has $1,000 or more of gross income from an unrelated trade or business during the year. The organization must make quarterly payments of estimated tax on unrelated business income if

it expects its tax liability for the year to be $500 or more. The organization may
use Form 990-W to help calculate the amount of estimated payments required. In general, the tax is imposed on income from a regularly carried-on trade or business that does not further the organization’s exempt purposes (other than by providing funds). See Publication 598, Tax on Unrelated Business Income of Exempt Organizations, and the Form 990-T instructions for more information.

Disclosure Requirements,

Public Inspection of Exemption Applications and Returns – Section 501(c)(3) organizations must make their applications (Form 1023 or 1023-EZ) and the annual returns (Form 990, Form 990-EZ or Form 990-PF) available to the public for inspection, upon request and without charge (except for a reasonable charge for copying). Each annual return must be made available for a three-year period starting with the filing date of the return. The IRS is also required to make these documents available for public inspection and copying. These documents must be made available at the organization’s principal office during regular business hours. The requests may be made in person or in writing. See Publication 557 for more information.

For tax years beginning after August 17, 2006, section 501(c)(3) organizations that file unrelated business income tax returns (Forms 990-T) must make them available for public inspection, and the IRS must make those returns publicly available. Organizations should not include private information of donors or other individuals, such as a social security number, in any information return.

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Charitable Contributions—Substantiation and Disclosure – Organizations that are tax exempt under section 501(c)(3)of the IRC must meet certain requirements for documenting charitable contributions. The federal tax law imposes two general disclosure rules: 1) a donor must obtain a written acknowledgment from a charity for any single contribution of $250 or more before the donor can claim a charitable contribution on his/her federal income tax return; 2) a charitable organization

must provide a written disclosure to a donor who makes a payment in excess of $75 partly as a contribution and partly for goods and services provided by the organization. See Publication 1771, Charitable Contributions – Substantiation and Disclosure Requirements, for more information.

Recordkeeping Requirements,

A donor cannot claim a tax deduction for any contribution of cash, a check or other monetary gift made on or after January 1, 2007, unless the donor maintains a record of the contribution in the form of either a bank record (such as a cancelled check) or a written communication from the charity (such as a receipt or a letter) showing the name of the charity, the date of the contribution, and the amount of the contribution.

Don’t delay. The earlier you file the better.

Most organizations must file this application by the end of the 27th month after they were legally formed.

Formation date: A corporation is legally formed when its articles of incorporation are filed with the state; an unincorporated association is legally formed when its organizing document is adopted by the signature of at least two individuals; and a trust is legally formed when all non-charitable interests in the trust property expire, or when it is funded if there are no non-charitable interests.

An organization that is not a private foundation is not required to file an application unless its annual gross receipts are normally more than $5,000. An organization must file an application within 90 days of the end of the tax year in which it exceeds this threshold.

Example 1: An organization that was created on January 1, 2013, and exceeds the gross receipts threshold, must file an application by April 30, 2015.

Example 2: An organization that was created on January 1, 2012, but did not exceed the gross receipts threshold until its tax year ending December 31, 2013, must file an application by March 31, 2014.

An organization that files its application before the deadline will usually be recognized as tax exempt under section 501(c)(3) of the IRC from the date of its creation, if it meets exemption requirements. An organization that files an application after the deadline will usually be recognized as tax exempt from the date of the application. It may also request exemption retroactive as of the date of creation. See the instructions to the application form for more information.

Determination Letter,

The IRS tax specialist reviewing an application may request additional information in writing. If all information received establishes that an organization meets the requirements for exemption, the IRS will issue a determination letter recognizing the organization’s exempt status and providing its public charity classification. This is an important document that should be kept in the organization’s permanent records.

While an organization’s application is waiting for processing by the IRS, the organization may operate as a tax-exempt organization.

Most organizations are required to file an annual information return (Form 990, Form 990-EZ or Form 990-PF) or electronic notice (Form 990-N) while their application for exemption is pending. An organization’s exempt status can be automatically revoked while its application is pending if it has not filed a required return or notice for three consecutive tax periods after its formation date. These returns are subject to public disclosure. If the organization has unrelated business income of more than $1,000, it must also file a Form 990-T. See Publication 4221-PC or 4221-PF for more information.

Although donors have no assurance that contributions are tax-deductible for federal income tax purposes until the application is approved, contributions
made while an application is pending would qualify if the application is approved. However, if the application is disallowed, contributions would not qualify. Moreover, the organization would be liable for filing federal income tax returns unless its income is otherwise excluded from federal taxation.

The EO website (www.irs.gov/charities) provides information about how to find out about the status of an application for tax-exempt status.

How many board members does my Nonprofit organization need?

nitially, the founders and/or persons who oversee the operation of your Nonprofit serve as its board members. In most states, one person may serve as the sole director for incorporation purposes. However, when submitting a 501(c)(3) application or other type of tax exempt application, the IRS almost always requires at least three distinct individuals to serve on the board of directors.

Keep in mind, you may change your board from time to time and that your board may be “reasonably” compensated. In general, the IRS prefers directors who are volunteers. Don’t worry if you initially only have one director. You’ll have the chance to add more directors later.

Answer: It can be an LLC if the LLC is owned only by Section 501(c)(3) organizations or governmental units or wholly owned instrumentalities of a state or political subdivision thereof and the LLC satisfies the 12 conditions described in an IRS paper called “Limited Liability Companies as Exempt Organization Update.” The LLC cannot have individuals or nonexempt organizations as members, and its organizing documents must contain certain language required by the IRS. The 12 conditions are:

1. The organizational documents must include a specific statement limiting the LLC’s activities to one or more exempt purposes.

2. The organizational language must specify that the LLC is operated exclusively to further the charitable purposes of its members.

3. The organizational language must require that the LLC’s members be section 501(c)(3) organizations or governmental units or wholly owned instrumentalities of a state or political subdivision thereof (“governmental units or instrumentalities”).

4. The organizational language must prohibit any direct or indirect transfer of any membership interest in the LLC to a transferee other than a section 501(c)(3) organization or governmental unit or instrumentality.

5. The organizational language must state that the LLC, interests in the LLC (other than a membership interest), or its assets may only be availed of or transferred to (whether directly or indirectly) any nonmember other than a section 501(c)(3) organization or governmental unit or instrumentality in exchange for fair market value.

6. The organizational language must guarantee that upon dissolution of the LLC, the assets devoted to the LLC’s charitable purposes will continue to be devoted to charitable purposes.

7. The organizational language must require that any amendments to the LLC’s articles of organization and operating agreement be consistent with section 501(c)(3).

8. The organizational language must prohibit the LLC from merging with, or converting into, a for -profit entity.

9. The organizational language must require that the LLC not distribute any assets to members who cease to be organizations described in section 501(c)(3) or governmental units or instrumentalities.

10. The organizational language must contain an acceptable contingency plan in the event one or more members ceases at any time to be an organization described in section 501(c)(3) or a governmental unit or instrumentality.

11. The organizational language must state that the LLC’s exempt members will expeditiously and vigorously enforce all of their rights in the LLC and will pursue all legal and equitable remedies to protect their interests in the LLC.

12. The LLC must represent that all its organizing document provisions are consistent with state LLC laws, and are enforceable at law and in equity.

The IRS does charge a user fee for each application. If you qualify for the 1023 EZ form, the IRS fee is only $400. Our fee is $299 to file the short form. We can only file on your behalf is your annual revenue is under $50,000.

The qualification for the form depends on a number of factors, including time in business and gross revenue (under $50,000). The vast majority of our clients qualify.

Once we determine if you qualify, we will send you an invoice to pay the IRS fee.

Why choose EZ Incorporate for your needs?

Get Approved or Your Money Back

Our experts review each application to make sure it is filed correctly.
Our experience ensures that your business name and application is approved. We ensure approval or your money back.

Fast Processing

We process and send out all applications within 24 hours of your order.
The processing time on the state’s side varies from state to state (usually 3-14 business days). We always complete our end within 24 hours.

Dedicated Lifetime Support

We provide phone, email, and live chat support to all our customers forever.
Got questions? Our support team works around the clock for you. We generally reply to all questions and inquiries same day.
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They resolved every question on the spot. If I knew what I was going to get before the order I would have gladly paid more it was that good.

Kevin Song, Dulcet Fashion Inc.
My business partner and I decided start an LLC with S corporation benefits and did not know the first thing about setting it up. After looking at the paperwork involved we were very unsure about doing it ourselves.

Thankfully we found EZ incorporate early on. They broke down the process into step by step pieces that were easy for us amateurs to understand.

Elmer Ramilo, R&E Electric
This is the most dependable and informative incorporation service out there.

No one else was willing to answer my 20 some questions and walk me through it step by step.

Go with EZ Inc. You’ll know you are in good hands after the first phone call

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