The cost of applying for 501(c)(3) status depends largely on the size of the organization. Sufficiently small organizations that are eligible to fill out the abridged form may only have to pay a $275 user fee. Larger organizations will have to pay $600 plus the cost of an attorney, which may cost up to $15,000. Filing for 501(c)(3) status with the IRS is a crucial step for any nonprofit organization. These organizations are exempt from some federal income taxes under the U.S. Internal Revenue Code (26 U.S.C. ยง 501(c)) and is one of over 29 types of nonprofit organizations exempt from some federal income taxes.
Typically, IRS 501(c)(3) approval takes between two and 12 months, and will likely involve written follow-up questions. Sometimes it takes a little less; sometimes a little more.
To start a 501c3 tax-exempt nonprofit organization in Arizona, you must first start a nonprofit in Arizona according to the state rules and then apply for 501c3 status with the IRS.
IRS Form 1023, titled Application for Recognition of Exemption Under 501 of the Internal Revenue Code, is the tax form used by nonprofits to apply for tax-exempt status. After applying for 501(c)(3) status, it may take between three and six months to receive a determination letter confirming approval. The processing time depends on various factors, including the IRS’s workload and the completeness of your application.
To avoid delays, it is essential to be prepared. Read the instructions, and ensure your organization has completed all the steps necessary before filing. The average processing time for Form 1023-EZ is about 2-4 weeks, whereas Form 1023 can take between three and six months, and in some cases, it could take up to a year.