Non-profit 501(c)(3) Application Now Easier
New application process for 501(c)(3) status.
Filing for 501(c)(3) tax-exempt status has streamlined to a shorter process, both in time and in required paperwork. For those interested in filing for non-profit status in North Carolina and around the country, the new system is expected to help charitable organizations become established in less time.
What’s different about the 501(c)(3) application process?
Less paperwork. Previously a nearly thirty-page document was required in the application process. Now the application is a mere three pages. Click here for the new Form 1023-EZ.
More digital. Online filing of the Form 1023-EZ is mandatory. This allows immediate receipt so that the IRS can begin reviewing tax status eligibility. A user fee of $400.00 is required upon filing the application online.
Fewer delays. Processing of shorter application forms will reduce the time it takes for organizations to be reviewed. The IRS reported that many applications have taken approximately nine months to complete the review process, but the new simplified application for smaller charities* should help reduce the overall wait time.
Starting a 501(c)(3) in North Carolina requires paperwork in addition to federal filing requirements. Articles of incorporation must be filed with the Secretary of State, organizational bylaws must be created (prior to filing for 501(c)(3) status), and a Federal Employer Identification Number (FEIN) must be obtained. The North Carolina Center for Nonprofits provides information and assistance. Once 501(c)(3) status is approved, organizations in North Carolina must:
Apply to the North Carolina Department of Revenue for state tax exemptions, such as corporate income tax and franchise tax. Organizations can also apply for local property tax exemption by contacting their local County Tax Office.
1. Apply for a Charitable Solicitation License through the Solicitation Licensing Branch of the Secretary of State. The license is required of all charities raising $25,000 or more in a calendar year, and it is also required to apply for exemption if charities anticipate raising less than $25,000.
2. Request a State Withholding Identification Number if the non-profit will have paid employees.
3. There are additional requirements depending on the number of employees operating under a non-profit and if taxable products are sold. Review requirements with a North Carolina tax attorney to ensure compliance.
*Keep in mind, not every charitable organization may qualify to use the new Form 1023-EZ. Eligible organizations must have assets less than $250,000 and gross receipts less than $50,000.