Irs Form 1023

[drdino]

I have put this off for as long as I can but I have a client that wants me to set up a 501c3. The corporate seal has been obtained. It is now time for the IRS 1023 to be submitted. I have tried to outsource this but I have no takers. No one wants to touch this as there is considerable time and no profit in it whatsoever so they say. The charity will be small and they have had an estimate of between $3000 and $4500 to prepare in NY.

I am willing to take this case on but I have never prepared one. I have researched this all summer and have a few guides I purchased. I have plenty of time to prepare this but I wouldn't even know how to begin to price this. My firm has already set up the Corp but that was at a discounted rate as well as these are long term clients.

I have read that it can take 10-12 hrs to prepare. And it can take up to 9 months to be accepted. it will be a small charity in the less than 25000 assets. Any help or comments or suggestions would be appreciated. Anyone with experience? It wont take much to talk me out of this one.

Thank You.

[erchess]

What do you bill per hour?

The first decision is what do you charge per hour in the off season? Even if you charge by the form for returns you know or can figure out what that works out to as an approximate hourly fee in season. Then there is the discount if any for the fact this is offseason. You only need to make that discount if you are looking for more work in the offseason. Then you are apparently giving these people an additional discount for being long time clients. Once those are taken out that is what you charge for this job. You can quote a lump sum price and then be stuck if it takes a lot longer than you thought or you can quote an hourly rate and tell them you think it will be around y hours but you can't promise that.

Another thing you have to think about and should already have discussed with your client is how much additional use you expect to get from the knowledge you gained doing the research. Personally, I'd love to do more nonprofits so I would not charge for research. On the other hand if you really did not want to do this then you should have told them you would need to charge them at leas $$$ for research. Since you probably didn't do that it's too late to do it now but keep this in mind the next time someone wants you for an engagement involving substantial research.

[Uncle Sam]

Form 1023

I agree - this is no easy form to complete.
Having done a few in recent years I know how exhaustive it can be.
You need to know exactly what is being asked for in responding to the questions,
have as much promotional literature regarding the organization's structure, its policies and procedures (in pre-written form), who is going to be the decision makers, are there going to be any conflicts of interests and/or what safeguards you have in place to avoid it, any foreign operations, political action activities, etc.
Much of these changes occurred after 9/11, where Form 990 was completely revamped
3 years ago.
You also need to determine your state's reporting requirement.
You stated you're in New York - my state. Regardless of which Form 990 series is filed with IRS, there's a CHAR500 form filed with the NYS Attorney General's Office which is a 4-page document (and a sliding fee depending on size of assets and gross revenue) where you need to attach a copy of 990.

The fees you stated are not out of range - as this is a highly technical area and is very detail oriented in preparing.

There's also an application fee that must be submitted with the 1023 application - which ranges from $ 300 to $ 800 (I believe).- Form 8718,

[Snaggletooth]

Not the Gates Foundation

I've fooled with a couple of non-profits and did 990s until 3-4 years ago. As there is a $25,000 threshold filing requirement, I finally quit for these small non-profits. The 990 doubled in size and content. I also sent in a 1023 for one of them, and it was returned because a $900 user fee was not sent in with it. This amount was almost equal to the total annual revenue and expenses, and the non-profit just simply could not afford it. In fact, I was somewhat involved in the charity myself so I was not charging them for any of this misery.

I essentially took the position the IRS could take their 990 and 1023 and cram it. Everyone seems to want a 501(c)(3) which assures deductibility, but failure to have a 501(c)(3) does not by itself create non-deductibility.

I will also state that it doesn't surprise me to hear of practitioners charging $3000 to fool with this. There is no end to the requirements. Additionally, many operatives of the charity expect work to be done for free or at an extremely reduced rate. When they hear of a $3000 fee just to get their taxes done, their jaw drops. Even if the dollar volume is minimal, the complexities have become untenable to do this work for peanuts.

Unless you have the Gates Foundation, St. Jude Hospital, or some substantial dollars flowing in-and-out of this non-profit, I say forget it.

[kpangelinan]

I've fooled with a couple of non-profits and did 990s until 3-4 years ago. As there is a $25,000 threshold filing requirement, I finally quit for these small non-profits. The 990 doubled in size and content. I also sent in a 1023 for one of them, and it was returned because a $900 user fee was not sent in with it. This amount was almost equal to the total annual revenue and expenses, and the non-profit just simply could not afford it. In fact, I was somewhat involved in the charity myself so I was not charging them for any of this misery.

I essentially took the position the IRS could take their 990 and 1023 and cram it. Everyone seems to want a 501(c)(3) which assures deductibility, but failure to have a 501(c)(3) does not by itself create non-deductibility.

I will also state that it doesn't surprise me to hear of practitioners charging $3000 to fool with this. There is no end to the requirements. Additionally, many operatives of the charity expect work to be done for free or at an extremely reduced rate. When they hear of a $3000 fee just to get their taxes done, their jaw drops. Even if the dollar volume is minimal, the complexities have become untenable to do this work for peanuts.

Unless you have the Gates Foundation, St. Jude Hospital, or some substantial dollars flowing in-and-out of this non-profit, I say forget it.

I wouldn't flat fee something like this and I'm with Snaggletooth on this one.....walk away or have them sign an agreement to bill hourly....I've done 2 this past year and like already mentioned, the requirements, phone calls, faxing, etc......are endless.