COST TO FORM YOUR CORPORATION AND OBTAIN YOUR 501(C )(3) EXEMPTION RULING LETTER:
- Please review our “More Great Samples,” for we have written this Manual to help you form your own non-profit corporation. It contains a step by step guide with sample letters to the Secretary of state. More importantly, it has sample Articles of Incorporation, and excellent Biblical church by-laws. Your cost for this manual and CD is only $90.00, plus S&H of $10.80 for a total of only
- We have included the name of a ministry that will help you fill out and file the IRS Form 1023* to get your 501 (C )(3) exemption ruling letter. For his services, he asks for a donation of only
- The IRS will charge you a fee for reviewing the Form 1023 exemption application,
- The state of California [as does all other states], charges a “Filing fee,” NOTE – Fees for other states may well be higher, [or even lower]
- AND [in CA] you will need to file Form FTB3500 with the Franchise Tax Board to be exempted from paying the annual Tax of $800.00.
- The total costs, for all of the above, in the state of California [Note - each state's filing fee varies] is
* The church is NOT required to file the IRS Form 1023. The church is automatically 501(c)(3) and exempt from federal income tax, IF it is structured properly. **See Below
We have written on this in greater detail in “The Church Administration ‘How To’ Manual,” 3: pages 3, 4, 5, and 6.
The Para-church organization IS required to file the Form 1023 within 27 months. What is a Para-church ministry? It is any ministry that is not structured specifically to be a church.
HAVING SAID THAT, there is some value in the church filing the Form 1023. The benefits are:
- More easily able to get the church property off the tax rolls; [Some County Property Tax Assessors require the church to produce a "Determination Letter," and yet most do not. Check in your area to see what is required.
- To obtain a Bulk Mailing Permit from the postal service, they will require you to furnish an IRS Determination Letter. If you don’t have a letter, you cannot have a bulk mailing permit.
- If someone is developing an estate plan, and wants to leave the ministry funds, the "Estate Planner" may insist on seeing the churches IRS "Determination letter."
- If the ministry wants to apply for Grants, or other "Faith based" funds you are required to have an IRS "Determination Letter," to qualify.
Any other "Benefits" in having this letter are quite minimal, but remember – you can always get the letter at a later time, with no penalties, if you ever feel a need to do so.
POINT – It is an expense you do not have to face in the start up phase of your church.
THE "START UP COSTS" for a new church 'could' be $200.00 or less ** [if you choose to not file the Form 1023 with the IRS]
** You can easily determine this fact for yourself by looking at the IRS’s instruction sheet on how to fill out this Form. <http://www.irs.gov/pub/irs-pdf/i1023.pdf> Look carefully on the first page of the instruction sheet, right hand side. See:
“Form 1023 not necessary. The following types of organizations may be considered tax exempt under section 501(c)(3) even if they do not file Form 1023.
* Churches, including synagogues, temples, and mosques.
* Integrated auxiliaries of churches and conventions or associations of churches.”
SUMMARY: As shown in the IRS’ own printed word – the church is exempt of all Federal taxes, even if they do not file the Form 1023.
If you would like more information about similar issues, please consider “The Church Administration ‘How To’ Manual.” This Manual, endorsed by three CPA’s, an EA and two attorneys, was updated again in January, 2011, for the 12th time, since its original publication in 1991.
The above information is provided as a service to the Body of Christ by ADMINISTRATIVE ASSISTANCE
Copyright © 2002 by Administrative Assistance
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