Nonprofit, Tax-Exemption, Churches
E: kevin@callahanlawllc.com
T: 417-987-1077
Our Practices
Nonprofit, Tax-Exemption, Churches
callahan law llc has been forming the edge of nonprofit, tax-exempt organizations, and religious organizations/churches for over 25 years. In addition to publishing and teaching, we have forged new laws defining relationships between nonprofit organizations and businesses. We can help you form a new nonprofit corporation and obtain tax exemption for your organization through complex UBIT, compensation, donor, liability, spin-off, and merger issues. callahan law llc prefers to do most nonprofit services on a flat fee basis.
Flat Fees to Start Your Nonprofit.
What are you passionate about? Don’t allow the time-consuming and sometimes frustrating legalities of starting a nonprofit deter you from doing it. Have you looked at the application for tax-exemption that can be up to fifty pages and in a language you are not even sure you understand? We can help. We will guide you in decisions you have to make and create your nonprofit corporation from start to operating as a complete package on a flat fee basis. Flat fees free you to focus on what you are passionate about and allow you to accurately budget resources and interact with us without either of us thinking about what our watch says every six minutes because the meter is running.
Did you know that just forming a nonprofit corporation in your state does not make you tax-exempt? You must go IRS for that. Did you know that public charities and private foundations play by entirely different rules? We have decades of sophisticated experience and knowledge of the corporation and tax law applicable to nonprofits. We even helped write the law. Because we are so familiar with nonprofit corporations and tax-exemption law, we understand well the roadmaps and will counsel you to stay on the best route to reach your goals. We are experienced with the rules for creating the right entity in your jurisdiction; prosecuting your application for tax-exemption with IRS; forming relationships with partners and donors; taxation; compensating employees; and protecting directors, officers, and volunteers.
Our fixed fee package includes all of the steps required to create the organization and gain tax-exempt status, including:
- Meeting with you to understand your passions, purpose, programs, budget, structure, and plans;
- Securing your name;
- Writing your Articles of Incorporation in a way that will satisfy IRS requirements for tax-exemption to birth your corporation
- Filing and publishing the Articles of Incorporation;
- Obtaining a tax identification number (EIN);
- Drafting Bylaws to meet your needs;
- Preparing organizational meeting minutes that breathe life into your corporation;
- Drafting certain governance policies that the IRS recommends including, as applicable, conflict of interest, gift acceptance, document retention and destruction, joint venture, fundraising, compensation, confidentiality, travel and expense reimbursement;
- Drafting needed ancillary documents that may be called for by the business plan and that the IRS may want to review in advance, which can include scholarship guidelines, grant agreements, and resource sharing agreements;
- Drafting and filing Form 2848 Power of Attorney;
- Prosecuting your Application for Recognition of Exemption from Federal Taxation (either Form 1023-EZ, Form 1023, or 1024) and related statements;
- Representing and Advocating your nonprofit to IRS;
- Providing checklists, calendars, and forms to guide your nonprofit beyond start-up;
- Fundraising registration in state when necessary;
- Advising board members of their rights and responsibilities as directors; and
- Preparing your corporate book.
After our first meeting, we work with you and agree on a flat fee based on the nature of your organization’s activities and our experience regarding the level of documentation and follow-up that will be required to obtain exemption, the novelty and complexity of the organization’s proposed activities, as well as the number of states in which the organization must register.
Call callahan law llc now to discuss your organization at (417) 987-1077.
Frequently Asked Questions.
Call Kevin. He will discuss your dreams and desires and determine whether it qualifies for exemption. If we agree that we want to work together and believe in the potential for success of your organization, we will both sign an engagement letter laying out the exact costs and exactly what we will do. As soon as we collect some basic information from you, we will get started en route to your dreams.
We can form your corporation on the same day we meet. As soon as your corporation is formed, you can receive donations as long as we apply for tax-exemption within a certain number of months determined by IRS. We can provide you with a letter giving comfort to donors as to the tax-deductibility of their donations based upon 25 years of experience without a refusal of any application for tax-exemption. Once we have received your basic information from a simple questionnaire that we provide, we can start building your nonprofit. We can be flexible and be responsive to emergent needs if needed but can usually complete all of your documentation within a week or two.
Once the Application for Recognition of Exemption from Federal Taxation (IRS Form 1023 or 1023EZ) is submitted to IRS, it can take the IRS from several weeks to twelve months to receive a positive Determination Letter confirming your tax-exempt status. The time variance is based upon the amount of your budget, the complexity of your organization, and the number of applications that IRS is currently handling.
All fees and costs are discussed upfront. You will pay the filing fee with the state for filing your Articles of Incorporation ($25 to $150 depending on which state you file). You will also pay the User Fee to IRS to issue a Determination Letter. If your annual budget for the first three years is less than $50,000, the User Fee is $275. If your annual budget for any of the first three years exceeds $50,000, the IRS User Fee is $600. Unlike many firms, Callahan Law does charge for copies, phone calls or other routine administrative expenses when you are under a Flat Fee. If issues arise that are outside of the Flat Fee, we will discuss those issues and the costs for dealing with those issues before incurring fees.
All applications for tax-exemption are made electronically. Your application sits in line until it is assigned to a reviewer. The reviewer will either issue a determination letter upon review or send a series of questions asking for additional information. It is our philosophy when dealing with IRS to candidly provide them with enough and all appropriate information to take the action you desire and not to provide more information than is necessary. We want to paint the broadest brush strokes describing your purposes and activities to allow you to grow and expand without violating your purposes. Therefore, it can be a good sign that IRS comes back with questions before issuing your Determination Letter. This means that we did not provide too much information. Once all of the questions are answered and clarified, IRS will either issue a Determination Letter or refuse exempt status. While it is impossible to make guarantees, Callahan Law has prosecuted hundreds of applications over the past 25 years and has never had exempt status denied.
IRS will expedite the review process in limited circumstances, such as a pending grant that will be lost unless you produce a positive Determination Letter by a deadline. Expedited treatment is rare. Knowing the President of the United States and having his support can also be helpful.
You can always take donations, but you must be determined to be an exempt organization if your donors are to take a charitable exemption for the donation. If you file your Application for Recognition of Exemption from Federal Taxation within 27 months of the date of incorporation and are successful in obtaining tax-exempt status, your tax-exemption will be retroactive to the entity’s date of formation. So, you can receive donations and the donor can claim a charitable exemption as soon as you incorporate as a nonprofit corporation with the state.
Many newly-formed exempt organizations need to register to solicit funds (or apply for an exemption) depending on where they are fundraising. Once the organization is registered, until the IRS determination letter is issued, new entities should explain to potential donors that an application for tax-exempt status is pending. Donors who claim a charitable contribution deduction for their gifts before then take the risk of an adverse IRS decision.
Organizations whose status is pending can either defer acceptance of the grant if the grant maker is willing or find a fiscal sponsor. A fiscal sponsor is a recognized charitable organization that is willing to offer legal and fiscal sponsorship of the project until the organization receives its tax-exempt status.