How to Obtain an Independent Federal 501(c)(3) Status

The AGS requires that each affiliate become incorporated within their state and obtain independent federal 501(c)(3) status. This is the recognition of non-profit status that the Internal Revenue Service gives educational, scientific, charitable and religious organizations. An affiliate should take steps to apply for 501(c)(3) status early in its development, since the entire process takes approximately one year. The AGS National office Finance and Administration department can help affiliates with this process.

Step 1: Incorporation with the State
Before an organization can become a tax-exempted entity, it must first show that it is an approved corporation within its state and that it exists for non-profit reasons. Incorporation also protects the affiliate's officers and members in case of litigation or bankruptcy. Usually, an organization's by-laws can be used within its articles of incorporation, but the government requires that the by-laws and articles of incorporation be two separate documents. The affiliate should contact a lawyer to assist it in this process.

Process for Applying 1. Contact your state department or the attorney general's office (charities), located in your state capital, and ask how to develop articles of incorporation for your organization. If your organization covers more than one state, file your incorporation in the home state of the current or acting president.
2. Develop and file for you affiliate's articles of incorporation. Make sure that your articles cover all the requirements of your state. The state will either send you an application, or request that you send them a notarized copy of your organization's articles of incorporation or by-laws. Make sure to include the by-laws, the fee for incorporation (this will vary by state), and an officer's telephone number in case the state has any questions.
3. The articles must be approved by the secretary of state or another appropriate official of the state.

Step 2: Tax-Exempt Status with the Federal Government
Each state affiliate should file for an individual 501(c)(3), which makes the affiliate a legal entity independent from the national AGS. The AGS advises that the affiliate fill out the forms and then consult an accountant before filing with the IRS. Since your organization is a non-profit group, a local accountant may be willing to offer his or her services pro bono.

The organization should start the process of applying for 501(c)(3) status at the same time that the articles of incorporation are filed. The application must be filed with the IRS at least 15 months from the date of incorporation. An organization may claim non-profit status for the period of its existence, not from its date of incorporation.

Not-for-profit status is necessary so that the affiliate does not have to pay tax on its expenditures or revenues and so that the affiliate is eligible for tax-deductible contributions from pharmaceutical companies, foundations, and individuals. Affiliates should also consider applying for tax-exempt status in their respective state in order to have relief from state sales and property tax. This is a separate filing process that should be handled by your accountant.

Documents Required to File for 501(c)(3)

• Complete and attach Form SS-4
• Complete and sign Form 1023
• Enclose financial statements including current budget, detailed breakdown of financial support, revenue, and expenses. If your organization is new, or less than one year, submit proposed budgets for two years
• Articles of incorporation - signed by the affiliate's officers, approved by the state and notarized
• Signed by-laws (signed by the affiliate president or executive officer)
• - These two above documents should be conformed copies. A conformed copy is a copy that agrees with the original and all amendments to the original. The president or executive officer should sign this. It should also state: "This document is a complete and accurate copy of the original."
• Complete and attach Form 8718

Send the 501(c)(3) application form and supporting materials to the appropriate IRS office. Remember to provide them with the name and telephone number of someone to contact during business hours in case they need additional information You must file with the IRS district director where your organization's principal office is located. The district director will make the final decision on your organization. If the director is unable to make a decision, it will be forwarded to the national IRS office for a ruling. Be prepared to answer any questions or provide additional information about your affiliate. Wherever possible, the AGS will assist in answering any questions. The IRS will notify you in writing once a decision has been made.

For more information call 1-800-829-1040.