IRS Tax: IRS IS Raising Fees for Organizations Applying for Tax-Exempt Status and Introducing Cyber Assistant

The IRS (Internal Revenue Service) announced that user fees for application exemption Forms 1023, 1024, 1028 and group exemption letters will increase, beginning 2010.

IRS told that an adjustment to all application fees once every 2 years is an obligation by the law, and the last increase of this kind was in 2006. When determining the fees, the IRS looks into many variables including 'Average Hours per Case' and 'Average Cost per Staff Hour'. The increase in 2010 is the result of inflation and raised cost of doing business, the IRS told.

The new rates for the fees will be:
- $400 for an organization with gross receipts amount of $10,000 or below annually for a 4-year period
- $850 for an organization with gross receipts amount of over $10,000 annually for a 4-year period
- $3,000 for group exemption letters.

The IRS will also release a web-based software program called Cyber Assistant. Cyber Assistant will help Form 1023 applicants complete their forms more accurately, warning users about errors and  asking for missing information. Other than speeding the application process, less errors will result in less necessity for a contact between the IRS and the applicant and this eventually will reduce the cost of application to the IRS, thanks to Cyber Assistant. The IRS will then be able to charge lower application fees as a result of reduced cost. Cyber Assistant software will be usable only for Form 1023 applications for 501(c)(3) tax-exempt status.

After the release of Cyber Assistant, the IRS will change fees once again and will begin charging fees according to usage of the Cyber Assistant program:
- Applicants using Cyber Assistant for preparing Form 1023 will be charged a fee of $200, regardless of size (without looking into the amount of gross receipts)
- All other applicants which are not using Cyber Assistant for preparing Form 1023 will be charged a fee of $850, again, regardless of size

Cyber Assistant will be released in 2010.


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