IRS delays Cyber Assistant (again)
July 16, 2010 · Print This Article
On May 7, 2010 the IRS announced it would be delaying the release of the on-line program Cyber Assistant. This long-promised software will allow charitable organizations (including homeschool organizations) to file for 501c3 tax exempt status on-line. The IRS had previously announced that the filing fee would be lowered from $400 (or $850 depending on the organizations annual revenues) to $200 for organizations that filed using Cyber Assistant.
I had several homeschool organizations that were hoping to save $200-$650 by using the on-line filing option. Unfortunately, it won’t happen in 2010. When will the on-ling filing option be available? No telling. The IRS is not offering a new timeline.
What should your group do now if they want to apply for 501c3 tax exempt status?
Sandy Deja of 501c3Book.org has some good advice (emphasis added by me):
A 501(c)(3) has until the end of the 27th month after it is created to file its exemption application. If your organization is closing in on the end of its 27 month grace period, you should not wait for the Cyber 1023. Avoiding the hassles of missing the 27 month deadline is definitely worth the extra money.
Delayed 501(c)(3) Benefits
501(c)(3) status offers a number of benefits other than exemption from Federal income tax: deductibility for contributions, bulk mailing permits, state, local and property tax exemptions, and eligibility for foundation grants, to name a few. Only you can weigh the $650 discount against the costs of postponing these valuable benefits for your group.Reputation
In some cases, lost benefits can be recouped once the IRS recognizes 501(c)(3) status. There is one benefit, though, that once lost may be gone forever: your non-profit’s reputation. If you think there is any chance your organization will be in the news sometime soon, don’t wait for the Cyber 1023. Savvy journalists check the IRS website when writing articles about local charities. A news story pointing out that your group has not yet taken care of its IRS paperwork can do lasting damage.
So, in summary, take a look at the date you incorporated as a nonprofit within your state. If you are getting close to the 27 month window, your organization should file for 501c3 tax exempt status now and not wait for the IRS to offer their lower fee by filing through Cyber Assistant.
I can help with your 501c3 tax exempt application. See my Services page for details.
Carol Topp, CPA
Here’s the latest on the Cyber Assistant:
The National Taxpayer Advocate’s 12/31/2011 Report to Congress is critical of IRS delays in releasing the Cyber Assistant and recommends that Congress require the IRS to move forward on making it available. (You can view this report at http://www.irs.gov/advocate/article/0,,id=252216,00.htmlis.)
In response, the IRS said, “Software testing revealed problems requiring correction prior to public launch, and the IRS had to delay the release. Because the IRS must balance a number of competing information technology needs, we cannot presently predict when Cyber Assistant will be available.”
So it looks as if the Cyber Assistant is on the back burner for now.
Thank you Sandy for the update, even if it’s not what we want to hear…
Homeschool leaders, Sandy has a terrific website http://501c3book.org/ and ebook Prepare Your Own 501(c)(3) Application to help you apply for 501c3 tax exempt status. Don’t go down that road alone!