Understanding the steps to 501(c)(3) status
The 7 Rivers Region has a strong tradition of giving — and no shortage of nonprofit organizations working to make life better in our communities. From children’s charities and education to the arts and humanities, our neighbors are finding ways to do good, together.
Many of these organizations operate under what’s known as 501(c)(3) status — a reference to their designation under the Internal Revenue Code. This status exempts qualifying organizations from federal income tax and often state and local taxes as well, including sales, use, and property taxes. It also allows donors to deduct their contributions from their federal income tax, and it opens the door to foundation grants and reduced postal rates on nonprofit mailings.
What is a 501(c)(3)?
The 501(c)(3) designation is reserved for charitable, educational, scientific, religious, and literary organizations. Other types of nonprofits fall under different IRS codes — for example, 501(c)(4) applies to social welfare organizations, 501(c)(5) to labor and agricultural groups, and 501(c)(14) to credit unions. Each carries its own requirements, but all are nonprofits, meaning any revenue supports the organization’s mission rather than generating profit for individuals.
How to apply for 501(c)(3) tax-exempt status
Getting 501(c)(3) status isn’t a quick process. The IRS maintains high standards and requires detailed applications — plus careful record-keeping once approved to ensure ongoing compliance. The IRS wants to be sure no personal benefits are going to officers or directors, and that the organization is not being used to sidestep tax obligations.
In Wisconsin, the process begins by forming a non-stock corporation through the Wisconsin Department of Financial Institutions. That involves filing articles of incorporation, adopting bylaws, and obtaining a federal Employer Identification Number (EIN) from the IRS. Once those steps are complete, the nonprofit may apply for federal tax-exempt status by filing IRS Form 1023 or the simplified Form 1023-EZ (if eligible).
The full Form 1023 application is about 15–20 pages long and asks for comprehensive information about the organization's structure, fundraising methods, planned activities, and leadership. The Form 1023-EZ, introduced in 2014, is a much shorter, online-only version available to smaller organizations (typically with projected gross receipts under $50,000 and assets under $250,000).
501(c)(3) application fees and timelines
The filing fee for Form 1023-EZ is currently $275, while the fee for the standard Form 1023 is $600. Processing time varies; approvals for Form 1023-EZ can come within a few weeks, while full applications may take several months. It’s not uncommon for the IRS to request clarification, which can add time to the process.
Do you need a lawyer to start a nonprofit?
An experienced nonprofit or corporate attorney can be a valuable partner. They can help you assess whether your organization meets the IRS’s standards, prepare a strong application the first time around, and avoid costly delays or repeat filings. They can also guide you through annual compliance requirements to help ensure you maintain your hard-won tax-exempt status.
Additional resources on 501(c)(3) formation
To learn more about the application process and requirements, visit irs.gov/charities-and-nonprofits or review IRS Publication 4220: Applying for 501(c)(3) Tax-Exempt Status. You can also find helpful incorporation resources on the Wisconsin Department of Financial Institutions website. Additionally, if you're a La Crosse County nonprofit seeking guidance or community connections, La Crosse Area Community Foundation can be another helpful resource — whether you're just starting out or looking to grow your impact.
