IRS Form 1023-EZ
In July of 2014, the IRS released Form 1023-EZ, a shortened application designed to streamline the process of issuing 501c3 determination letters.
In order to use Form 1023-EZ, your organization must meet additional eligibility requirements (see below). If your organization meets those requirements, good news! IRS Form 1023-EZ is much shorter and less complicated than Form 1023. Additionally, the IRS is essentially rubber-stamping these applications, which means the average processing time is 2-4 weeks.
How Do I Determine My Eligibility?
Before you file, you must complete the Eligibility Checklist in the form's Instructions.
A single "Yes" response to any of the questions means you are NOT eligible to file Form 1023-EZ, and you must use Form 1023 instead.
Restrictions fall into three categories:
- Size: If your average annual gross receipts are less than $50,000, and your total assets are less than $250,000, you can use this form.
- Organizational Structure: You must be a nonprofit corporation incorporated in one of the United States or its territories. Your organization's tax-exempt status cannot have been previously revoked. Organizations falling outside these criteria, including unincorporated associations, must use Form 1023.
- Activities: Certain organizations are subject to additional IRS scrutiny, and are not eligible, including hospitals, schools, churches, housing providers, and foundations. Those organizations must file Form 1023.
It is crucial to outline your organization's activities fully, and to comply with the Eligibility Checklist. Failure to disclose your activities fully can result in a revocation of your tax-exempt status, and even criminal penalties.
Where Can I Download Form 1023-EZ?
You can download Form 1023-EZ here, but you must submit all information online. Use this form to preview the necessary fields and information, or complete it for your organization's records.
How Do I File Form 1023-EZ?
Before you file, you must create an account on pay.gov. Once inside the portal, select "IRS Form 1023-EZ." From there, you will be able to complete the filing, or save your work if you need to return. You will pay using a credit or debit card.
What is the Fee to File Form 1023-EZ?
All applicants must pay a $275 user fee using a credit or debit card.
What Do I Need To Prepare?
Your preparation will be largely the same as if you were using Form 1023 to file. You will need:
- A completed Eligibility Checklist
- Articles of Incorporation with appropriate IRS-required provisions
- Bylaws or other rules of operation
- Federal EIN
- A credit or debit card for payment
How Long Will It Take?
On average, the IRS is currently processing Form 1023-EZ in 2-4 weeks. If your 501(c)(3) application is approved, you will receive a Determination Letter in the mail as confirmation.
5 Things You Should Know About IRS Form 1023-EZ:
- The IRS recently introduced this form to reduce a backlog of over 66,000 applications for recognition of exemption.
- Organizations declare themselves to be compliant with IRS requirements, thus removing most of the scrutiny previously needed.
- Some eligible organizations choose NOT to file Form 1023-EZ. Instead of risking a future audit, they opt to disclose their activities fully up front.
- Just because the filing itself is "EZ-ier," it doesn't mean your preparation should be reduced. You still must incorporate, create organizational records, define your activities, and create financial projections.
- It really has never been easier to obtain tax exemption. Make sure you understand your filing options, and choose the best method for your organization.
Continue reading "How Long Does It Take To Get 501(c)(3) Status?"
