Form 1023EZ Short Form Unveiled – IRS To Release This Summer

April 28, 2014 | Kristy S. Maitre

On April 27, 2014, IRS released a draft of the new, four-page Form 1023EZ, “Streamlined Application for Recognition of Exemption Under Section 501(ϲ)(3) of the Internal Revenue Code.”  This is a major change in the application for non-profit 501(ϲ) (3) status.  The three page form is a vast improvement compared to the existing  Form 1023 which is over 25 pages in length.  A new streamlined process for the Form 1023-EZ will also allow the IRS to concentrate more on compliance for I.R.C. §501(c)(3) organizations.

The much simpler form can be used by smaller charities to apply for tax-exempt status with theIRS, and will be released in mid-to-late summer.  Initial IRS estimates are  that about 17% of applicants will be able to use the form.

The overriding goal is to help charities get up and running more quickly and avoid the paperwork that has sometimes delayed approval of their filings for up to a year.

Form 1023EZ will be able to be used by organizations that do not expect to have annual gross receipts of $200,000 or more in the next three years or in the prior two years and do not have assets exceeding $500,000. 

Some types of organizations will not be eligible to use the simplified form even if the gross receipts and asset test is satisfied.  Those organizations include the following:

  • Foreign organizations;
  •  Limited liability companies;
  • Successor entities;
  • Churches;
  • Hospital and medical research organizations; and
  • Schools seeking public charity status   

The instructions contain an Eligibility Worksheet that helps the organization determine whether they can apply using the Form 1023EZ.  In addition, IRS will verify qualification for the 1023EZ via compliance checks or examinations on an after-the-fact basis.

Form 1023-EZ Instructions sent to TFP on 2-10-14.pdf

http://www.irs.gov/pub/irs-dft/f1023ez--dft.pdf