New 1023-EZ Form

On July 1, 2014, the IRS introduced Form 1023-EZ.  This form is a shorter (only three pages) version of Form 1023 (26 pages), which is the application used by charities seeking recognition of tax-exempt status under section 501(c)(3) of the Internal Revenue Code.  This new form streamlines the filing process for smaller charities and reduces the costs involved in the process.

In a press release concerning the new form, the IRS stated that most new charities with gross receipts of $50,000 or less and assets of $250,000 or less will be eligible to use the short form application.  (Apparently, such charities make up nearly 70% of all applicants for tax-exempt status.)  Prior to the release of 1023-EZ, small charities had to go through the same drawn-out application process of larger charities.

In addition to providing small charities with a less strenuous application process, Form 1023-EZ also provides these charities with an opportunity to save money, both in the expense incurred in preparing the application and the filing, user, fee payable to the IRS.  When filing the current Form 1023, a user fee of $850 was due if the organization’s annual gross receipts averaged or were anticipated to average more than $10,000.  When filing Form 1023-EZ, eligible charities will only be required to pay a $400 user fee, i.e., a savings of $450.

The creation of Form 1023-EZ also establishes a faster path to receiving IRS tax-exempt recognition.  There is a current backlog of more than 60,000 tax exempt applications within the IRS.  Because considerably less information is required by Form 1023-EZ,  less time will be required of IRS personnel to review the application, which should then result in the IRS completing their and issuing tax-exempt determinations over a much shorter timeframe.

Those interested in learning whether an organization is eligible for using Form 1023-EZ should complete the Form 1023-EZ Eligibility Worksheet found here.

About Don Meyer

I am a partner of Bose McKinney & Evans LLP, where I'm a member of the Business Services, Tax, Employee Benefits and Executive Compensation, and Health Groups. I work with public and private companies, large and small nonprofit organizations, public schools and colleges, ESOPs and other ERISA plans, and health care providers, as well as executives and sole proprietors. I provide legal knowledge and advice to my clients with respect to their assorted business, tax and benefits needs, while also serving in a general counsel capacity for various clients. When necessary, I represent clients before the Internal Revenue Service, the Department of Labor, the Indiana Department of Revenue and other government agencies.
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