The 501 S(c)ene

The latest view on not-for-profit accounting issues

IRS Creates1023-EZ Streamlined Application for Tax Exempt Status

For an organization to be recognized as a 501(c)(3) tax exempt organization, it is generally required to submit Form 1023 to the IRS. Form 1023 is a 28 page, time intensive form that may be difficult to complete for many smaller nonprofits. As a result the IRS is currently in the process of creating Form 1023-EZ. This will be a simplified, shorter version of Form 1023 and will be significantly easier to complete. The IRS has estimated that Form 1023-EZ will take approximately 14 hours to complete, as opposed to the 101 hours estimated for the full Form 1023.

Organizations will qualify to use Form 1023-EZ by meeting the following requirements:

  • Projected annual gross receipts of no more than $200,000 in any of the next three years.
  • Annual gross receipts of no more than $200,000 in any of the past two years.
  • Total assets of no more than $500,000.

Additionally, the organization must qualify as a private foundation or a publicly supported public charity. Although the form is not available for use yet, the IRS has posted a draft of the 3 page form on their website at: http://www.irs.gov/pub/irs-dft/f1023ez–dft.pdf.

By Paul Biggs