IRS introduces simpler process when applying for tax-exempt status
If you’ve applied for tax-exempt status with the Internal Revenue Service, you know it’s challenging. But many new applicants find the process a little easier, because up to 70% of organizations applying now can use Form 1023-EZ.
The big advantage to the new form is its size. Form 1023-EZ is only 3 pages versus the 26-page 1023. This change makes the form easier to complete, quicker for the IRS to review and should speed up the processing time for smaller organizations. Freeing up IRS agents to review the traditional 1023 should also help those forms move through the process quicker.
The application fee for Form 1023-EZ is $400; this is the same as for small organizations filing a 1023, but some may find an additional benefit. Filers of Form 1023 were only eligible for this lower rate if their gross receipts didn’t exceed $10,000 annually. Now, most organizations with gross receipts of $50,000 and assets of $250,000 or less are eligible to file Form 1023-EZ.
If you’re ready to apply for tax-exempt status for your organization, first complete the eligibility worksheet in the instructions for Form 1023-EZ to see if you qualify for the shorter form. If so, you must file online and be prepared to pay your $400 fee when applying.
Good luck with your nonprofit organization! If you need assistance with accounting, assurance of fiscal responsibility or advice on financial planning, the OSA&C team can help. Contact Lynn@OnlineStewardship.com.