1023EZ – Simplified Application for Tax Exemption

IRS Rolls Out 1023-EZ

On July 1, 2014, the IRS rolled out the long promised 1023-EZ, application for recognition of exemption that can be filed online.  This is good news for small organizations that are just starting out, or that need to apply for reinstatement because of automatic revocation, saving them time and money. 

The new Form 1023-EZ, available on IRS.gov, is three pages long, compared with the standard 26-page Form 1023. Most organizations with gross receipts of $50,000 or less and assets of $250,000 or less qualify to use the new form.  The IRS devised the form to speed up the process of getting tax exemption for small organizations and free up its resources to focus on larger more complex organizations.

"Previously, all of these groups went through the same lengthy application process -- regardless of size," IRS Commissioner John Koskinen said. "It didn't matter if you were a small soccer or gardening club or a major research organization. This process created needlessly long delays for groups, which didn’t help the groups, the taxpaying public or the IRS.”

The Form 1023-EZ must be filed using pay.gov, and a $400 user fee is due at the time the form is submitted.  The instructions include an ‘eligibility checklist’ that must be completed before filing.

The twenty pages of instructions will be daunting for some, and there are some issues to watch out for; organizations are asked to include the code that best describes their organization, but not all of the codes are applicable to 501(c)(3).  The good news is that even for those who choose to seek the advice of an attorney during the process, the time and cost will still be greatly reduced.

Practice Area(s): Non Profit and Tax Exempt

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