New Form 1023-EZ

fountain-pen-1441111-mThis past July, the IRS introduced the new form, 1023-EZ, which is a shorter form applicable to charities applying for 501(c)(3) tax exempt statuses.

The IRS stated that this shorter form makes it easier for the charities to apply and for speeding up processing on the IRS’s end. This new form is only three pages long, as compared to the original Form 1023 at twenty-six pages.

Some 70 percent of applicants will qualify to use the new form 1023-EZ. In order to qualify, organizations must have gross receipts of $50,000 or less and total assets of $250,000 or less. The new form comes with an eligibility checklist that organizations must complete before filing 1023-EZ.

The old way of applying for tax exempt filing status created unnecessarily long delays for the charities, in addition to putting a burden on the taxpaying public and the IRS. This new process will free up resources and reduce applicant backlog. There are currently 60,000 501(c)(3) applications in the IRS backlog; with a majority of these applicants pending for nine months.

The IRS also stated the new form will allow small charities to complete the form without the risk of compliance issues. Saving a majority of resources upfront, the IRS will be able to use these resources to devote more compliance activity on the back end to ensure the charities are indeed doing charitable work.

For further details on the new form 1023-EZ, please visit the application process on the IRS website (see link below).

http://www.irs.gov/pub/irs-drop/rp-14-40.pdf

 

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