The IRS has good news for small not-for-profit organizations: the agency has released a new streamlined form they can use to apply for federal tax-exempt status under IRC Section 501(c)(3). Not-for-profit that anticipate receiving $50,000 or less in annual gross receipts can now file Form 1023-EZ.

The IRS created Form 1023-EZ to help ease the backlog of Form 1023 applications, many originating from smaller not-for-profits from which the IRS did not need the detailed information requested. For example, no attachments are required to be submitted with Form 1023-EZ, such as bylaws or articles of incorporation. But an organization must attest that it possesses the proper organizing documents.

In Part IV of the form, an organization chooses its not-for-profit classification by checking one of the three boxes in this section to apply for public charity status. If it fails to do so, the organization will be classified as a private foundation, which is a less favorable tax status than a public charity.

It’s important to note that this new form can only be filed online—it cannot be printed, completed, and mailed to the IRS. Form 1023-EZ can also be filed to apply for private foundation, but not private operating foundation, status.

To file Form 1023-EZ, an organization must first create an account at www.pay.gov. A draft of the form can be created and saved, and then submitted online after paying the $275 user fee. The IRS typically reviews forms and responds to applications for tax-exempt status within three months.

The IRS has not yet addressed the issue of not-for-profit exceeding the $50,000 threshold in years following their initial application. Until then, however, small nor-for-profits with less than $50,000 in receipts are encouraged to use the new online 1023-EZ form.

If you have any questions about Form 1023-EZ or would like assistance in filling it out, please give us a call.