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Introducing Form 1023-EZ

In what may be a sea change in how new non-profit organizations seek tax-exempt status, the Internal Revenue Service (the “IRS”) has announced that it is releasing the Form 1023-EZ, a “Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code” this summer, and that eligible organizations will immediately be able to utilize the form in seeking tax-exempt status.  

The Form 1023-EZ, a 3-page form that requires simple “check the box” answers and no narrative description of activities, is a tremendous departure from the traditional Form 1023, the core form of which currently runs 12-pages long and requires the submission of narratives and budgets, plus additional schedules. According to the IRS, the Form 1023-EZ promises to be a much more efficient way to process exemption applications of small organizations. The goal is to help the IRS get through its backlog of exemption applications and reduce the lengthy waits that have long plagued new organizations seeking tax exemption.  

The Form 1023-EZ will be available to any group seeking tax-exempt status under Section 501(c)(3) so long as the organization is not:  

  • expected to have annual gross receipts that exceed $200,000 in any of the next 3 years or has had annual gross receipts that exceeded $200,000 in any of the past two years;
  • an organization with total assets in excess of $500,000;
  • a foreign organization;
  • a limited liability company (LLC);
  • a successor to a for-profit entity;
  • a previously revoked organization or a successor to a previously revoked organization (other than automatic revocation for failure to file Form 990—note: groups that have been auto-revoked for failure to file may use the Form 1023-EZ to be reinstated);
  • a church;
  • a school, college, or university described under IRC 509(a)(1) and 170(b)(1)(A)(ii)
  • a hospital or medical research organization under IRC 509(a)(1) and 170(b)(1)(A)(iii)
  • a supporting organization described under IRC 509(a)(3); or
  • an organization in one of a number of other prohibited categories.

A draft of the Form 1023-EZ is currently available online.  

Draft instructions (from February 2014) are available here.  

We will be back with further updates once the Form 1023-EZ is finalized and goes live.