Form 1023-EZ Revisions

Posted on Wednesday, January 24, 2018

In June 2014, the IRS released an alternative to Form 1023 to apply for tax-exemption.  Form 1023-EZ is a simpler form for smaller organizations.  It has only 3 pages compared to the 12 pages of Form 1023.  There are some restrictions as to the type of organizations that can file Form 1023-EZ but in general, most organizations with gross receipts of $50,000 or less and assets of $250,000 or less are eligible to apply for tax -exempt status by filing Form 1023-EZ.

In January 2018, the IRS made some changes to Form 1023-EZ to make it easier for both organizations applying for exempt status and the IRS in determining the correct tax-exempt status.  The simpler form is still only 3 pages but there were 4 additional questions added.

At the top of the form, the following 2 questions were added.

Have your annual gross receipts exceeded $50,000 in any of the past 3 years and/or do you project that your annual gross receipts will exceed $50,000 in any of the next 3 years?  If yes, stop.  Do not file Form 1023-EZ.  See instructions.

Do you have total assets the fair market value of which is in excess of $250,000?  If yes, stop.  Do not file Form 1023-EZ.  See instructions.

In Part III, Your Specific Activities, the following question was added.

Briefly describe the organization’s mission or most significant activities (limit 250 characters).

In Part IV, Foundation Classification, the following question was added.

Are you applying for recognition as a church, school, or hospital (described in section 170(b)(1)(A)(i), (ii), or (iii) of the Internal Revenue Code)?  If yes, stop.  Do not file Form 1023-EZ.  See instructions.

In addition, organizations that have had their tax-exempt status revoked, must request the same foundation classification as they had at the time of automatic revocation if they use Form 1023-EZ.  If they are seeking a different foundation status, they must file Form 1023.

There was no change to the 1023-EZ user fee and overall, the changes do not require a significant amount of additional time in completing the application. 

Posted by: Carrie Minnich, CPA

Posted in Mission Minded Nonprofits

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