New IRS Nonprofit Exemption Form 1023-EZ

March 04, 2015 By Dustin Wood

On July 1, 2014, the IRS released Form 1023-EZ in final form. The form is a streamlined version of Form 1023, Application of Exemption Under Section 501(c)(3) of the Internal Revenue Code (essentially application for tax exempt status of a nonprofit organization).

The main benefits of using the Form 1023-EZ versus Form 1023 are significantly less preparation time (three page form compared to a 26 page form) and shorter anticipated processing time of the application by the IRS to grant tax exempt status (the IRS currently has a backlog of 60,000 applications under Form 1023).

Only certain organizations are eligible to use Form 1023-EZ to apply for exemption, but the IRS anticipates that as many as 70% of applicants will qualify to use the new form. To determine eligibility, applicants must complete the Form 1023-EZ Eligibility Worksheet. If they answer “Yes” to any of the questions on that worksheet, Form 1023-EZ cannot be used to apply for exemption. According to that worksheet, organizations must project less than $50,000 in annual gross receipts for the next three years and total assets of $250,000 or less (the IRS had previously released a draft of Form 1023-EZ with limits of $200,000 for gross receipts and total assets of $500,000, but the final form reduced those thresholds significantly).

Form 1023-EZ can only be filed electronically by going to www.pay.gov (and entering in Form 1023-EZ). To file the form you must register an account on www.pay.gov, complete the form on that site, and submit a $400 user fee for processing the application.

I plan to file the form myself by the end of this year for a nonprofit competitive baseball organization for which I serve on the board of directors and I’ll provide an update on my experience in completing and filing the form.

Dustin Wood

Dustin Wood

Dustin is currently a manager over our audit department and works in the Logan office. He specializes in compilations, reviews, and audits of financial statements, and in the preparation of payroll tax reports and nonprofit information returns.

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