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.

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