As of July 1, 2014, many small charities (those with gross receipts of $50,000 or less and assets of $250,000 or less) are able to file Form 1023-EZ to apply for tax-exempt status under Internal Revenue Code 501(c)(3). This form was designed to assist small charities by reducing the lengthy application process. The new Form 1023-EZ is only three pages long compared to the 26 page Form 1023. According to the IRS, up to 70 percent of all applicants qualify to use this new tax form.
This new form not only reduces application time for small charities, but will allow the IRS to speed up the approval process as well. The IRS currently has over 60,000 tax-exempt status applications in its backlog and this new form is thought to help reduce this number.
Organizations seeking to use Form 1023-EZ will first need to complete an eligibility worksheet. The worksheet includes questions regarding the organization’s gross receipts, assets and exempt purpose among other items used to determine the organization’s ability to use the simplified form.
Different from Form 1023, Form 1023-EZ must be electronically filed online at pay.gov. Currently, a $400 user fee is due at the time of filing. Organizations not currently registered with pay.gov will need to register before filing.
Please contact a Hertzbach advisor today if you have questions or would like to discuss the applicability of this new process to your organization.