By Lois Oiler
Beginning July 1, 2014, the Internal Revenue Service introduced a new, shorter application form to help small charities apply for 501(c)(3) tax-exempt status more easily. The objective is to reduce lengthy processing times for small charitable organizations.
The new Form 1023-EZ, is available now on IRS.gov and is three pages long, compared to the standard 26-page Form 1023. Most small organizations, including as many as 70% of all applicants, qualify to use the new simplified form. Most organizations with gross receipts of $50,000 or less and assets of $250,000 or less are eligible. Previously, all charitable organizations, regardless of size, had to apply with the same lengthy form.
The change will allow the IRS to speed the approval process for smaller groups and free up resources to review applications from larger, more complex organizations. Currently, the IRS has more than 60,000 501(c)(3) applications in its backlog, with many of them pending for nine months.
The new form was created as a result of feedback the IRS received from the tax community and those working with charitable groups. The new EZ form must be filed online. The instructions include an eligibility checklist that organizations must complete before filing the form. The Form 1023-EZ must be filed using Pay.gov, and a $400 user fee is due at the time the form is submitted. Further details on the new Form 1023-EZ application process can be found in Revenue Procedure 2014-40.