Tuesday, July 22, 2014
Form 1023-EZ Makes It Easier to File Non-Profit Tax Exemption
In light of the change, IRS Commissioner John Koskinen said, “This is a common-sense approach that will help reduce lengthy processing delays for small tax-exempt groups and ultimately larger organizations as well. The change cuts paperwork for these charitable groups and speeds application processing so they can focus on their important work." [quoted in article on CPA Practice Advisor]
Rather than the standard 26-page original Form 1023, the new Form 1023-EZ, is just so easy and only 3 pages long. Most small and new organizations, including as many as 70 percent of all applicants, qualify to use this new streamlined form. Following feedback this spring from the tax community and those working with charitable groups, the IRS refined the 1023-EZ proposal, including revising the $50,000 gross receipts threshold down from an earlier figure of $200,000. There are some other specific requirements to be eligible, apart from gross receipts and assets, for example your organization cannot be a Limited Liability Corporation (LLC).
This change will hopefully allow the IRS to speed the approval process for smaller groups and free up resources to review applications from larger, more complex organizations thereby reducing the application backlog. Currently, the IRS has more than 60,000 501(c)(3) applications in its backlog, with many of them pending for nine or more months. Previously, all of these groups went through the same lengthy application process--regardless of size, Koskinen said. "It didn't matter if you were a small soccer or gardening club or a major research organization. This process created needlessly long delays for groups, which didn’t help the groups, the taxpaying public or the IRS,” he said.
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. For more information, check out the Revenue Procedures which were just posted here.
Okay, Missionpreneurs...now may just be the time to support or create the cause you've always been passionate about!
Do you plan to use the Form 1023-EZ? We'd love to hear from you!