This summer, the IRS finally released the much anticipated Form 1023EZ, otherwise known as the Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. This is great news for smaller organizations who want to give back to their communities without having a huge operating budget. In addition, it should speed up the approval process for organizations that want to be tax exempt as it no longer requires the comprehensive description of an organization’s activities, operations, governance, finances, etc. that is required in the standard Form 1023.
Not all organizations will qualify to file the Form 1023EZ. The most notable requirement is that the organization’s projected annual gross receipts will not exceed $50,000 for any of the next three years. Also, the organization’s gross receipts cannot have exceeded $50,000 for any of the preceding 3 years, nor can the organization have assets totaling more than $250,000. There are a number of other things that can affect an organization’s eligibility to file the Form 1023EZ, an overview of which can be found on our IRS Form 1023 Preparation page.
While the Form 1023EZ doesn’t require nearly as much information as the standard Form 1023, some elements are still the same. For example, the Form 1023EZ still requires that:
You have the proper organizational structure;
Your organizational document must limit your purposes to one or more exempt purposes within section 501(c)(3);
Your organizational document must not expressly empower you to engage in activities that do not further your exempt purposes; and
Your organizational document must provide that upon dissolution, the organization’s assets will be used exclusively for 501(c)(3) exempt purposes.
Read more about the new IRS Form 1023EZ and how Powers & Neal can help you help others.