Tuesday, April 22, 2014

Draft Form 1023-EZ (streamlined 501(c)(3) application)

OmbAn observant attorney noticed that Treasury and the IRS have submitted a short version of IRS Form 1023, the Application for Recognition of Exemption Under IRC § 501(c)(3), for review by the Office of Management and Budget under the Paperwork Reduction Act.  The Form 1023-EZ would be a streamlined, two-page form that the IRS estimates approximately 17 percent of applicants could use instead of the current, much longer Form 1023 (see the supporting statement filed with OMB).  The draft instructions for the new form state that the form would only be available to organizations that expect to be relatively small financially (no more than $200,000 in annual gross receipts and no more than $500,000 in total assets) and are not churches, schools, hospitals, supporting organizations, or a number of other rarer types of 501(c)(3) groups.  This would appear to make the form available only for small organizations that do not qualify by virtue of their activities as public charities, that is small organizations that are either private foundations or publicly supported.

Interestingly, the National Taxpayer Advocate in her 2007 Annual Report to Congress (see item 6 on page II-3 of the Executive Summary) recommended a separate Form 1023-EZ for use by smaller organizations.  The recommendation, however, would have only made the shorter form available to non-private foundations with annual gross receipts not normally more than $25,000.  (See Volume I, Section Two, page 535 of the full report.)

Hat Tip:  Charles ("Chip") Watkins

Lloyd Mayer


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