Friday, March 12, 2021

National Council of Nonprofits calls for change in use of Form 1023-EZ

In January of this year, the National Council of Nonprofits issued a statement containing a number of criticisms of recent Internal Revenue Service policy. Among these criticisms was a call for the immediate withdrawal of IRS Form 1023-EZ. The NCN feels that this is a necessary step because the Form, in its current form, is particularly vulnerable to abuse by entities falsely claiming to be charitable organization. The Council points to some startling statistics in defense of its assertions: first it notes that “virtually every entity that applies using the Form 1023-EZ receives tax-exempt status regardless of eligibility,” followed shortly by the damning pronouncement that the IRS’ “erroneous approval rate [of 1023-EZ applications] was found to be 46 percent.” It should be noted that the Council is not relying on its own findings when issuing these statements: all of its cited statistics come from the Taxpayer Advocate, which is itself a governmental entity existing in close proximity to the Internal Revenue Service.

To view the Council’s open letter in its entirety, see here

David Brennen, Professor of Law at the University of Kentucky

https://lawprofessors.typepad.com/nonprofit/2021/03/national-council-of-nonprofits-calls-for-change-in-use-of-form-1023-ez.html

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Comments

Nina Olson has been saying this for year. Yet another fallout from the processing delays occasioned by the (c)(4) application dump that led to Lois Lerner's crash and burn and the ongoing Congressional ban on regulating dark money.

Posted by: Russ Willis | Mar 16, 2021 7:39:34 PM

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