By Ruth Masterson, Exponent Philanthropy
The IRS is looking to speed its response time to applications for 501(c)(3) status. With a backlog of 60,000 applications and an average wait time of 9 months for applicants at the beginning of last summer, it’s no wonder.
The IRS now accepts a streamlined application for 501(c)(3) status, called Form 1023-EZ, which is intended to decrease both time to complete the application and time to review it.
What is Form 1023-EZ? Form 1023 is the full version of the application for 501(c)(3) status; the new, shorter version is cleverly named Form 1023-EZ. The new form is only 2 pages (versus 12 pages plus 8 supplemental sections of the full form). It can only be filed electronically and must be accompanied by a $400 filing fee, compared to $850 for most organizations using the full form.
But only organizations that meet a long list of criteria are permitted to use the shorter form. Primarily, EZ filers must be quite small, with annual income (gross receipts) not expected to exceed $50,000/year for 3 years and with less than $250,000 in total assets. In addition, filers may not be a foreign-based organization, an LLC or successor to a for-profit, a church, a hospital, a school, or other specified organization types. The IRS provides a worksheet at the end of the Form 1023-EZ instructions to help filers know if they are eligible to use the new form. Further, the IRS plans to require additional documentation from a randomly selected sample of EZ filers, so EZ filers may need to supply additional information.
