One of the more daunting aspects of forming a charitable organization has been completing the IRS application for exempt status – Form 1023. The standard application comprises 26 pages written in technical language which is difficult for a layperson to immediately understand.
On July 1, 2014 the IRS issued a new, shorter application form, Form 1023-EZ, which is three pages long. The IRS estimates that as many as 70% of all applicants for 501(c)(3) status may use the new form, which must be filed electronically. Most organizations with gross receipts of $50,000 or less and assets of $250,000 or less are eligible to use Form 1023-EZ. The filing fee for the shorter form is $400 compared to $850 for the longer Form 1023.
As of July 2, the IRS said it had more than 60,000 510(c)(3) applications in its backlog, with many pending for nine months. The new form is intended to speed the approval process for smaller groups. An application filed electronically on August 18, 2014 was approved and a determination letter received on September 8, 2014, only 3 weeks after filing. The organization can now prove to potential donors that it is eligible to receive tax deductible contributions.
Filing for the exemption is only part of operating and governing a charitable organization. If you need assistance with your charitable entity, contact Roger Whitaker at 614-229-4422 or by e-mail at rwhitaker@LNLattorneys.com.