Q. What happens if an ineligible organization files form 1023-EZ?
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A. A Form 1023-EZ filed by an organization that does not meet the eligibility criteria will be "rejected." Unlike an adverse determination, a Form 1023-EZ rejection does not result in any appeal rights for the applicant. Generally, rejected 1023-EZ applicants must file the long form 1023.
Over 75% of rejections during the first two years Form 1023-EZ has been in use were based on applicants’ responses revealing that they had, or expected, gross receipts in excess of $50,000. The other ineligible applicants rejected included churches, limited liability companies, credit counseling organizations, schools, and for-profit successors. Form 1023-EZ (2 year) Update Report
A rejection for ineligibility to file Form 1023-EZ does not indicate the applicant does not qualify for tax exemption (see earlier discussion of rejected applicants that reapply and are approved).
Form 1023 Paperwork, In Millions of Hours, 1986 to 2016
Source: U.S. Office of Management and Budget. Click image to learn more.
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