Form 1023 Paperwork, In Millions of Hours, 1986 to 2016
Source: U.S. Office of Management and Budget. Click image to learn more.
Real Help With Your 501(c)(3) Application
IRS Changes Long-Form 1023 User Fees
In Revenue Procedure 2018-5, dated January 2, 2018, the IRS ends the two-tier fee schedule that has been in place for Form 1023 applicants since 2004. The new fee, for all Form 1023 applications, is $600.
"New" Form 1023-EZ Actually Has One New Question
The new Form 1023-EZ is dated January 2018. In an apparent effort to discourage ineligible applicants, the IRS has added questions which duplicate eligibility requirements previously only mentioned in the Eligibility Worksheet found in the Form 1023-EZ instructions. Gross receipts and assets questions have been added to the threshold questions at the beginning of the form, and a question reminding churches, schools, and hospitals not to use Form 1023-EZ has been added to to Part IV.
The one new question in the January, 2018 Form 1023-EZ is found in Part III, Your Specific Activities. Question 1 now provides a box where the applicant must enter a description of the organization's mission and/or accomplishments. Only 250 characters are allowed. Other Part III questions have been renumbered.
The IRS has also issued new instructions for Form 1023-EZ. Three new questions have been added to the Eligibility Worksheet. Organizations formed as for-profit entities, organizations currently (or previously) recognized exempt under a section of IRC 501(a) other than 501(c)(3), and agricultural research groups described in 170(b)(1)(A)(ix) are not eligible to file Form 1023-EZ.
Another Not So New Form 1023
A "new" Form 1023, dated December, 2017, is available from the IRS website.
Part X, Question 5 has a new line item (g): "509(a)(1) and 170(b)(1)(A)(ix) an agricultural research organization directly engaged in the continuous active conduct of agricultural research in conjunction with a college or university." This reflects a minor change to the law enacted in 2105. The former Part X, question 5(g), and subsequent items, have been renumbered.
The IRS has finally deleted a Part X question about "Advance Rulings," a procedure the IRS ended about a decade ago!
The two-tier User Fee previously outlined in Part XI of Form 1023 has been replaced with a blank line where the applicant is asked to enter the User Fee after looking it up on www.irs.gov. [As noted above, the fee for 2018 is $600.]
The description of the purpose of Schedule E been changed, and Question 8, offering tardy applicants an opportunity to apply for 501(c)(4) status for prior periods, has been eliminated. [As of 1-22-18, however, the Revenue Ruling and Manual section allowing (c)(4) status for prior periods remain unchanged.]
Aside from the 12-2017, date on each page of the form, there have not been any other changes to the 501(c)(3) application. New instructions for Form 1023 have also been issued.
IRS Reduces 1023-EZ User Fee
The fee for Form 1023-EZ was reduced from $400 to $275 as of July 1, 2016. Revenue Procedure 2016-32.
The IRS released Form 1023-EZ, Streamlined Application for Recognition of Exemption, on July 1, 2014. The new form is only two and a half pages long. The IRS estimates that most 501(c)(3) applicants will be eligible to use the 1023-EZ. Size, history, activities and foundation status can all make an organization ineligible. Eligible applicants check boxes to certify that they are eligible to file the form, and that they have met the organizational, operational and public support tests. There is no requirement to submit financial data or organizing documents. Instead of describing their activities, applicants choose a code from an activity list in the 1023-EZ's instructions. As of October, 2016, the IRS had not posted Frequently Asked Questions about Form 1023-EZ. 1023-EZ Frequently Asked Questions created by Sandy Deja. Sandy Deja's comments on Form 1023-EZ.
"New" Form 1023 Not So New
A "new" Form 1023, dated December, 2013, is available from the IRS website.
Aside from the December, 2013, date on each page of the form, there have not been any other changes to the 501(c)(3) application.
New Interactive 501(c)(3) Application Form
In late 2013, the IRS released Form i1023, an “interactive” version of the 501(c)(3) application. After asking a few preliminary questions, the interactive form walks you through the 501(c)(3) application, allowing you to look up information and prepare continuation sheets that are an integral part of the form. The form cannot be filed on line; you must still print it, add your supporting documents, and file in the usual way. There is no fee discount for using the "interactive" Form 1023. More information about Form i1023. Sandy Deja's comments on Form i1023.
New Form 8940
The IRS has introduced a new form for use by exempt organizations. Form 8940 provides a way to apply for nine different EO-related rulings that previously required a letter application. The User Fee for 2016 is $400. More Information about Form 8940.
There has been a slight change in the address where exemption applications should be sent. Send all Forms 1023, 1024, 8940 and 8718 to:
Internal Revenue Service
E.O. Application Receiving
P. O. Box 12192
Covington, Kentucky 41012-0192
Note: Although the IRS issued a “new” Form 1023 in 2013, they did not issue new instructions. The address in the Form 1023 instructions dated June, 2006 is incorrect. Form 1382, often included with the old instructions, does have the correct address.
Elimination of Advance Rulings
On September 9, 2008, the IRS issued new regulations eliminating the "Advance Ruling" for new publicly supported 501(c)(3) organizations. A public charity relying on either one of the one-third public support tests no longer needs to complete a tax year that is at least eight months long before receiving a final determination that it is publicly supported. If a new organization can show that it can reasonably expect to meet a public support test, the IRS will recognize it as a public charity for all purposes for its first five years, regardless of the level of public support it in fact received.
News Affecting 501(c)(3) Applications