IRS Announces Streamlined 501(c)(3) Application for Small Charities

July 01, 2014 by Karen Reed, EA
Volunteers feeding food

Beginning on July 1, 2014, a more streamlined process is available to small charitable organizations applying for 501(c)(3) tax exempt status. There is now a new three-page application, Form 1023-EZ, which replaces the standard twenty-six page Form 1023 for eligible organizations. Charities with gross receipts of $50,000 or less and assets under $250,000 are allowed to use the form. Seventy percent of all applicants will qualify, according to IRS estimates. 
 

Currently, there are more than 60,000 501(c)(3) applications awaiting review, some of them for as many as nine months. The new shorter form is expected to expedite the approval process and help reduce the application logjam.
 

Interested organizations should first complete the Form 1023-EZ Eligibility Worksheet. A “Yes” answer to any one of the twenty-six questions on the worksheet disqualifies an organization from the streamlined process. The IRS requires Form 1023-EZ to be filed electronically on www.Pay.gov, and there is a $400 fee due with the application.

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Karen Reed, EA

 

During her years as an audit representative for TaxAudit, Karen successfully defended the company’s members throughout the entire federal and state audit processes, handled cases assigned to US Tax Court, and developed procedures to make the audit process easier for taxpayers. Karen attributes a great deal of her tax acumen to the six tax seasons she spent as a return reviewer, analyzing thousands of returns. Responding in writing to questions from taxpayers, she became familiar with the common mistakes self-preparers make. Karen was previously the manager of the Tax Education and Research Department and the Director of Communications at TaxAudit. Her tax advice has been featured in U.S. News and World Report, the Los Angeles Times, the Chicago Tribune, and other publications.


 

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