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Question: I am starting a nonprofit organization and need to apply for 501c3 status. Can I fill out the new 1023-EZ form?
The Internal Revenue Service recently released Form 1023-EZ, the streamlined application for recognition of exemption of 501c3 status. This form is significantly shorter and easier to complete than the regular application, which is a welcome change for aspiring small nonprofit organizations. In order to utilize the streamlined applications, organizations must meet eligibility requirements and complete the Form 1023-EZ Eligibility Worksheet. There are 21 questions on the worksheet and an affirmative answer to any of the questions makes your organization ineligible to utilize the streamlined application.
Organizations with Budgets and Previous Expenses Less than $50,000 per year
The streamlined application is intended for small organizations, so only those with projected budgets of less than $50,000 per year are eligible. If the organization has been operating already, gross receipts from each of the last three years also must be less than $50,000 per year and total assets cannot exceed $250,000.
Only Certain Types of Organizations Qualify
Organizations that have been formed asa successor to a for profit organization or a nonprofit whose status was revoked for reasons other than automatic revocation for failure to file annual returns cannot use the streamlined application. Organizations formed in or with an address in a foreign county, limited liability companies, churches, schools and universities and hospitals are all ineligible for submission of Form 1023-EZ, as are some other specialized types of organizations.
My organization’s 501c3 status was revoked by the IRS. Can I request reinstatement through form 1023-EZ, or do I need to fill out the regular 1023 form?
If your organization’s 501c3 status was revoked for failure to file required returns for three consecutive years, you may be able to use Form 1023-EZ to request reinstatement. You must meet the requirements described above and meet the eligibility requirements for filing 990- EZ (gross receipts of less than $200,000) or 990-N (gross receipts of less than $50,000) , this is the first time your status was revoked and it is no later than 15 months since the date of your revocation.
What’s different in the streamlined form?
The streamlined form is considerably shorter and less complicated. It is only three pages as compared to the 26 pages of Form 1023. Form 1023 –EZ is available only online and requires simple responses attesting to requirements instead of the required attachments in the regular application, including bylaws, articles of incorporation and financial information.
At age 23, Anne Byrne was the founding executive director of Denver’s rape crisis center, an organization that continues to flourish today, over 28 years later. Byrne went on to build a nationally recognized, multi-site summer and after school tutoring program for inner city youth. With 25 years of experience as an executive director of emerging nonprofit organizations, Byrne, who is aProfessional-in-Residence at the ASU Lodestar Center, brings valuable expertise and perspective to the "Ask a Nonprofit Specialist."