Form 1023-EZ: Instructions on How to File

Form 1023-EZ is the streamlined application used by smaller nonprofit organizations to apply for 501(c)(3) tax-exempt status from the Internal Revenue Service (IRS). This designation exempts an organization from federal income tax and enables donors to deduct their contributions. The form is a simpler and shorter alternative to the more comprehensive Form 1023, designed to expedite the application process for organizations that fit within specific IRS parameters.

Determining Your Eligibility for Form 1023-EZ

To use Form 1023-EZ, an organization must meet a strict set of IRS eligibility criteria. The primary qualifications are financial. An organization must project that its annual gross receipts will not exceed $50,000 in any of the next three years and attest that its gross receipts have not been more than $50,000 in any of the past three years.

A second financial constraint relates to assets, as the total fair market value of the organization’s assets must not exceed $250,000. The IRS requires applicants to complete the Form 1023-EZ Eligibility Worksheet, a checklist found within the form instructions, to confirm they qualify.

The IRS also prohibits certain types of organizations from using Form 1023-EZ, regardless of their size. Ineligible entities include:

• Churches, schools, universities, and hospitals
• Supporting organizations and private operating foundations
• Organizations that operate donor-advised funds
• Foreign organizations
• Organizations involved with digital assets or certain controlled substances

Other organizational structures will also disqualify an applicant. Organizations formed as Limited Liability Companies (LLCs), those that are successors to for-profit businesses, or those that issue stock cannot use Form 1023-EZ. An organization that has previously had its application for tax-exempt status denied is also ineligible. However, organizations whose status was automatically revoked for failing to file returns for three consecutive years can use Form 1023-EZ to apply for reinstatement from the application date forward.

Information and Documentation to Prepare

Gathering necessary information beforehand streamlines the filing process. A fundamental requirement is securing an Employer Identification Number (EIN). An EIN is a unique nine-digit number assigned by the IRS, and organizations must apply for and receive it using Form SS-4 before starting the Form 1023-EZ submission.

An organization’s organizing documents are also a central component. These are the legal documents that create the organization, such as articles of incorporation. For the IRS to grant 501(c)(3) status, these documents must state the organization’s purposes are limited to those described in section 501(c)(3) and include a dissolution clause stipulating that assets will be distributed for exempt purposes if the organization dissolves.

Applicants must also prepare a clear narrative describing their organization’s mission and activities. While the form itself does not require lengthy descriptions, the online application requires the entry of a National Taxonomy of Exempt Entities (NTEE) Code. This three-character code classifies the organization’s primary activity, and a well-defined mission statement helps in selecting the most accurate code.

Finally, the organization must compile a complete list of its officers, directors, and trustees. The application requires the full names, titles, and mailing addresses for each of these individuals. The person who will electronically sign the application must be one of the listed officials.

The Online Submission Process

Filing Form 1023-EZ is an entirely electronic process handled through the Pay.gov portal, as no paper version exists. Applicants must first create an account on the Pay.gov website to access and submit the form. Once logged in, the user can find the application by typing “1023-EZ” into the search bar.

The online form will prompt the user to enter all prepared information, including the organization’s EIN and details about its officers and directors. Applicants must check a box to attest that they have completed the Form 1023-EZ Eligibility Worksheet and have confirmed their eligibility. This attestation is required to proceed with the submission.

After all required information has been entered, the applicant must pay the non-refundable $275 user fee. Payment can be made through Pay.gov using a bank account, debit card, or credit card. An authorized officer, director, or trustee must then electronically sign the application, certifying under penalty of perjury that the information provided is true and complete before submitting it.

After You Submit Your Application

Once submitted, the application enters the IRS review process, which often takes around 90 days, though times can vary. Applicants can check the status of their application on the “Where’s My Application” page of the IRS website. If an application is pending beyond the posted processing date, the organization can call IRS Customer Account Services.

The IRS will issue a determination letter communicating its decision. A favorable letter grants 501(c)(3) status, while an adverse letter denies the request and explains the organization’s appeal rights. If approved, the effective date of the exemption is generally the date the organization was legally formed, provided it filed within 27 months of formation.

A favorable determination results in the organization’s inclusion in the IRS Tax-Exempt Organization Search database. This online tool allows the public, including potential donors and grantmakers, to verify an organization’s tax-exempt status.

Receiving tax-exempt status does not end an organization’s compliance responsibilities. Most small tax-exempt organizations must file an annual information return. For organizations with gross receipts of normally $50,000 or less, this is met by filing Form 990-N, the e-Postcard. This simple online filing is due every year to maintain tax-exempt status.