Form 1023-EZ: Step-by-Step Filing Instructions

Form 1023-EZ is the streamlined application used by smaller organizations to request 501(c)(3) tax-exempt status from the Internal Revenue Service (IRS). Its purpose is to simplify a complex process, making it more accessible for eligible nonprofits. This application allows organizations to be recognized as exempt from federal income tax and assures donors that their contributions are tax-deductible.

Determining Your Eligibility

Before an organization can use the streamlined application, it must work through the Form 1023-EZ Eligibility Worksheet. This worksheet is a series of questions designed to screen out organizations that must file the more comprehensive Form 1023. A “Yes” answer to any question indicates that the organization is not eligible to use the EZ form.

A primary component of eligibility revolves around financial thresholds. An organization qualifies to use Form 1023-EZ if its projected annual gross receipts will not exceed $50,000 in any of the next three years. Similarly, the organization’s total assets, valued at fair market value, must not exceed $250,000.

The structure of the organization is another determining factor. To be eligible, the entity must be organized as a corporation, an unincorporated association, or a trust; partnerships cannot apply. The organization cannot be a successor to a for-profit entity or one that has had its tax-exempt status previously revoked, unless the revocation was for failing to file required annual returns for three consecutive years.

Certain types of organizations are automatically disqualified from using Form 1023-EZ due to the nature of their activities. These include churches, schools, colleges, universities, and hospitals or medical research organizations. The list also extends to organizations formed in foreign countries, private operating foundations, and those that provide housing facilities.

Information and Documents Needed to File

Before beginning the online application, gather all necessary information and documents. A requirement for any organization seeking tax-exempt status is an Employer Identification Number (EIN). An organization must have its EIN before it can start the Form 1023-EZ application.

The organization’s organizing documents are central to the application. Depending on the legal structure, this may be the articles of incorporation, articles of association, or a trust agreement, and they must contain specific language. This includes a purpose clause, which limits the organization’s activities to one or more exempt purposes as defined in Internal Revenue Code Section 501(c)(3).

A dissolution clause is also required within the organizing documents. This provision must state that if the organization dissolves, its assets will be distributed for an exempt purpose, or to a government entity for a public purpose.

The application requires details about the individuals who run the organization. You will need to compile a list of all officers, directors, and trustees, including their full names, titles, and mailing addresses. Finally, you must prepare a clear narrative describing the organization’s mission and its planned activities, giving the IRS a complete picture of what the organization does and who it serves.

Completing the Form 1023-EZ

The Form 1023-EZ must be completed accurately online. The process is a series of attestations where the applicant confirms they meet the various requirements for exemption.

Part I: Identification of Applicant

This part requires basic information about the organization. You will enter the previously obtained Employer Identification Number (EIN), the organization’s legal name as it appears on its organizing documents, any “doing business as” (DBA) names, the mailing address, and the name of a principal officer.

Part II: Organizational Structure

This section asks you to confirm that the entity is a corporation, trust, or association. You will also attest that its organizing documents contain the necessary purpose and dissolution clauses.

Part III: Your Specific Activities

In this part, you will provide the narrative of your organization’s purpose and activities. A component of this section is the selection of a National Taxonomy of Exempt Entities (NTEE) code that best describes the organization’s primary activities.

Part IV: Foundation Classification

Most organizations applying with Form 1023-EZ will be classified as public charities rather than private foundations. The form asks questions to confirm this status, as private foundations have more stringent operating rules and are not eligible to use the EZ form.

Part V: Reinstatement

This section applies to entities that previously had their exemption automatically revoked for failing to file annual information returns for three consecutive years. The form allows these organizations to apply for retroactive reinstatement of their status.

The Submission Process

The submission process for Form 1023-EZ is handled electronically through the federal government’s online payment portal, Pay.gov. There is no paper version of the form; all applications must be completed and submitted online.

To begin, you must navigate to the Pay.gov website and create an account. Once registered, you can use the site’s search function to find Form 1023-EZ. After locating the form, you will proceed to enter all the information you have prepared, including identifying details, attestations, and the activities narrative.

A required user fee must be paid at the time of submission. The fee, which is currently $275, must be paid directly through Pay.gov using a credit card, debit card, or direct debit from a bank account. The application will not be considered filed until this payment is successfully processed.

The final step involves electronically signing and submitting the application. Upon successful submission and payment, you will receive an electronic confirmation from Pay.gov, which serves as your receipt.

After You Submit Your Application

Once the Form 1023-EZ is submitted, the review process begins at the IRS. The first official communication you should expect is an acknowledgment of receipt, which confirms that your application has been entered into the IRS system for processing.

The processing time for a Form 1023-EZ takes around 90 days, though this can vary. During this period, the IRS may contact your organization if it needs to clarify any of the information provided.

The final outcome of the process is the issuance of an IRS determination letter. If your application is approved, this letter is the official document that grants your organization tax-exempt status. This letter is the definitive proof of your organization’s tax-exempt status that donors and grantors will often request.

Upon approval, the IRS will also add your organization to its Tax-Exempt Organization Search database. This is a public, online tool that allows anyone to verify an organization’s tax-exempt status.