Great news for charitable organizations! The IRS recently introduced a streamlined application process for small organizations that want tax-exempt status under Sec. 501(c)(3).
Previously, an entity wanting tax-exempt status under Sec. 501(c)(3) had the burdensome task of submitting Form 1023,Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, and a detailed statement of its proposed activities. The new procedure calls for the filing of a simpler application form (a 2½-page Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code) and does not necessitate the filing of a detailed statement of proposed activities. Form 1023-EZ requires a $400 application fee and must be e-filed only. The IRS will not accept paper submissions.
Other requirements for eligibility to use the steamlined application process are as follows: The organization (1) must have not had gross receipts in excess of $50,000 in any of the past three years; (2) must not have projected gross receipts of more than $50,000 in the current tax year and the next two years; and (3) the organization’s total assets must not exceed $250,000.
Entities not eligible to use the streamlined form include: (1) entities that are not corporations, (2) unincorporated associations, or trusts; and (3) churches, (4) schools, and (5) hospitals. The form is also not available for entities seeking exemption under other sections of the code, such as 501(c)(4).
For anyone wanting to obtain tax-exempt status for worthwhile charitable activities that don’t involve a lot of money, this new form is a both a money and time-saver. Please contact us at (610) 489-3300 if you have any questions about this new form or need help with your venture.