IRS Streamlined Application for Recognition of Exemption (Form 1023-EZ)


The Internal Revenue Service has lowered the user fee for charities applying for tax-exempt status.

On July 1, the IRS decreased the user fee for processing Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, from $400 to $275.

In May, the IRS released Revenue Procedure 2016-32 about its plan to reduce the user fee for filing Form 1023-EZ. They then introduced the form in 2014 to streamline the process for small organizations to apply for tax-exempt status under Section 501(c)3 of the Tax Code. The IRS wanted to reduce a months-long backlog of applications from approximately 60,000 organizations that ask for tax-exempt status each year (see Easy or Too EZ: New Rules for Tax Exemptions). Organizations with annual gross receipts of $50,000 or less and assets of $250,000 or less can use the three-page form.

Charities need to submit the fee through when filing a 1023-EZ application. They can pay the fee directly from a bank account or via credit or debit card.

The IRS also released regulations recently on how groups should register as tax-exempt organizations under Section 501(c)4 of the Tax Code (see IRS Issues Rules for Registering 501(c)4 Organizations).

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