The EZ Filing Process For Small Nonprofit Organizations
For well over a year, Sustainable Law Group, PC has had the pleasure of helping many nonprofit organizations obtain tax exempt status through the IRS 1023-EZ process and have found that not only is it much easier and less expensive, but it is also a much faster application time!
Nonprofits Now Have a Highly Streamlined Process When Filing for 501(c)(3) Status
Before the Form 1023-EZ came into the picture, nonprofits had to file the 1023 form in order to gain 501(c)(3) status to be tax-exempted. The 31-page Form 1023 application is much more involved and labor-intensive, requiring much more information from the applicant, such as a detailed projected four-year budget, specific documents related to the organization, and a written narrative that describes the organization’s past, present and future administrative and financial plans that further the purpose for tax exemption.
After filling out the form, applicants typically had to wait a good six months to a year (and sometimes longer) just to have the application processed.
Now certain smaller nonprofits can utilize a shortened process through Form 1023-EZ, which is not only much shorter in length and faster to get approved, but it’s also cheaper to file. Instead of the previous $850 fee associated with the regular Form 1023, applicants using the 1023-EZ form pay less than half of that – $450. The application can be approved is as little as one month, granting the organization 501(c)(3) status that is considered equally as valid as the traditional process.
Eligibility for Application Through Form 1023-EZ
Not every small, nonprofit organization is necessarily eligible to apply via the filing process. Prior to filling out the 1023-EZ, applicants must answer 26 “yes or no” questions regarding their organization on an eligibility worksheet. Even one “yes” can deem an organization ineligible to use the 1023-EZ application process. For example, the nonprofit organization must forecast annual gross receipts no more than $50,000 in the next three years, and must not have had annual gross receipts exceeding $50,000 over the past three years. In addition, assets associated with the organization cannot be worth more than $250,000.
The Bottom Line
There’s no denying the benefit and convenience of a shortened application process, faster approval time, and reduced financial obligations associated with 1023-EZ form when filing for 501(c)(3) status. This common-sense approach can really help smaller nonprofits obtain tax-exemption status without the burden of submitting extensive documentation and having to wait an extensive time to get tax exempt status.
At Sustainable Law Group, we work with many smaller nonprofits that qualify for tax exempt status and offer a reduced flat-rate for clients that qualify for the 1023-EZ. If you have any questions or are interested in forming a nonprofit please reach out to us at firstname.lastname@example.org.