Tax Exempt Status Application Now Easier

You have a cause for which you’re deeply concerned.  Or your child’s local sports team needs a tax exempt entity to better operate under a common organizational structure.  Internal Revenue Code 501(c)(3) tax-exempt status is the way to go for this type of situation. But the IRS paperwork required for filing for tax-exempt status use to be a nightmare.  The standard form (Form 1023) clocked in at 26 pages.  That’s a lot of IRS paperwork for your child’s high school soccer club.

Not anymore.  The IRS has just introduced a shorter, more streamlined approach for smaller tax-exempt organizations.  “This is a common-sense approach that will help reduce lengthy processing delays for small tax-exempt groups…” said IRS Commissioner John Koskinen. “The change cuts paperwork for these charitable groups and speeds application processing so they can focus on their important work.”

The new Form 1023 is a mere three pages.  Seventy percent of the tax-exempt applications will be covered by this new form.  The IRS anticipates that with the new form, organizations will find it easier to qualify, making it easier on the small groups, which previously had to go through the same lengthy process as large tax-exempt organizations.  Koskinen said, “It didn’t matter if you were a small soccer or gardening club or a major research organization. This [previous] process created needlessly long delays for groups, which didn’t help the groups, the taxpaying public or the IRS.”

The new streamlined form applies to most tax-exempt organizations with gross receipts of $50,000 or less and assets of $250,000 or less.  The new form must be filed online.  There is an eligibility checklist that must be completed prior to filing the form.  In addition, the tax-exempt organization must pay a $400 user fee at the time the form is filed.

If you have a tax-exempt organization that needs help with its IRS compliance then schedule your free consultation by calling (480) 888-7111 or submit a web request here.