You might be asking yourself, “what is the difference between the 1023 and the 1023EZ?” And that is a very valid question if you are in the early stages of becoming a tax-exempt organization.
The 1023EZ is a much shorter tax-exemption application form than the full 1023 form. It is more streamlined, costs less, and is submitted electronically. It reduces the amount of time spent between submitting your application with the IRS and gaining your 501(c)(3) tax exempt status. The full 1023 tax-exemption form is roughly 16 pages and can take up to 6 months for your application to be processed by the IRS.
The IRS provides a 1023EZ qualifications quiz so people are aware prior to applying if they are eligible to be using the 1023EZ form or not.
The IRS has 26 qualifications in their eligibility quiz, but the main qualifiers that determine if your organization is eligible to use the 1023EZ when applying for your 501(c)(3) status are the following:
- Your organization’s projected annual gross receipts will not exceed $50,000 in any of the next 3 years.
- If you are an existing organization, your actual annual gross receipts have not exceeded $50,000 in any of the past 3 years.
- Your organization’s total assets must not exceed $250,000.
- The organization must not be a foreign organization, LLC, successor to a for-profit entity, church, school, hospital, or housing organization.
- Your organization is not requesting classification as a supporting organization or a private operating foundation.
- Your organization does not maintain or plan to maintain one or more donor-advised funds.
If your organization agrees with all of the above statements, then congrats! Your organization can most likely apply for tax exemption using the 1023EZ form!