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SMALLER CHARITIES AND A SIMPLIFIED PATH TO TAX EXEMPT STATUS

The life blood of many charities is the ability to accept donations from its supporters and be able to offer its contributors a potential tax write-off.  Historically, there was only one way for a charity of any size to become a tax exempt 501(c)(3) organization.  The IRS application form was 26 pages long and required a lot of time and voluminous documentation on the part of the organization in order to complete the application.  This was often a major impediment to obtaining tax exempt status for smaller organizations. 

In the last couple of years, the IRS has implemented a new form for smaller organizations, the Form 1023-EZ.  This is a shorter, simplified application procedure which also promises a quicker approval timeline from the Internal Revenue Service.  In general, the 1023-EZ form is available for organizations with gross receipts of $50,000 or less and assets of $250,000 or less.  The Form 1023-EZ must be filed online, but the time to fill out the form is much shorter and the associated filing fee is much lower for applicable organizations than under the regular Form 1023.  There is also an accompanying Form 1023-EZ Eligibility Worksheet, which must be completed prior to completion of the Form 1023-EZ which will help applicants determine whether or not they are eligible to use the short EZ form or whether they must use the longer form.  This shorter simplified online approach to application for tax exempt status for smaller charities will facilitate those charities being able to focus on their mission and not on paperwork.