People who want to set up non-profit organizations will have an easier time doing so now that the IRS has greatly simplified the application for tax exemption. The IRS just released a new tax exempt application form (Form 1023-EZ) that is only 3 pages long. Prior to this form being released, organizations applying for tax exemption would have to fill out the 26 page Form 1023.
Most small organizations, including as many as 70% of all applications, qualify to use the new streamlined form. Most organizations with gross receipts of $50,000 or less and assets of $250,000 or less are eligible. Organizations should review the instructions to Form 1023-EZ to make sure they are eligible to apply with the simplified form. The instructions are just under 20 pages, and professional assistance will likely be needed. The application may be simplified, but it is still not simple.
The fee to apply for tax exemption has been reduced to $400 from $850. However, under old provisions, there was a reduced $400 fee for organizations whose gross receipts did not exceed $10,000 over a four year period. Under the new provision, the $400 reduced application fee will generally apply to organizations with gross receipts of $50,000 or less (assuming other requirements are met).
If you have any questions on how this applies to you, please feel free to give us a call.
Buzzkill Disclaimer: This post contains general tax information that may or may not apply in your specific tax situation. Please consult a tax professional before relying on any information contained in this post.