IRS reduces Form 1023-EZ user fee from $400 to $275

IRS reduces Form 1023-EZ user fee from $400 to $275

Rev. Proc. 2016-32 announces that the user fee for filing Form 1023-EZ, “Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,” will be reduced from $400 to $275, effective July 1, 2016.

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Read text of Rev. Proc. 2016-32 as it appears in the Internal Revenue Bulletin 2016-22 [PDF 115 KB]

Background

An entity seeking exemption from federal income tax as an organization described in section 501(c)(3) generally is required to apply to the IRS on Form 1023, Application for Recognition of Exemption. The IRS uses the information provided to determine if the applicant is exempt and whether the applicant is a public charity or a private foundation. 

The IRS released Form 1023-EZ in 2014 to provide a less burdensome alternative for small organizations applying for recognition of exemption. However, there are numerous limitations to the organizations eligible to file the Form 1023-EZ, including:

  • Gross receipts of $50,000 or less and total assets of $250,000 or less 
  • Corporations, trusts, or associations (i.e., no LLCs)
  • Domestic entities (i.e., no foreign organizations or foreign mailing addresses)
  • Section 501(c)(3) private non-operating foundations or publicly supported public charities described in section 509(a)(1) / section 170(b)(1)(A)(iv), section 509(a)(1) / section 170(b)(1)(A)(vi), or section 509(a)(2) (i.e., private operating foundations, churches, schools, hospitals, supporting organizations, and testing for public safety organizations may not use the form) 

The Form 1023-EZ “eligibility worksheet” sets forth a more comprehensive list of the requirements. Although an organization may be eligible to file Form 1023-EZ, it may choose to file Form 1023 instead.

 

For more information, contact the Managing Director-in-Charge of KPMG's Washington National Tax Exempt Organizations Tax group:

D. Greg Goller | +1 (703) 286-8391 | greggoller@kpmg.com

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