New Online Form 1023 – Application for Recognition of Exemption

On January 31, 2020, the IRS announced that it has released a new online version of Form 1023. The revised Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code is reformatted for electronic filing.

There are also some substantive changes. For example, applicants must now include an NTEE code. There are also new questions designed to encourage OFAC compliance for those making foreign grants as well as questions that are more descriptive in nature. For example, rather than ask whether an organization has a “close connection” to another organization, there are specific questions about shared board members and relationships among entities.

The IRS expects the online Form 1023 to improve processing times in the same way that Form 1023-EZ, which is filed electronically, has helped to speed up the application process for small organizations. However, the 1023-EZ is less than four pages long with no attachments. It remains to be seen whether similar results can be achieved with the new online Form 1023 which is 40 pages long including all the schedules and requires numerous attachments.

Beginning January 31, 2020, applications for recognition of exemption on Form 1023 may be submitted electronically online at Pay.gov. The IRS will provide a 90-day grace period during which it will continue to accept paper versions of Form 1023 (Rev. 12-2017). Thereafter, all Form 1023 applications must be submitted electronically.

The required user fee for Form 1023 will remain $600 for 2020. Applicants must pay the fee through Pay.gov when submitting the form. Payment can be made directly from a bank account or by credit or debit card.

Ellis Carter is a nonprofit lawyer with Caritas Law Group, PC. To contact Ellis, call 602-456-0071 or email us at info@caritaslawgroup.com.

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