IRS Form 1023-EZ adds more questions for 501c3 tax exempt status

In January 2018, the IRS Exempt Organization updated the Form 1023-EZ by adding a few extra questions.

The Form 1023-EZ Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, is a short online form that small nonprofit organizations can use to apply for 501(c)(3) status. The Form 1023-EZ application form is available for U.S. organizations with assets of $250,000 or less and annual gross receipts of $50,000 or less. That’s most homeschool organizations. It was created in 2014.

The update in 2018 added:

  • Two questions from the Eligibility Worksheet (found on the Instructions to Form 1023-EZ) asking:
  1. “Have your annual gross receipts exceeded $50,000 in any of the past 3 years and/or do you project that your annual gross receipts will exceed $50,000 in any of the next 3 years? (that’s really two questions)
  2. “Do you have total assets the fair market value of which is in excess of $250,000?”
If you check “Yes” to either of those questions, you do not meet the requirements to submit Form 1023-EZ and you most file the longer, paper application, Form 1023, instead.
  • A new requirement that organizations describe to the IRS their mission or most significant activities. The description is limited to 255 characters, so it’s very short.

I frequently see eloquent mission statements such as the following:

It is the goal of our organization to encourage Christian home educating families to home school in a manner that honors God. To accomplish this we will…

1) provide for academic achievement nurtured in an atmosphere where godly living is exemplified

2) provide resources for enhancing parental home schooling skills.

3) provide opportunities for children’s enrichment and growth through various classes and activities.

4) inform member families and public about legislative issues related to home education

That’s lovely, but it’s not specific enough for the IRS, it doesn’t describe their activities, and it is more than 255 characters! I culled it down to this:

To encourage Christian home educating families. We offer an annual conference, educational classes, field trips, clubs and social events.

 

Since the addition of this new description, I have found the IRS is taking a bit longer to approve 501(c)(3) tax exempt status. What used to take only 10 days is now taking about 3-4 weeks. But that is still a lot shorter than the 3-6 months that most nonprofits who file the longer full Form 1023 wait.

Do your homeschool organization need help applying for tax exempt status or preparing your Form 1023-EZ? I can helpContact me, Carol Topp, CPA.

Carol Topp, CPA

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