The Law Office of Chris Van Vechten was recently retained to assist a Kitsap County youth sports client in applying for 501(c)(3) status. Traditionally, applying for 501(c)3 tax-exemption has been a laborious task, but recent developments at the IRS have made it easier than ever. Public Charities which receive less than $50,000 a year in donations and which meet several other eligibility requirements no longer have to fill out the exhaustive 26 page form 1023. Instead, they can elect to fill out the three page form 1023-EZ, which can only be filed electronically through Pay.gov.
There are some detractors of this streamlined form. Time Magazine accused the 1023-EZ of turning the IRS into a rubber stamp, which fails to adequately screen applicants. There is also room for uncomfortable interpretation with the new form. Chris personally felt that at least one line – Part 3, line 6, “Do you or will you donate funds to or pay expenses for individual(s)” was not adequately explained in the instruction manual. Nevertheless, the 1023-EZ is a great opportunity for small non-profits, like school booster clubs, to achieve tax-exempt status with less hassle than ever before.