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Good day, ladies and gentlemen, and welcome to the IRS webcast on EZ Form 1023-EZ. At this time, it is my pleasure to turn the floor over to your host. Welcome to the webinar on applying for exemption using the form 1023-EZ. We have a few announcements before we get started. The information contained in this presentation is current as of the day it was presented and should not be considered official guidance. Any stories, names, characters, and incidents portrayed in this production are fictitious. No identification with actual persons, living or deceased, places, buildings, and products is intended or should be inferred. This program will be recorded and maintained in accordance with federal recordkeeping laws. Let's get started. We have three objectives for today. First, we will look at the basic differences between Form 1023, the application for exemption under section 501(c)(3) and the form 1023-EZ, the streamlined application for exemption under section 501(c)(3). Moving forward, we will refer to the form 1023 as the form 1023 and the form 1023-EZ as the EZ. Our second objective will be to explain the eligibility requirements for the EZ. For our final objective, we will review the information needed to complete and submit the EZ.

Before going into the differences between the 1023 and the EZ, let's begin with what they have in common. Both forms are only used by organizations seeking recognition of tax exemption under section 501(c)(3). Section 501(c)(3) organizations have the distinction of receiving tax deductible contributions in addition to tax free income. However, please note that there are other tax exempt subsections under the internal revenue code, such as section 501(c)(4), (c)(6), (c)(7), and many more. Organizations requesting exemption under those subsections must use a different application form. Both forms are due within 27 months of formation to be considered timely filed. This means that when an organization submits its application for section 501(c)(3) status, within 27 months of its formation date, it will generally be granted recognition of exemption, effective its date of formation. If either form is not submitted within the 27 months, recognition of exemption will be effective from the date the application was submitted. Lastly, both forms require payment of a user fee. As we just discussed, both the 1023 and the EZ are used only by organizations seeking exemption under section 501(c)(3). Regardless of which application form is used, organizations seeking 501(c)(3) status must be organized and operated exclusively for a section 501(c)(3) purpose, and none of its net earnings inures to or benefits any private shareholder or individual. A detailed discussion of the exemption requirements for section 501(c)(3) organizations is out of the scope of this presentation. However, a variety of IRS resources will be provided at our conclusion that can help you learn more. In addition, you may consult a tax professional. Now, let's briefly talk about the 1023. Any organization applying for section 501(c)(3) status can use the 1023. Remember, to use the EZ, an organization must meet certain eligibility requirements, which we will discuss later in the presentation. The 1023 and all required attachments, supplemental schedules, and other documents are submitted in paper form. The 1023 seeks to obtain sufficient information and detail about organizations that may have complex structures or activities. A complete application includes copies of organizing documents, financial information, a detailed description of activities, and more. After submitting the 1023, an organization can expect to be contacted within 180 days from the submission date.

Organizations can request expedited handling of the 1023, and it will be granted if they meet the expedite criteria. And finally, the 1023's user fee is $600. Moving on to the EZ. The EZ is only available to those organizations that meet certain eligibility criteria.

The EZ is only filed electronically and is designed for small organizations. It has a shorter processing time than the 1023. After submitting the EZ, an organization can expect to be contacted within 90 days from the submission date. However, the EZ is not eligible for expedited handling. The user fee for the EZ is $275. As we previously mentioned, not every organization can apply using the EZ. Organizations can determine their eligibility for the EZ by completing the form 1023 EZ eligibility work sheet, which is available in the form 1023 EZ instructions, starting on page 13. It is very important that organizations complete this work sheet before completing the EZ application. The work sheet consists of 30 questions.

If an organization answers yes to any question on the work sheet, they cannot apply for exemption using the EZ streamlined application. Let's run through the questions on the eligibility work sheet. We will put screenshots of the questions on each slide, but it is important to note that the actual eligibility work sheet has additional information under each question that does not appear on the slides. You should also refer to the form 1023 EZ instructions. Remember, answering yes to any question means an organization cannot use the EZ and must file the full form or standard 1023. The first three questions from the work sheet address financial thresholds. If gross receipts are expected to exceed $50,000 in the next three years, if gross receipts have exceeded $50,000 in any of the past three years, or if total assets have a fair market value in excess of $250,000, the organization cannot use the EZ.

Questions four through six relate to foreign organizations. If the organization was formed under the laws of a foreign country, has a mailing address in a foreign country, or is a successor to or controlled by an entity suspended under section 501(p) as a terrorist organization, the EZ cannot be used. Questions 7-11 address the form or entity type of an organization and other factors. The following organizations would answer yes on the eligibility work sheet and therefore cannot use the EZ: Organizations that are formed as a limited liability company, LLC, or formed as an entity type other than an association, nonprofit corporation, or trust, for profit organizations or successors to for profit organizations, revoked organizations or successors to previously revoked organizations. This question does not apply to organizations whose exempt status was automatically revoked for failure to file a Form 990-series return for three consecutive years; and finally, organizations currently exempt under, or previously exempt under, another 501(c) subsection. All of the organizations I just briefly described cannot file the EZ. A significant number of the questions on the eligibility work sheet focus on the activities of an organization. We will briefly touch on these over the next three slides. The activities questions begin with numbers 12-17. If the organization answers yes to operating as a church, a school, a hospital, or medical research organization, an agricultural research organization, or a cooperative hospital or educational service organization, they cannot use the EZ. Questions 18-23 continue to ask about an organization's activities. Organizations that answer yes to engaging in the following cannot file the EZ.

Charitable risk pools under section 501(n), supporting organizations under 509(a)(3), credit counseling activities, investments in private equities or partnerships, or the selling of carbon credits or offsets. Continuing with the focus on activities, we are now on questions 24-28 on the eligibility work sheet. If an organization answers yes to operating as an HMO, an accountable care organization, a donor advised fund, a private operating foundation, or an organization that tests for public safety, they cannot file the EZ. The last two questions on the work sheet, 29 and 30, are directed towards organizations whose tax-exempt status has been automatically revoked for non-filing of Form 990-series returns for three consecutive years. If you are automatically revoked and answer yes to question 29, that you are applying for reinstatement under section 4 of revenue procedure 2014-11, and seeking to change your foundation classification from the classification you had before the automatic revocation, you cannot use the EZ. If an organization answers yes to question 30, that they are applying for retroactive reinstatement of exemption under section 5 or 6 of revenue procedure 2014-11, they cannot use the EZ. Revenue procedure 2014-11 provides procedures for reinstatement for organizations whose tax-exempt status has been automatically revoked. Organizations applying for reinstatement after auto revocation should review this revenue procedure in detail before submitting an application for reinstatement on either the 1023 or the EZ. Additionally, if an organization answers yes, that they meet section 4 of revenue procedure 2014-11 on the EZ when they do not, the EZ application will be rejected and the user fee refunded. If you have completed the eligibility work sheet and answered no to all of the questions, your organization can use the EZ. Remember, we strongly recommend reading the instructions to the form 1023-EZ in their entirety before completing the work sheet. If you can reduce the possibility of error when answering the work sheet questions, you can lessen the likelihood that your EZ will be rejected.

The first step in the EZ online application process is to register for an account on You can go directly to or for the link as well as copies of instructions and other helpful information, you can visit, and click on applying for tax-exempt status tax-exempt status and then form 1023-EZ. Next, sign into your account and enter Form 1023 EZ in the search bar at the top of the page. Then click continue to form to begin. On the slide is the first page of the EZ. As we previously mentioned, before you complete the EZ, you must attest that you have completed the eligibility work sheet in the current instructions, are eligible to apply using the EZ, and understand the requirements to be exempt under section 501(c)(3). Here you can see part 1 of the EZ. This part gathers basic information about the organization, such as full name, address, employer identification number or EIN, month the tax year ends, contact individual and phone number, fax number, user fee submitted, names, titles, and mailing addresses of officers, directors, and trustees, as well as the organization's website and email, if available. It's important to note that an organization cannot apply for exemption without an EIN. Additionally, the full name entered on the EZ should match the organizing document exactly. For more information on organizational structure and organizing documents, such as articles of organization or articles of incorporation, see the instructions to the form 1023 EZ page 4 and publication 557, tax-exempt status for your organization, page 24. Here we have part 2 of the EZ. Part 2 focuses on organizational structure and the organizational test of section 501(c)(3). Only certain entity types are eligible for tax-exempt status under section 501(c)(3). The first four questions in this part relate to your organizational structure, the existence of the organizational document, and the date of formation. The next three questions, five through seven, address the organizational test. All organizations must meet the organizational test under section 501(c)(3). For information on how to determine if your organizing document meets this test, see page 4 of the instructions for form 1023-EZ. You may also review publication 557, tax-exempt status for your organization, which includes further information and examples of the organizational test. In a nutshell, the organizational test requires that the organizing document limit its purposes to those described in section 501(c)(3) and not expressly empower the organization to engage, other than as an insubstantial part of activities, in consists that themselves are not in furtherance of section 501(c)(3) purposes. Also, as part of the organizational test, assets must be dedicated to section 501(c)(3) purposes upon dissolution of the organization. Keep in mind that questions five through seven are attestations not requiring the submission of the actual supporting documents. Your organization is responsible for understanding the information they are attesting to, in this case, that your organizing documents meet each of the organizational test requirements noted in boxes five, six, and seven.

Now on to part 3, your specific activities. In this part, the EZ is focusing on the activities of your organization because all organizations must meet the operational test of section 501(c)(3). This test looks at the activities of an organization to ensure they are operating exclusively for section 501(c)(3) purposes. In question 1 of part 3, you must briefly describe your mission or most significant activities. Keep in mind, you are limited to 250 characters. The form 1023-EZ instructions page 5 provide good detail on what to keep in mind when completing this section. It also provides examples of activities or missions that do further section 501(c)(3) purposes and those that do not. For example, an organization that operated a scholarship fund for making payments to pre-selected specifically-named individuals does not meet the section 501(c)(3) operational test, as it is operated for the benefit of a private, rather than a public interest. Question 2 asks for a three-character code called an NTEE code that best describes your activities. You can select the appropriate code from the list of NTEE codes, starting on page 21 of the instructions to form 1023-EZ.

Question 3 addresses your section 501(c)(3) purpose. In order to qualify for section 501(c)(3), your organization must be organized and operated exclusively to further one or more of these purposes. Check all purposes that apply to your organization. Question 4 is an attestation regarding activities that do not further section 501(c)(3) purposes. Before you attest that you have not and will not conduct activities that violate these probations and restrictions, you may wish to read pages 7 and 8 in the form 1023-EZ instructions, which provide more information on each bulleted item that comprises the attestation. Part 3 continues with questions 5-12. These are yes-or-no questions, which cover the following activities: Influencing legislation, paying compensation to officers, directors, or trustees, donating funds to pay for expenses for individuals, conducting activities or providing assistance to individuals or organizations outside the United States, engaging in financial transactions with officers, directors, or trustees or any entities they own or control, having unrelated business gross income of $1,000 or more during a tax year, operating bingo or other gaming activities, and providing disaster relief. Part 4 of the EZ addresses the foundation classification of your organization. This is an important designation for every organization described under section 501(c)(3), so before you select a classification, please read pages 8-11 of the form 1023-EZ instructions. This is an area where it is easy to select the wrong classification, which can have negative consequences to your organization, such as limitations on donations and excise taxes. The two main foundation classifications are public charity and private foundation. A public charity generally has a broad base of support, while a private foundation generally receives its support from a small number of donors. Every organization is a private foundation unless it can qualify for one of the public charity exceptions noted in questions 1 and 2 part 4.

Question one provides the exceptions to private foundation status for churches, schools, or hospitals. There are specific requirements for each of these three classifications and a yes answer here means the organization cannot use the EZ. Question 2 provides three options to meet public charity status. If you normally receive at least one third of your support from public sources or you normally receive at least 10% of your support through public sources, and you have other characteristics of a publicly supported organization, select Box 2(a). This selection indicates a public charity status under sections 509(a)(1) and 170(b)(1)(a)(vi). The form 1023-EZ instructions provide a calculation on page 10 titled line 2(a) to help you determine if you can meet this classification. If you normally receive more than one third of your support from a combination of gifts, grants, contributions, membership fees, and gross receipts from activities related to your exempt functions and normally receive not more than one third of your support from investment income and unrelated business taxable income, select Box 2(b). This selection indicates a public charity status under section 509(a)(2). The form 1023-EZ instructions provide a calculation on page 11 titled line 2(b) to help you determine if you can meet this classification. If you are operated for the benefit of a college or university that is owned or operated by a governmental unit, select Box 2(c). This selection indicates a public charity status under sections 509(a)(1) and 170(b)(1)(a)(iv). The requirements and calculation for this public charity classification are located in the form 1023-EZ instructions, page 11, titled line 2(c). The terms used in the EZ public charity descriptions for 2(a), (b), and (c) are defined in the form 1023-EZ instructions. Also, to determine the correct classification using the calculations in the instructions, you should know the types, sources, and amounts of your revenues for the most recent five-year period. If you are a new organization, you can use types, sources, and amounts of revenue received thus far, combined with those you anticipate you will receive over the first five years of existence.

If you don't satisfy one of the public charity tests in 2(a), (b), or (c), you are a private foundation and must attest that your organizing document contains the provisions required by internal revenue code section 508(e). These special organizing document requirements are discussed in the form 1023-EZ instructions on page 11, beginning with the title special organizing document requirement. Please note that you may only check one box in line 2.

Again, take care in your selection. If you wish to request a change in foundation classification after receiving exemption, you would have to submit a form 8940, request for miscellaneous determination, and pay the applicable user fee. Part V of the EZ will not be completed by all organizations. This section is only relevant to organizations that are applying for reinstatement of exemption after being automatically revoked for failure to file 990 series annual returns or notices for three consecutive years. Let's step back a minute.

Not all automatically revoked organizations can use the EZ to apply for reinstatement of exemption. Remember the eligibility work sheet? Questions 29 and 30 address automatically revoked organizations applying for reinstatement. If you are applying for reinstatement under section 4 of revenue procedure 2014-11 and changing your foundation classification, you cannot use the EZ. Or if you are applying for retroactive reinstatement under section 5 or 6 of revenue procedure 2014-11, you cannot use the EZ. You must file the standard 1023. So which automatically revoked organizations applying for reinstatement can use the EZ?

Organizations that meet the criteria of revenue procedure 2014-11, section 4 or section 7, can apply for reinstatement on EZ. See boxes 1 and 2 on the current slide. If you meet all of the criteria in the Rev. Proc. for section four to be retroactively reinstated and are not changing your foundation classification, check Box 1. If you meet all of the criteria in the Rev. Proc.

for section seven to be reinstated effective the date of the application filing, check Box 2.

Remember, if you checked these boxes and do not meet the stated criteria in the Rev. Proc., your application will be rejected. The last part of the form is your signature. Make sure the signer is an officer, director, or trustee of your organization. The signer is declaring under penalties of perjury that they are authorized to sign the application, that they have examined the application, and that it is true, correct, and complete to the best of their knowledge. After this part, you will pay the user fee and submit the application. It is important to note that submitting the application does not guarantee exemption will be recognized. If your application is incomplete or not completed correctly, it may be rejected.

Additionally, you may be contacted for additional information. The IRS also selects a statistically valid random sample of applications for pre-determination reviews, which may also result in requests for additional information. If you have determined you cannot use the EZ, consider going to our website and using the interactive 1023. It includes prerequisite questions, auto-calculated fields, help buttons, and links to relevant information. Once completed, you will still print and mail the form. To get to the interactive 1023, simply go to and click on applying for tax-exempt status and then interactive form 1023. On this next slide, we have listed just a few of the topics available on the charities and nonprofits section of the IRS website. The site is located at This site has a wealth of information for tax-exempt organizations. It can help you with applying, annual reporting, how to stay exempt, educational resources and guides, forms and instructions, and a host of other topics. There is also a search function titled tax-exempt organization search, which will identify organizations eligible to receive tax deductible contributions, automatically revoked organizations, determination letters after January 1, 2014, Form 990-series returns, and organizations that have filed the Form 990-N e-postcard. Finally, you may also wish to visit the stay exempt website located at This is an IRS site created especially for section 501(c)(3) organizations. It has information for both new and existing organizations and includes recent news, videos, and tutorials. The course content includes subjects such as applying for section 501(c)(3) status, interactive form 1023, and prerequisite questions, life cycle of an exempt organization, maintaining section 501(c)(3) tax-exempt status, Form 990 overview, required disclosures, foundation classification, and more. There is also a resource library for your convenience. That is all we have for today. Thanks for attending the webinar on the Form 1023-EZ, streamlined application, and good luck with your organization.