If you were contemplating starting a small charity, you were likely scared away from the scary 26-page Form 1023 application and accompanying documents required by the IRS to file for tax exemption and the $6,000 – $10,000 professionals charge to prepare it.
The form 1023 is necessary in order for your organization to receive the coveted 501(c)(3) tax-exempt status and so donors can make tax-deductible donations.
The exciting news is that on July 1, 2014, the I.R.S. introduced a new Form 1023-EZ, which allows smaller charities to fill out a short 3-page application to file for tax-exempt status, cutting down the costs and time needed by attorneys and accountants to prepare the application.
Most organizations with less than $50,000 a year in gross receipts will be eligible to use the shorter application. The 1023-EZ instructions include a checklist that organizations must complete to ensure that it is eligible. The I.R.S. anticipates that as many as 70% of all applicants qualify to use the new form. The 1023-EZ must be filed online at www.pay.gov together with a $400 user fee.