Filing for non-profit status: hope and help for smaller organizations

Ever been stymied getting a non-profit organization together?

Got word from the IRS yesterday that a draft form 1023-EZ was being make available for review, for possible use this summer. And little wonder: the form 1023 is what an organization files to acquire its tax-exempt status. It’s a beast to complete, and the filing fee isn’t trivial for a group bootstrapping. Form 1023-EZ should take away some strain in those fragile, early days of of new organization.

So I looked at the much-shorter proposed form (PDF) and a couple of blog posts sharing the same news; this is the one to see for more detail. First, only relatively small organizations can use the 1023-EZ to apply: annual revenues of less than $200,000 and assets less than $500,000. Second, no word on the fees. Third, churches (which formally are exempt from applying, but need to do so to get a letter of exemption) would not be able to use this form at release time.  Fourth, the IRS also benefits due to its long backlog of applicants, which may not sound like much until your fundraising is inhibited for want of a determination.

So who, in church circles, should care? Smallish, independent mission-focused non-churches, like mission societies, charitable projects, publication efforts, travel funds and the like. Think of the former independent affiliate organization. Who shouldn’t? Those who can work through an existing non-profit organization, and those who want to form a very, very small organization (under $5,000 in annual revenues) because the IRS provides for those without application, and they’re unlikely to really need a determination letter. (I thought I had written about this option, but cannot find that I have.)