Not-for-Profit Alert: Form 1023, Application for Tax Exempt Status, Must Be Filed Electronically
By Israel Tannenbaum
In Revenue Procedure (Rev. Proc. 2020-8) the IRS has announced that effective January 31, 2020, Form 1023 (Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code) must be filed electronically.
This modifies Revenue Procedure 2020-5, 2020-1 I.R.B. 241, which explains procedures for issuing determination letters on public charity status, private foundation status, and other determinations related to exempt organizations.
Rev. Proc. 2020-8 sets forth procedures for issuing determination letters in response to electronically submitted Form 1023 applications.
A related IRS release, IR-2020-25, expands on this and revises the instructions for Form 1023. The required user fee for Form 1023 will remain $600 for 2020.
The new rules are effective on Jan. 31, 2020. However, the IRS will accept completed paper Forms 1023 if submission of the Form 1023 is postmarked on or before April 30, 2020.
These changes generally apply procedures that were previously provided with respect to the required electronic filing of Form 1023-EZ, to Form 1023.
This is a positive change for newly-created organizations, as the IRS expects that the increased processing efficiency from electronic filing of Form 1023 will significantly reduce the time it takes them to process applications for, and approve, exempt status for not-for-profit organizations.
Please contact your Mazars USA LLP professional for additional information.