If you’re filing EO applications next year, you may see some additional questions and boxes on your forms. Soon, the IRS will revise Form 1023, “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,” and Form 1024, “Application for Recognition of Exemption Under Section 501(a),” both of which are used by organizations applying for tax-exempt status under section 501.
Why is the IRS considering these revisions? Going into effect in January 2018, these changes are intended to streamline the application process.
Revisions to Form 1023-EZ
Form 1023-EZ will also receive a minor facelift; expect to see a new box where organizations must describe their exempt purpose. The revised Form 1023-EZ will also ask organizations for specifics; is the applicant seeking recognition as a church, hospital, or school? If so, you may now be allowed to use Form 1023-EZ. The last change is to the question asking about the organization’s gross recipients and assets—it will now be presented as two separate questions.
These changes came about after a review of three percent of randomly selected filed forms. Processing time will also increase as a result of these changes, and according to Sunita Lough, Commissioner of the IRS Tax-Exempt and Government Entities Division, more examiners have been hired to deal with the added workload.
A New Form: Form 1024-A
If you’re an organization applying for a social welfare organization designation under section 501(c)(4), then you may have to revisit the application process. The Protecting Americans from Tax Hikes Act of 2015 authorized the new Form 1024-A, “Application for Recognition of Exemption Under Section 501(c)(4) of the Internal Revenue Code.” Although organizations seeking 501(c)(4) status can self-declare, the new Form 1024-A is meant for use by organizations that want an official determination of their tax exempt status from the IRS. Barring any additional changes after a comment period, the final version will be available in January 2018.
Additional Changes to Expect
Come the new year, it will help to pay special attention to your forms; starting January, the IRS will implement new review procedures. Incorrect or incomplete Forms 990 filed in paper form will be rejected.
For help navigating these new forms or if you have other tax-related inquiries, please contact your local Sikich advisor or visit www.sikich.sikichdevelopment.com for more information.