IRS To Implement Post-Determination Compliance Program For Exempt Organizations That Submitted A Form 1023-EZ Application For Exemption

The IRS recently announced that it will implement a post-determination compliance program to follow up on smaller exempt organizations that obtained their tax-exempt status by submitting a Form 1023-EZ Application for Exemption.  The five-page Form 1023-EZ Application became available last summer as a way for smaller nonprofit organizations to apply for tax-exempt status without having to complete the traditional Form 1023 Application, which can be over 25 pages and include numerous exhibits.  For more information on the Form 1023-EZ Application, click here.

As of the end of 2014, the IRS had received over 20,000 Form 1023-EZ Applications and approved approximately 95% of those applications. While the Form 1023-EZ Application has drastically cut down on the IRS' backlog of applications for tax-exempt status, critics of the new Form 1023-EZ Application believe that the IRS should be asking more questions regarding a nonprofit organization's activities and finances.