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IRS Slashes Application Fee for Small Exempt Organizations

By Alistair M. Nevius, J.D.

Please note: This item is from our archives and was published in 2016. It is provided for historical reference. The content may be out of date and links may no longer function.

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Small organizations that want the IRS to recognize their tax-exempt status are getting a break. The IRS announced that it is cutting the application fee they must pay when applying for tax-exempt status (Rev. Proc. 2016-32). The announcement, in Tuesday’s Internal Revenue Bulletin, reduces the fee from $400 to $275 for Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. The change is effective July 1.

Form 1023-EZ is available for use by U.S. organizations with assets of $250,000 or less and annual gross receipts of $50,000 or less. The IRS recently reported that, in its first year of availability, 52% of applications for exempt status were made on Form 1023-EZ.

The IRS also announced, in its “Form 1023-EZ First Year Report,” that it expects to make other changes to the form although, so far, no draft amendments have been posted on the IRS website.

Tuesday’s revenue procedure modifies Rev. Proc. 2016-8, which was issued in January, and which sets the user fees for applications for recognition of exempt status, as well as a fee schedule for requests for determination letters.

—Alistair Nevius (anevius@aicpa.org) is The Tax Adviser’s editor-in-chief, tax.