November 11, 2004 | Read Time: 1 minute
Organizations seeking charity status will be required to provide additional information on a revised application form released by the Internal Revenue Service. They will be required to use the updated Form 1023 beginning May 1, 2005.
The application form has been redesigned to give the IRS data that will allow the tax agency to spot potential abuses by nonprofit organizations.
To uncover instances in which people illegally benefit from their ties to charities, the new form asks organizations for information about their payments to third parties who helped create them.
The form requires that groups provide detailed information about pay arrangements with their officials. Applicants must identify all employees and independent contractors who earn more than $50,000 a year, and explain how they justify the salaries they pay.
Organizations must also provide information about their relationships with employees’ businesses and family members, and explain their conflict-of-interest practices.
“This new form will give us valuable information about those who might abuse the tax-exempt system and erode public confidence in charities,” Internal Revenue Commissioner Mark Everson said in a statement.
IRS officials said the new form, while longer than the one it replaces, should be easier to fill out.
They also said that it simplifies the process for organizations seeking charity status by incorporating other forms that groups currently must file separately.
The revised Form 1023 is available from the government online at http://www.irs.gov. Printed copies of the form can be obtained later this month by calling the IRS at (800) 829-3676.
