IRS Granted Tax-Exempt Status to Nearly 80,000 Groups in 2016

A short-form version of the Internal Revenue Service application for nonprofit status continues to bolster the number of groups getting a 501(c)3 designation.

The IRS granted 501(c)(3) designations to 79,545 religious and charitable organizations last year, according to the newly released 2016 IRS Data Book, an annual summation of its work. That number is down slightly from 2015, when it conferred nonprofit status to 86,915 applicants.

Still, in each of the past three years, the number of approvals has more than doubled the 2013 figure, the last full year before the agency introduced the 1023-EZ. The three-page form was made available in July 2014 for organizations with less than $50,000 in annual gross revenue.

The 1023-EZ is significantly slimmer than the 26-page application required of larger organizations. While it streamlined the application process for smaller groups, critics complain that in offering the form, the IRS has abandoned its oversight duties and instead opted to rubber-stamp applications. Quickly conferring 501(c)3 status to bad actors could tar the reputations of legitimate tax-exempt organizations, they argue.

In total, the agency received 84,588 applications for tax-exempt status from religious or charitable institutions, in 2016. Of those, 37 were disapproved and 5,006 were either withdrawn by the applicant or incomplete.

Last year, there were 1.8 million tax-exempt organizations, up from 1.7 million the previous year, according to the IRS. Of those, 1.2 million were religious or charitable organizations. Tax-exempt groups filed slightly more than 960,000 forms of various kinds electronically, the agency reported.