July 2, 2014 | Read Time: 1 minute
Against the wishes of several nonprofit associations and charity regulators, the Internal Revenue Service has introduced a short form for small organizations to file for tax-exempt status.
Instead of having to file a 26-page application form, would-be nonprofits with gross revenue of $50,000 or less and assets of $250,000 or less are now eligible to file a three-page application. Some nonprofits, such as hospitals, colleges, and universities, would not be eligible to use the new form, called the 1023-EZ. About 70 percent of new applicants, the IRS predicts, will be eligible for the short form.
The IRS says the 1023-EZ will allow it to process applications more quickly and devote more time to rooting out fraud and abuse among existing nonprofits. The agency has a backlog of more than 60,000 applications for tax-exempt status.
Critics of the new short form say the longer form educates applicants about the planning involved in setting up nonprofits and helps weed out cheats.
