Changes Expected in Early 2018 for Applications of Exempt Organizations

Sunita Lough, commissioner of the Internal Revenue Service (IRS) Tax-Exempt and Government Entities (TE/GE) Division stated recently that changes will be made in January to Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, and Form 1024, Application for Recognition of Exemption Under Section 501(a) with the goal to streamline the application process surrounding both forms.

On September 27, the IRS released a draft version of Form 1024-A, Application for Recognition of Exemption under Section 501(c)(4) of the Internal Revenue Code, created specifically for organizations applying to be social welfare organizations under the section. The comment period ended October 23. Lough stated the new application form will be made available in January but did not mention if the comment period produced any revisions to the draft application.

The highly scrutinized Form 1023-EZ, Streamline Application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code will also have changes in January, according to Lough. The IRS will add questions about the applicant's gross receipts and fair market value of the organization's assets, along with a narrative box for the applicant to state the organization's mission and primary activities. The revised form will also require churches, schools and hospitals – entities not eligible to file Form 1023-EZ – to self-identify.

These changes were outlined in the TE/GE's Fiscal 2018 Work Plan, released in September, and the Division predicts the average processing time for the forms will increase. According to Lough, additional examiners have been hired for the extra workload.

Lastly, the Division has put added emphasis on compliance with regard to paper-filed returns. In January, the Division will implement procedures intended to detect and reject incomplete paper-filed returns that were previously filed with the IRS. Lough notes, "Paper returns get away with not giving us all the data, and that's not very equitable; we want that to change."

With limited funding and personnel resources, the TE/GE Division strives to have maximum efficiencies wherever possible, not only through the exempt organization application process but also through audit processes. The Division’s goal is to continue to evolve and develop better and faster practices.

For more information, please contact Schneider Downs.  

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2021 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
Ohio’s New Budget
Supreme Court Ruled State Request for Donor Information Unconstitutional
Applying for Federal Income Tax Exemption?
IRS Experiencing Delays: Exempt Organizations are Encouraged to e-file Forms 8868 and 990-ez
Ohio Update on the Unemployment Benefits Exclusion for Taxpayers Who Filed Prior to the Enactment of the American Rescue Plan Act
LIFO Liquidation Relief for Automotive Dealers
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us
Map of Pittsburgh Office

One PPG Place, Suite 1700
Pittsburgh, PA 15222

[email protected]
p:412.261.3644     f:412.261.4876

Map of Columbus Office

65 East State Street, Suite 2000
Columbus, OH 43215

[email protected]
p:614.621.4060     f:614.621.4062

Map of Washington Office
Washington, D.C.

1660 International Drive, Suite 600
McLean, VA 22102

[email protected]

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.