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How Much Does It Cost to File the 1023-EZ?

The filing fee for the IRS Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, is currently $275. This fee is non-refundable, regardless of whether your application is approved or denied.

Understanding the 1023-EZ Filing Fee

The $275 fee might seem straightforward, but understanding where it fits within the larger context of establishing a non-profit organization is crucial. Think of it as one piece of a much larger puzzle. While it’s the only fee directly payable to the IRS for this specific application, neglecting other potential costs can lead to unpleasant surprises.

For many fledgling non-profits, this fee represents a significant portion of their initial operating budget. It’s vital to factor it into your financial planning and consider ways to secure funding to cover this and other essential expenses. The good news is that the 1023-EZ is designed for smaller organizations, suggesting your initial costs might be generally lower compared to larger, more complex charities requiring the longer Form 1023.

Navigating the 1023-EZ Process: Beyond the Filing Fee

Successfully filing the 1023-EZ involves more than just paying the fee. It requires careful planning, meticulous documentation, and a clear understanding of IRS regulations. Errors or omissions can lead to delays or even rejection, potentially costing you time and money in the long run.

While the form is streamlined, it still demands accuracy. Ensure you meet all the eligibility requirements before submitting your application and paying the fee. If you’re unsure, seeking professional guidance from a qualified attorney or accountant specializing in non-profit law can be a wise investment. Consider this: the cost of professional advice upfront could potentially save you significantly more than the $275 filing fee if it prevents costly mistakes.

Additional Costs to Consider

While the $275 is the direct cost for filing, consider these potential associated expenses:

Legal Fees: Consultations with attorneys to ensure compliance and proper structuring of your organization.
Accounting Fees: Assistance with financial statements, bookkeeping, and ensuring proper accounting practices are in place.
State Filing Fees: Costs associated with registering your non-profit with your state government.
Software and Resources: Costs associated with using software or resources to prepare your application.
Time Investment: Your time (or your staff’s time) spent preparing the application has an inherent cost.
Potential for Rejection: While not a direct cost, rejection leads to loss of the fee and costs of a re-application (if eligible).

FAQs About Form 1023-EZ and Related Costs

Here are some frequently asked questions to provide a deeper understanding of the 1023-EZ and its associated costs:

1. Is the $275 Fee the Only Cost Associated With Obtaining 501(c)(3) Status?

No. While the $275 filing fee is the only cost directly payable to the IRS for the 1023-EZ application, there are often other costs involved in setting up a non-profit organization and obtaining 501(c)(3) status. These may include legal fees, accounting fees, state filing fees, and the cost of your time.

2. What Payment Methods Does the IRS Accept for the 1023-EZ Filing Fee?

The IRS requires electronic payment of the $275 filing fee. Acceptable methods usually include credit card, debit card, or direct debit from your bank account. You will make the payment through the pay.gov website when prompted within the online application process.

3. What Happens if My 1023-EZ Application Is Rejected? Do I Get a Refund?

No, the $275 filing fee is non-refundable, even if your application is rejected. If your application is denied, you may be able to address the reasons for denial and re-apply. However, you will need to pay the filing fee again. It’s essential to thoroughly review the requirements and ensure your organization is eligible before submitting the application.

4. How Can I Determine if My Organization Is Eligible to Use Form 1023-EZ?

Eligibility for Form 1023-EZ is based on specific criteria, including:

Gross Receipts: Your organization’s gross receipts must not have exceeded $50,000 annually for the past three years and are not expected to exceed that amount in the future.
Total Assets: Your organization’s total assets must be valued at $250,000 or less.
Type of Organization: The organization must be formed as a corporation, trust, or association and must be organized and operated exclusively for exempt purposes described in section 501(c)(3).

Refer to the instructions for Form 1023-EZ on the IRS website for a complete list of eligibility requirements.

5. Can I Apply for a Fee Waiver for the 1023-EZ Filing Fee?

No, the IRS does not offer fee waivers for the Form 1023-EZ filing fee. All organizations applying using this form are required to pay the $275 fee.

6. What Are the Penalties for Providing False Information on the 1023-EZ Application?

Providing false or misleading information on the 1023-EZ application can have serious consequences. The IRS may revoke your organization’s 501(c)(3) status, and individuals involved could face civil or criminal penalties. Accurate and truthful reporting is paramount.

7. How Long Does It Take for the IRS to Process the 1023-EZ Application?

Processing times can vary. The IRS generally aims to process Form 1023-EZ applications within a few months, but it can take longer depending on their workload and the complexity of the application. Check the IRS website for current processing times.

8. Can I Track the Status of My 1023-EZ Application?

Yes. Once you submit your application, you should receive an acknowledgement from the IRS. You can then typically track the status of your application through the IRS website or by contacting the IRS directly.

9. What Happens After My 1023-EZ Application Is Approved?

Upon approval, the IRS will issue a determination letter recognizing your organization as a 501(c)(3) tax-exempt entity. This letter is crucial for fundraising and demonstrating your tax-exempt status to donors. You will also need to comply with ongoing reporting requirements, such as filing Form 990-N (if eligible) or Form 990.

10. What Are the Annual Reporting Requirements for 501(c)(3) Organizations Approved Through the 1023-EZ?

Organizations approved through the 1023-EZ are generally required to file an annual information return with the IRS. Most smaller organizations will file Form 990-N (e-Postcard) if their gross receipts are normally $50,000 or less. Organizations with higher gross receipts will file Form 990 or Form 990-EZ, depending on their income and assets.

11. If I Am Ineligible for the 1023-EZ, What Is the Cost to File the Regular Form 1023?

If you are ineligible for the 1023-EZ, you must file the longer Form 1023. The filing fee for Form 1023 is $600. Therefore, it’s important to carefully assess your eligibility before choosing which form to file.

12. Where Can I Find the Most Up-to-Date Information About the 1023-EZ and Its Filing Fee?

The IRS website (www.irs.gov) is the official source for the most up-to-date information regarding Form 1023-EZ, its instructions, and the filing fee. Always refer to the IRS website for the latest information before preparing and submitting your application. The IRS also publishes notices and announcements about fee changes, which are generally announced well in advance of their effective date. Regularly checking for these updates will help you avoid any surprises.