IRS Form 1023, application for exempt status, now must be filed electronically
On Jan. 31, the IRS issued Revenue Procedure 2020-8, requiring that Form 1023, “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,” be filed electronically.
Organizations seeking exempt status under Section 501(c)(3) are required to file Form 1023. Historically, this form has been paper-filed, together with multiple attachments. Now, as of Jan. 31, filers must submit the application and pay the associated user fee online at www.pay.gov. While the electronic filing of Form 1023 is mandatory, the IRS is offering a grace period, allowing paper filing through April 30, 2020.
Based on our initial review of the electronic filing page relating to Form 1023, it appears that the size of the file will be limited to 15 MB. If the file exceeds this limit, the filer will need to electronically file what can be filed up to the 15 MB maximum and contact the IRS for guidance regarding submission of the additional documentation.
This new measure appears to be the latest step taken by the IRS in its efforts to establish methods for becoming more innovative and efficient, and perhaps this new procedure will allow for a reduction in the time between submission and approval.
As related to exempt organizations, the IRS’s push for more efficient filings and data security is a journey that began soon after the Taxpayer First Act was signed into law on July 1, 2019. That legislation was designed to overhaul the IRS by requiring it to modernize its technology and enhance its cybersecurity, requiring all exempt organizations to electronically file statements and/or Form 990 series returns for tax years beginning after July 1, 2019.
Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
InsightDeferred compensation for tax-exempt organizations: Tax and 990 reporting issues to considerLori Rothe Yokobosky, Laura KielczewskiLearn about common tax and Form 990 reporting issues associated with nonqualified deferred compensation arrangements.
On-demandExempt organizations challenges and concerns during the pandemicJoin members of CohnReznick’s Exempt Organizations Tax Services group and the non-profit legal counsel of Perlman & Perlman as we walk through a comprehensive review of these challenges, along with other topics to help non-profits make sense of some of the more complicated requirements.
InsightQualified emergency financial aid grants for student COVID-19 relief are nontaxableLori Rothe Yokobosky, Laura KielczewskiCertain funds awarded to help students with COVID-19-related expenses are excluded from their gross income. Read about impacts to credits, reporting, and more.
InsightNew York State sets new Department of State filing requirements for nonprofitsLori Rothe Yokobosky, Sima Wolfson, Zach SegalLearn about the Annual Financial Report, Funding Disclosure Report, and Financial Disclosure Report – who must file and how, when they are due, and more.