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.
What does CohnReznick think?
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.
Subject matter expertise
CPA, MST, Partner & Exempt Organizations Tax Services Leader
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