Inadequate IRS funding will create shady nonprofits

Inadequate IRS funding will create shady nonprofits

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A rational solution would have been to increase the workforce, shorten the wait time and continue the screen. Instead, in 2014, the feds created a new solution: the new form “1023EZ." For $400, the new entity, if it will have less than $50,000 in gross receipts the first year, fills out a generic three-page form. In mere weeks, it is almost certainly deemed tax exempt — any real screening is gone. This new option has been blasted by the National Council of Nonprofits and the National Association of State Charity Officials. Many foundations, including some locally, won’t donate to these EZ nonprofits.

Now the fee has been dropped to only $275.

Most of us are quick to join the political chorus calling for government budget cuts and personnel cuts. We deplore the bureaucracy and we have unfortunate anecdotes from dealing with it. But it is illuminating to see an example of where insufficient funding caused an ill-advised solution that will create a flood of questionable nonprofits, and harm a vital sector of our economy for some time to come.

Source Name: 
The Tennessean
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