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Streamlined EO Application Must Go, Group Says

January 12, 2021 Publication: Tax Notes | Posted in:
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Form 1023-EZ
Tax Exemption
Council of Nonprofits in the News [1]

A short and simple IRS form used by groups seeking tax-exempt status as charitable organizations should be replaced by a new version to prevent ineligible organizations from obtaining exemption, according to a national network of nonprofits.

Almost all organizations that submit Form 1023-EZ, “Streamlined Application for Recognition of Exemption Under Section 501(c)(3) [2] of the Internal Revenue Code,” are granted exemption by the IRS, regardless of eligibility, David L. Thompson of the National Council of Nonprofits said in a January 11 letter to the IRS [3].

As a result, the erroneous approval rate for 2019 was 46 percent [4], wrote Thompson, citing a Taxpayer Advocate Service report. He was responding to an IRS request [5] for comments on exempt organization forms and schedules.

“Quite frankly, the form fails to provide adequate information to ensure that only eligible organizations attain tax-exempt status and the privilege of receiving tax-deductible donations,” Thompson said.

Source Name: 
Tax Notes
Source Link: 
https://www.taxnotes.com/tax-notes-today-federal/exempt-organizations/st... [6]

Source URL: https://www.councilofnonprofits.org/article/streamlined-eo-application-must-go-group-says

Links
[1] https://www.councilofnonprofits.org/article-categories/council-of-nonprofits-the-news
[2] https://www.taxnotes.com/lr/resolve/cqfp#cqfp-0000011
[3] https://s3.amazonaws.com/pdfs.taxnotes.com/2021/2021-1139_TNTDocs_Support-NonprofitsCouncilComments.pdf
[4] https://www.taxnotes.com/lr/resolve/2brmb
[5] https://www.taxnotes.com/lr/resolve/2d634
[6] https://www.taxnotes.com/tax-notes-today-federal/exempt-organizations/streamlined-eo-application-must-go-group-says/2021/01/12/2dq9q