Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue, requires applicants merely to attest, rather than demonstrate, that they meet fundamental aspects of qualification as an exempt entity. The IRS approves 95% of Form 1023-EZ applications, but once it reviewed documents or basic information from a sample of the applicants, it approved only 77%, and 20% did not qualify for exempt status as a matter of law. TAS’s analysis of a representative sample of approved Form 1023-EZ applicants showed that 37% did not satisfy the legal requirements for exempt status.
The IRS should revise Form 1023-EZ to require most applicants to submit their organizing documents and a description of their actual or planned activities and financial information. The IRS should make a determination only after reviewing the application and these supporting materials.
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