How do you file IRS Form 1023 for 501(c)(3) status?
You file IRS Form 1023 by submitting a detailed online application through pay.gov — that presents the nonprofit’s purpose & structure and activities along with the finances — so the IRS can decide whether to recognize it as tax-exempt under section 501(c)(3).
What is IRS Form 1023 for nonprofits?
IRS Form 1023 is the formal “Application for Recognition of Exemption Under Section 501(c)(3)” — that specific charities should file to be recognized as exempt from federal income tax and eligible to receive tax-deductible donations.
Once approved, the organization is treated as a 501(c)(3). In other words, income from related activities is not subject to federal income tax — and donors can generally deduct contributions on their own returns — subject to normal limits.
Specific groups, like churches and very small charities with gross receipts normally under $5,000 — are treated as exempt without filing but may still request a formal determination letter if they want written proof for donors and grantors.
Who should file Form 1023 instead of the streamlined version?
The full application should be used when your nonprofit is more established & more complex or does not qualify for the shorter online version designed for smaller organizations.
In general practice, the streamlined filing is only available to organizations that expect annual gross receipts at or below $50,000 — and have total assets of $250,000 or less — subject to extra eligibility questions in the IRS worksheet.
The standard form is also needed if your activities involve specific higher-risk areas — like specific schools or hospitals or international operations or if the worksheet indicates that you are not eligible for the shorter option.
How do you apply for 501(c)(3) tax-exempt status with Form 1023?
Applying for 501(c)(3) tax-exempt status is done via completing Form 1023 online and submitting it with the required user fee and attachments — that prove the charitable purpose and governing structure as well as financial viability.
1. EIN
An Employer Identification Number should be obtained — even if you have no employees.
2. Setting up the governing documents
Form a corporation, trust, LLC, or association and adopt articles and bylaws that limit the purpose to 501(c)(3) objectives — and dedicate assets to charitable use if you dissolve.
3. Confirming the charitable purpose & activities
It should be ensured that the planned work fits into permitted categories like charitable, religious, educational and scientific or prevention of cruelty to children or animals — and that you will not engage in prohibited political campaign activity.
4. Preparing financial info
Historical income and expenses must be gathered if you already operate and realistic budgets should be prepared for the next several years — so the IRS can see the funding plan.
5. Completing the application online
Fill in each part of the form & answer questions about your structure. Then describe programs and present details on compensation & related organizations and fundraising. The IRS expects specific and 100% complete answers rather than general statements.
6. Attaching required documents
Your organizing documents should be uploaded with bylaws and financial schedules along with any additional explanations requested in the instructions.
7. Submitting through pay.gov & paying the fee
All applications are filed electronically through pay.gov — and the current user fee for the standard form is $600.
What key sections of the form should you prepare for?
Specific parts of the application take the most time and naturally deserve extra attention as outlined below:
- Identification details — basic information like legal name & address and EIN with date of formation
- Organizational structure — A statement of whether you are a corporation or trust, LLC or association along with the copies of organizing documents
- Purpose and dissolution provisions — Language in the charter that limits activities to exempt purposes and makes sure assets go to another charity — if you wind down
- Description of activities (narrative) — A program-by-program explanation of what you do and who you serve & where you operate and how each activity supports the mission
- Compensation and insider transactions — Information on how leaders are paid and how conflicts of interest are handled
- Financial data and public charity status — Past and projected figures plus an explanation of how you satisfy public support tests — or, if not, why you would be classified as a private foundation
Form 1023 vs Form 1023-EZ
The standard application and the simplified version are distinct in length & eligibility and level of detail. The table below presents a basic comparison in line with the IRS guidance.
| Feature | Standard Form 1023 | Form 1023-EZ |
|---|---|---|
| Typical users | Larger or more complicated charities | Smaller groups that fulfill worksheet tests |
| Gross receipts / asset limits | No specific dollar cap | Gross receipts ≤ $50,000; assets ≤ $250,000 |
| Filing method | pay.gov | pay.gov |
| User fee | $600 | $275 |
| Narrative and attachments | Detailed narrative plus multiple schedules | Shorter form & fewer attachments |
| Review focus | In-depth look at activities, governance, finances | Streamlined review based on attestations |
How can The Tax and Accounting Group help?
The Tax and Accounting Group presents expert assistance to nonprofits that would like to have a accurate & smooth filing process — instead of trial-and-error with a high-stakes IRS submission. From eligibility review to document cleanup and program narrative development to projections and schedules, we provide 360 degree application preparation and follow-through. Contact us today for professional support.
FAQs
Do all charities have to file Form 1023?
No. Specific organizations like churches and some very small charities, are treated as tax-exempt without filing — although some of them still choose to apply in order to obtain a determination letter for donor and grantor assurance.
Can Form 1023 be used to reinstate a revoked exemption?
Yes. If the exemption was revoked for failure to file required returns for three years — you generally should submit a new application using Form 1023 — or, when eligible, the streamlined application along with the appropriate schedules and fees.
Where can you find official IRS Form 1023 instructions?
The IRS posts current instructions & eligibility details along with the application tips on its website — and the instructions are available both as a PDF and in browser format.
Is Form 1023 a one-time filing for my nonprofit?
The 501(c)(3) application is submitted once — then keep your status by filing the necessary annual information returns rather than refiling it.
Can I correct mistakes after I submit my 501(c)(3) application?
It should be noted that if you notice an error — after applying for 501(c)(3) tax-exempt status, you or your tax advisor can address it by responding to IRS follow-up letters, naturally with clarifications and supporting documents.