When I started Idle Tuesdays Recording Studio in 2012, IRS Form 1023 was a whopping twenty-six pages long and cost $800 to file. We didn’t have a dollar in our bank account, didn’t own any assets, and had no employees, and still, we had to tick “No” for twenty-six long pages and belly up $800.
The IRS eventually realized their twenty-six page long form simply didn’t apply to the majority of startup nonprofit organizations. Since then, it’s been reduced to a reasonable 3 page form that can be completed online.
IRS Form 1023-EZ is the form that grants organizations the much sought after “tax exempt” status.
The three biggest benefits to tax-exemption is:
- exempt from paying the annual $800 California Franchise Tax Board fee
- exempt from paying income tax
- can offer donors a tax-exemption
I’ve been working with Lisa Karadjian of Rediscover Studio City East, and recently filed Form 1023-EZ on their behalf. The form asked for basic contact information and only took about 15 minutes to complete. After creating a Pay.gov account on behalf of Rediscover Studio City East, the $275 filing fee was paid.
I should be hearing back from the IRS in approximately three to four weeks, hopefully in the form of the “IRS Determination Letter.”
This letter confirms an organization has been granted tax-exempted. If you have any questions about IRS Form 1023 or Form 1023-EZ, please don’t hesitate to reach out.