IRS Form 1023 | Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code

IRS Form 1023 is filed by nonprofit organizations wishing to apply for tax-exempt status. It is not, however, required of religious organizations. Once filled, Form 1023 is public information, and sure to be seen by the media and potential donors.

How to Fill-in

In Part I, the organization’s address and website are listed, and consultant’s are named. Part II is for the organization’s structure, with information such as whether it is a trust, a corporation or an LLC.

In Part III of the form, you must indicate that your articles of incorporation contain such required provisions as a statement of the organization’s exempt purposes. There must also be clauses defining what will become of the organization’s assets in the event of dissolution.

In Part IV of the Form 1023, the organization’s past, present and future activities must be described in detail. There isn’t room on the form itself for this information; you must provide attachments. For each activity, list its description, the percent of the organizations efforts that are devoted to it and how it’s funded. When and where each activity is conducted and by whom are also vital pieces of information, as is how it furthers the exempt purpose of the organization.

Part V is for listing compensation of your officers. You must also list the compensation of any employee or contractor who earns over $50,000 per year. Part V requires considerable detail about the relationships between these individuals. There are many check-boxes, and depending on how they are answered, further attachments to the Form 1023 may be needed.

Part VI poses question about any goods or services that your organization provides. It specifically asks if any of these beneficiaries are in any way related to anyone mentioned in Part V.

Part VII probes the history of your organization. Among other questions posed, it asks if your organization is a “successor” to another entity, and if so, was it for profit?

Part VIII asks more questions about the activities of your organization. Do they include the support of or opposition to political candidates? It will also ask about Bingo or other gaming activities. There are questions related to your fundraising activities, as well as any relationship with governmental entities. Questions are asked about intellectual property and joint ventures with outside organizations. You are asked if the organization will be making grants or loans, or if you are involved in providing health care.

Part IX is for financial data. The sources and uses of your funds will be probed, and you will be required to provide a balance sheet.

Part X asks if you are a Public Charity or a Private Foundation. If the later is the case, it will here be determined if you can be considered a Private Operating Foundation.

Finally, in Part XI, your user fee payment will be determined.