Instructions for Filling Out Form 1023

Instructions for Filling Out Form 1023

Written by 
Pilot Team
October 6, 2023
Instructions for Filling Out Form 1023

Instructions for Fill Out Form 1023

This document serves as a comprehensive guide for organizations applying for tax-exempt status under Section 501(c)(3) using Form 1023, covering step-by-step instructions, definitions of terms, requirements for different types of organizations, and additional resources like sample policies.

In this article, we'll provide information on Form 1023 and a step-by-step guide on how to fill it out, keeping it straight to the point.

What is Form 1023?

Form 1023 is an application form used by organizations seeking recognition of exemption from federal income tax under Section 501(c)(3) of the Internal Revenue Code. The purpose of this form is to provide the IRS with sufficient information to determine whether an organization meets the legal requirements for tax-exempt status.

This includes information about the organization's structure, activities, governance policies, and financial data. Organizations must provide detailed information to demonstrate that they are organized and operated exclusively for exempt purposes. The form also addresses additional requirements for certain types of organizations, such as churches, schools, hospitals, and supporting organizations. A user fee is required when submitting Form 1023, and organizations may be subject to annual filing requirements if their tax-exempt status is approved.

Who Must File Form 1023?

Organizations that need to file Form 1023 are those seeking recognition of exemption under Section 501(c)(3) of the Internal Revenue Code. This includes charities, educational institutions, religious organizations, and other types of nonprofit organizations. To be eligible for filing, the organization must be organized and operated exclusively for exempt purposes, ensure none of its earnings benefit any private shareholder or individual, and not be an action organization. Additionally, the organization must have a properly structured organizing document with specific language, and provide detailed information about its activities, financial data, compensation arrangements, and other required information.

Form 1023 Tax Filing Deadlines and Due Dates

  • Form 1023 should be filed within 27 months from the end of the month in which the organization was legally formed to have the exemption recognized back to the date of formation.
  • For organizations seeking reinstatement of tax-exempt status after automatic revocation, the due dates and procedures depend on how quickly the organization acts to rectify the situation.

Form 1023 Late Payment Penalty

Although there is not specific late payment penalty for Form 1023, it is important to note that Form 1023 is an application for recognition of exemption under Section 501(c)(3). Penalties typically apply to late filings of annual returns or other required forms for organizations that are already recognized as tax-exempt. Therefore, it is crucial for organizations to file Form 1023 within the specified time frame to avoid potential issues with their tax-exempt status.

Step-by-Step Instructions for Form 1023

Step by step instructions for filling out Form 1023 include:

  1. Introductory Material: This section provides links to future developments, reminders, phone help, email subscription, what's new, how to get forms and publications, and an overview of organizations described in Section 501(c)(3).
  2. General Instructions: These instructions cover social security numbers, the use of "you" and "us" in the form, definitions, answers, the purpose of Form 1023, what to file, when to file, how to file, filing assistance, signature requirements, authorized representative, after you submit Form 1023, public inspection, foreign organizations, and specific instructions for each part of the form.
  3. Specific Instructions: Detailed guidance is provided for each part of Form 1023, including identification of the applicant, organizational structure, required provisions in your organizing document, your activities, compensation and other financial arrangements, financial data, foundation classification, effective date, annual filing requirement, and signature.
  4. Schedules: Instructions for completing schedules specific to different types of organizations, such as churches (Schedule A), schools, colleges, and universities (Schedule B), hospitals and medical research organizations (Schedule C), section 509(a)(3) supporting organizations (Schedule D), effective date (Schedule E), low-income housing (Schedule F), successors to other organizations (Schedule G), and organizations providing scholarships, fellowships, educational loans, or other educational grants to individuals and private foundations requesting advance approval of individual grant procedures (Schedule H).
  5. Additional Material: Includes a sample conflict of interest policy, states with statutory provisions satisfying the requirements of Internal Revenue Code Section 508(e), a glossary of terms, and the National Taxonomy of Exempt Entities (NTEE) Codes.
  6. Notices: Information about the Paperwork Reduction Act Notice and how to provide comments or suggestions to the IRS.

How to Submit Form 1023

To submit Form 1023, register for an account on Pay.gov, search for "1023" and select the form. Complete the form, including all required parts and schedules based on your organization's activities and structure. Pay the user fee using a bank account or credit/debit card, and upload the completed form along with required attachments in a single PDF file. Finally, submit the application through Pay.gov.

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