FORM 1023 GUIDE

This Form 1023 guide explains how to apply for 501(c)(3) tax-exempt status — by gathering your EIN & organizing documents, program description and financials, and then filing Form 1023 electronically through pay.gov.

What is Form 1023?

Form 1023 is the IRS application a nonprofit submits in order to be recognized as tax-exempt — under section 501(c)(3). Approval signifies mission-related income is not subject to federal income tax and donors, in general, can deduct their contributions — which presents assistance to the organization in building credibility with funders along with supporters.

Who should use Form 1023 instead of Form 1023-EZ?

The full version of Form 1023 is used when your organization does not satisfy the simplified form's small-organization thresholds — or when the work is more involved. The streamlined version fits limited operations — the standard form is intended for nonprofits with larger budgets — or more complicated activities.

Long form is necessary in the below scenarios:

• Expected annual gross receipts above the IRS limit for the streamlined application
• Total assets that are greater than the 1023-EZ cap
• Programs that involve scholarships or foreign projects and unusual funding sources that call for more detail
• Organizations that answer "yes" to a disqualifying item on the 1023-EZ eligibility worksheet

How do you prepare before you start the 501(c)(3) application?

Essentials of the application before submitting the form on pay.gov are listed below:

• EIN - Obtain an EIN from the IRS — even if you do not yet have staff
• Organizing documents — Having signed articles of incorporation or a trust agreement that state a charitable, religious and educational or similar purpose — and explaining where assets go if the group dissolves
• Bylaws and board structure — Adopting bylaws that describe how directors are chosen and how meetings occur
• Program description — Drafting a concise narrative that lists the main programs, who you serve and how each distinct activity advances the exempt purpose
• Financial information — For new organizations, sketching three-year budgets is essentials — and for existing groups, gathering recent revenue and expense figures that following the IRS Form 1023 instructions is fundamental

How do you complete the main parts of IRS Form 1023?

The form has a complete story in sections and each part has a specific focus as outlined below:

• Identification details — Enter your legal name & EIN and address along with formation date exactly as they appear in your organizing documents
• Type of entity — Indicate whether you are a corporation or trust and unincorporated association — and attach the signed organizing documents and any amendments
• Required 501(c)(3) language — Confirm that the governing documents cover acceptable purpose and dissolution clauses — or attach amended versions that do.
• Narrative of activities — Explain each program in everyday language: what you do, who benefits, how often activities occur and how they advance charitable or educational goals
• Compensation and insider relationships — List officers and directors as well as the key employees, how they are paid and any family or business links
• Financial data and public charity status — Present historical figures or projections and indicate which public charity category applies

How do you submit Form 1023 & pay the user fee?

Form 1023 is submitted through pay.gov as underlined before. The application and attachments are uploaded online. And then the user fee is paid by bank transfer or card at the same time. We present a brief comparison of the standard vs streamlined applications in the table:

What happens after you send your 501(c)(3) application?

Upon submitting the form, the IRS reviews the filing and naturally might share follow-up questions. Processing, in general, takes several months. The processing stage upon filing generally looks like below:

• Intake check — The IRS confirms that the form is complete and that the correct user fee was received
• Technical review — An examiner studies your distinct activities & finances and governance in order to see whether you satisfy the 501(c)(3) rules on charitable purpose and public benefit as well as limits on political activity.
• Determination letter — If the examiner agrees that you satisfy the qualification, you receive a determination letter — confirming recognition under section 501(c)(3). When you apply within the IRS deadline, this recognition can reach back to the formation date.
• Ongoing compliance — Once approved, specific organizations file an annual Form 990-series return & maintain records that present programs and spending continue to support that exempt purpose.

Wasserman Accounting supports your Form 1023 process

As explained in this Form 1023 guide, a careful submission lowers delays — and presents confidence in the new organization. Wasserman Accounting has worked with nonprofit leaders for decades, who want the form to tell a clear story. Our professionals focus on:

• Reviewing your goals and activities and recommending whether the standard form or the streamlined version fits your distinct situation
• Shaping your activity narrative — so that it is specific and readable, and aligned with 501(c)(3) standards
• Suggesting revisions to organizing documents and bylaws — so that necessary clauses appear in the right place
• Assistance with pay.gov submission actions — and aid you in replying to IRS questions if extra information is demanded

If you are ready to apply for 501(c)(3) tax-exempt status and would like experienced guidance at each action of the 501(c)(3) application, contact Wasserman Accounting to discuss your Form 1023 timeline. Our team is ready to present decades of expertise.