1023-EZ vs. 1023: Which Nonprofit Application Is Right for You?

ATBIZ
Oct 20
2 min read

One of the most important steps in launching a nonprofit is applying for 501(c)(3) tax-exempt status with the IRS. This designation allows your organization to receive tax-deductible donations, apply for grants, and establish long-term sustainability.

But here’s the big question: Should you file the streamlined Form 1023-EZ or the full Form 1023?

Both applications can get you to the same end goal — tax-exempt recognition — but they differ in eligibility, timelines, and risks. Choosing the wrong one can delay your approval or cause problems down the road.

Let’s break it down.

What Is Form 1023-EZ?

The 1023-EZ is the simplified version of the application for tax exemption. It’s designed for smaller nonprofits with straightforward structures and limited budgets.

Key Features:

Online filing only (no paper option).
Shorter form — just 3 pages compared to the full 26-page 1023.
Lower filing fee ($275 vs. $600 for the full form).
Faster approval time (sometimes within 2–4 weeks).

Eligibility Requirements:

Projected annual gross receipts of $50,000 or less for the first 3 years.
Total assets of $250,000 or less.
Cannot be a church, school, hospital, credit counseling agency, or private foundation.
Must meet IRS eligibility checklist criteria.

✅ Best for: New, small, and straightforward nonprofits with limited budgets and programs.

What Is the Full Form 1023?

The standard Form 1023 is the comprehensive application for tax-exempt status.

Key Features:

Paper or online filing through Pay.gov.
Detailed — up to 26 pages plus required attachments.
Higher filing fee ($600).
Longer review time (typically 3–12 months, depending on complexity).

When It’s Required:

If your nonprofit projects annual gross receipts of more than $50,000.
If total assets exceed $250,000.
If you’re applying as a church, school, hospital, or other complex organization.
If your programs involve higher scrutiny (such as international operations or grantmaking).

✅ Best for: Larger, more complex nonprofits — or those planning for significant growth in the near future.

The Risks of Choosing the Wrong Form

It can be tempting to file the 1023-EZ just to “get it done fast.” But if your organization doesn’t truly qualify, this can backfire.

Risks include:

Denial of your application.
Revocation of your tax-exempt status later.
Struggles with fundraising — many funders prefer nonprofits that filed the full 1023 because it requires more transparency.

Think long-term: choosing the right form now can save headaches down the road.

Timelines at a Glance

1023-EZ: 2–4 weeks (sometimes longer).
Full 1023: 3–12 months (sometimes longer depending on IRS backlog).

Final Thought

Both the 1023-EZ and the full 1023 can establish your nonprofit as tax-exempt — the right choice depends on your size, structure, and long-term goals.

At All Things Business, we guide nonprofits through the application process, helping you choose the correct form, prepare the required documents, and avoid mistakes that could delay approval.

👉 Ready to file for tax-exempt status? Contact us today and let’s make sure you start your nonprofit journey on the right path.