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Abstract: 

Advisors who regularly assist in the formation of new family foundations may have observed that it takes an increasingly long time for the IRS to process clients’ taxexemption applications. According to IRS Commissioner John Koskinen, the IRS exempt organization division has a backlog of 60,000 cases. The current exemption application process is burdensome for applicant organizations, many of which are run by volunteers. In addition to the long wait for a determination letter, the IRS estimates that Form 1023 takes 101 hours to complete.To improve IRS efficiency and reduce burdens on (and wait times for) small applicant organizations, the IRS has developed draft Form 1023-EZ, “Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code,” which is shorter and less burdensome than the regular form. Even as they welcome the changes Form 1023-EZ is expected to bring, family foundation advisors should be prepared to take a more active role in educating and advising their clients—and to scrutinize and refine their clients’ plans to make up for the less rigorous application process.

Keywords: IRS Draft Form 1023-EZ

Affiliations:  1: Strasburger & Price, LLP.