IRS Form 1023 Preparation Guide and Checklist

IRS Form 1023 Preparation Guide and Checklist

Organization Name: [________________________________]
EIN: [________________________________]
State of Incorporation: [____]
Date of Formation: [__/__/____]
27-Month Filing Deadline (for retroactive exemption): [__/__/____]
Preparer/Legal Counsel: [________________________________]
Target Filing Date: [__/__/____]

HOW TO USE THIS CHECKLIST: Work through each section in order. Complete all items before filing. Form 1023 must be submitted electronically through pay.gov. The user fee is $600 for Form 1023 (full) and $275 for Form 1023-EZ (streamlined, if eligible). Organizations must have an EIN before filing. Allow 3–6+ months for IRS processing after submission.

PRE-FILING: DETERMINE WHICH FORM TO FILE

Form 1023-EZ Eligibility Worksheet

Complete this section first. Organizations may use Form 1023-EZ ONLY if all of the following are true:

• ☐ Projected annual gross receipts will not exceed $50,000 in each of the next 3 years
• ☐ Total assets do not exceed $250,000
• ☐ Organization is not a church, association of churches, or integrated auxiliary
• ☐ Organization is not a school (K-12, college, or university under § 170(b)(1)(A)(ii))
• ☐ Organization is not a hospital or medical research organization under § 170(b)(1)(A)(iii)
• ☐ Organization is not a supporting organization under § 509(a)(3)
• ☐ Organization is not a private operating foundation
• ☐ Organization is not organized or formed outside the United States
• ☐ Organization is not seeking exemption as a foreign private foundation
• ☐ Organization is not a successor to a for-profit entity
• ☐ Organization does not have revoked exemption (with limited exceptions)
• ☐ Organization does not conduct activities outside the United States
• ☐ Organization does not provide credit counseling services

If any box is unchecked → Organization must file Form 1023 (full application).

Note on Form 1023-EZ: The EZ form is only 3 pages and does not require submission of articles, bylaws, or financial statements. However, the applicant certifies under penalty of perjury that required provisions exist. IRS may later request documentation. Approval rates are higher for Form 1023, which provides the IRS with full transparency into the organization's activities.

PHASE 1: ORGANIZE REQUIRED DOCUMENTS

1.1 Organizing Documents

• ☐ Articles of Incorporation — certified/file-stamped copy from Secretary of State; include all amendments
• ☐ Verify articles contain required purpose clause (must limit activities to § 501(c)(3) purposes — see language below)
• ☐ Verify articles contain required dissolution clause (assets must go to § 501(c)(3) organizations or government upon dissolution — see language below)
• ☐ Verify articles do not authorize non-exempt purposes, political campaign activity, or private inurement

Required Purpose Clause Language:

"This corporation is organized exclusively for charitable, educational [and/or scientific, religious, literary, etc.] purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code. No part of the net earnings of this corporation shall inure to the benefit of any private shareholder or individual."

Required Dissolution Clause Language:

"Upon the dissolution or winding up of this corporation, its assets remaining after payment of all debts and liabilities shall be distributed to a nonprofit fund, foundation, or corporation which is organized and operated exclusively for charitable, educational [and/or scientific, religious, literary, etc.] purposes and which has established its tax exempt status under Section 501(c)(3) of the Internal Revenue Code."

1.2 Bylaws

• ☐ Adopted bylaws with date of adoption and board signatures
• ☐ All amendments with dates
• ☐ Review bylaws for: board composition and election procedures, officer roles, meeting requirements, fiscal year, amendment procedures, conflict of interest procedures, dissolution procedures

1.3 EIN and Registration Documents

• ☐ IRS EIN confirmation (Form SS-4 or CP575 letter)
• ☐ Certificate of incorporation from Secretary of State (if available separately from articles)
• ☐ Foreign qualification documents if operating in multiple states

PHASE 2: FORM 1023 PART-BY-PART CHECKLIST

Part I — Identification of Applicant

• ☐ Legal name exactly as it appears in articles of incorporation
• ☐ Correct EIN
• ☐ Organization's mailing address and primary contact
• ☐ Website URL (if applicable)
• ☐ National Taxonomy of Exempt Entities (NTEE) code (select appropriate code from IRS list)
• ☐ Month fiscal year ends
• ☐ Date of formation (formation date, not date of applying)
• ☐ State of legal domicile

Part II — Organizational Structure

• ☐ Check correct box: Corporation / Trust / Association / Other
• ☐ Attach required organizing documents (articles + all amendments; bylaws)
• ☐ For corporations: confirm date/state of incorporation
• ☐ For trusts: attach trust instrument with required provisions

Part III — Required Provisions in Organizing Document

• ☐ Confirm purpose clause satisfies § 501(c)(3) requirements
• ☐ Confirm dissolution clause requires distribution to § 501(c)(3) organizations or government
• ☐ Note: If state law automatically requires § 501(c)(3)-compliant dissolution, check the applicable box (IRS allows reliance on state law in some cases)
• ☐ If organizing document lacks required provisions, amend before filing — this is a fatal deficiency

Part IV — Narrative Description of Activities

This is the most critical section. The IRS uses this to assess the organizational and operational tests.

For each program activity, prepare a detailed description:

• ☐ Activity 1: [________________________________]
• ☐ Description of activity
• ☐ How it furthers the § 501(c)(3) purpose (be specific — "education" is not enough)
• ☐ Who benefits (must be a charitable class, not private individuals)
• ☐ When and where the activity takes place
• ☐ Estimated percentage of time and resources dedicated to this activity: [____]%
• ☐ Activity 2: [________________________________] — [____]% of resources
• ☐ Activity 3: [________________________________] — [____]% of resources

Additional required disclosures in Part IV:

• ☐ Fundraising activities: methods, geographic areas, professional fundraisers engaged
• ☐ Foreign activities (if any): countries, agents, oversight procedures, amounts
• ☐ Gaming (bingo, raffles, casino nights): type, frequency, purpose
• ☐ Grants to individuals: criteria, application process, objective standards, anti-discrimination

Private Benefit and Inurement Warning: Activities must benefit the public, not private individuals. Describe how benefits flow to a charitable class (e.g., "low-income residents," "students," "the general public") rather than to specific named individuals, insiders, or the private interests of founders.

Part V — Compensation and Financial Arrangements with Officers, Directors, Trustees, Employees, and Independent Contractors

• ☐ List all officers, directors, and trustees: full name, title, mailing address, hours per week, compensation (or "none")
• ☐ List top 5 highest-compensated employees (compensation ≥ $50,000): same information
• ☐ List top 5 highest-compensated independent contractors (compensation ≥ $50,000)
• ☐ Describe compensation determination process: Who approves? What comparability data is used?
• ☐ Identify all family and business relationships between officers, directors, employees, and contractors
• ☐ Disclose all loans, leases, purchases, sales, or business arrangements with insiders

Compensation Documentation Checklist:

• ☐ Compensation committee composition (must be disinterested directors)
• ☐ Comparability data sources (compensation surveys, comparable organizations — document these)
• ☐ Board approval minutes

Part VI — Your Members and Other Individuals and Organizations That Receive Benefits from You

• ☐ Does the organization have members (formal membership structure with voting rights)?
• ☐ Are members provided goods or services? If yes, describe.
• ☐ Does the organization limit benefits to members only (and not a broad charitable class)?
• ☐ Describe relationship with any affiliated organizations, parent/subsidiary organizations, or chapters.

Part VII — Your History

• ☐ Prior exempt status: Has the organization previously applied for exempt status? If yes, describe outcome.
• ☐ Successor organization: Is the organization a successor to any other organization (for-profit, nonprofit, dissolved)?
• ☐ Political activities: Has the organization engaged in political campaign activities? (Must answer "no" for § 501(c)(3))

Part VIII — Your Specific Activities

Answer YES or NO to each question, and provide explanation/attachments as required:

• ☐ Fundraising activities: ☐ Solicit within state ☐ Solicit in other states ☐ Use professional fundraisers
• ☐ Gaming activities (bingo, pull-tabs, raffles): ☐ Yes ☐ No
• ☐ Act as fiscal sponsor for another organization: ☐ Yes ☐ No
• ☐ Invest in partnership or joint venture (with a for-profit entity): ☐ Yes ☐ No
• ☐ Sell products or services: ☐ Yes ☐ No (describe if yes)
• ☐ Receive goods or services from insiders: ☐ Yes ☐ No (describe if yes)
• ☐ Conduct activities abroad: ☐ Yes ☐ No
• ☐ Grant funds, goods, services, or loans to individuals: ☐ Yes ☐ No
• ☐ Affiliated with a governmental body: ☐ Yes ☐ No

Part IX — Financial Data

For organizations existing less than 1 year, provide projected budgets for 2 years:
For organizations existing 1–3 years, provide actuals for prior years PLUS projected budgets:
For organizations existing 4+ years, provide actuals for 4 most recent years:

• ☐ Balance sheet/statement of financial position as of [__/__/____]
• ☐ Revenue and expense breakdown by program, management/general, and fundraising

Part X — Public Charity Status and Public Support

• ☐ Select the public charity classification:
• ☐ 509(a)(1) organization described in § 170(b)(1)(A)(vi) — public support test (33.33% from public/government)
• ☐ 509(a)(1) — church (Schedule A)
• ☐ 509(a)(1) — school (Schedule B)
• ☐ 509(a)(1) — hospital (Schedule C)
• ☐ 509(a)(2) — service provider (program revenue + contributions test)
• ☐ 509(a)(3) — supporting organization (Schedule D)
• ☐ New organization — requesting advance ruling (5-year presumption period)
• ☐ Provide public support calculation if organization has 3+ years of financial history

Part XI — User Fee Information

• ☐ Confirm user fee amount: $600 for Form 1023 or $275 for Form 1023-EZ
• ☐ Pay through pay.gov when submitting application (electronic submission required)
• ☐ Retain payment confirmation

PHASE 3: SCHEDULE APPLICABILITY DETERMINATION

Complete the table below to identify which schedules are required:

PHASE 4: GOVERNANCE POLICIES CHECKLIST

The IRS does not require all of these policies, but Form 990 Part VI asks about them annually, and having them in place strengthens the application.

PHASE 5: PRE-SUBMISSION REVIEW

• ☐ Every question answered (no blanks left unexplained)
• ☐ All attachments labeled with the specific Part and line number of Form 1023 to which they correspond
• ☐ Narrative descriptions are specific and detailed (vague answers invite IRS follow-up)
• ☐ Financial data is consistent across all Parts and Schedules
• ☐ Compensation disclosures are complete and match financial data
• ☐ No private benefit or inurement issues remain unaddressed
• ☐ No political campaign activity described or implied
• ☐ Articles and bylaws reviewed for required provisions
• ☐ Correct Schedule(s) completed and attached
• ☐ Correct user fee ready for payment through pay.gov
• ☐ Authorized officer (president, CEO, or designated officer) will sign under penalties of perjury
• ☐ If represented by an attorney or CPA: Power of Attorney (Form 2848) prepared

27-Month Deadline Check

• ☐ Filing within 27 months of end of month of formation? → Effective date will be date of formation
• ☐ Filing after 27 months? → Complete Schedule E; effective date will be date of application (not retroactive)
• Date of formation: [__/__/____]
• 27-month deadline: [__/__/____]
• Today's date vs. deadline: ☐ Within 27 months ☐ Past 27 months (complete Schedule E)

PHASE 6: FILING AND FOLLOW-UP

• ☐ Submit Form 1023 electronically through pay.gov
• ☐ Pay user fee ($600 or $275) through pay.gov at time of submission
• ☐ Print and retain complete copy of submitted application (with all attachments)
• ☐ Record submission date and confirmation number: [________________________________]
• ☐ Calendar expected IRS processing timeline (3–6+ months for Form 1023; 2–4 weeks for Form 1023-EZ)
• ☐ Monitor IRS online application status (check at pay.gov or IRS EO Status Check)
• ☐ Respond promptly to any IRS information requests (IRS will typically provide 30 days to respond)
• ☐ Upon receipt of IRS determination letter: retain permanently; post on website; file with corporate records

PHASE 7: STATE FILINGS TO COORDINATE

Federal exemption does not automatically grant state exemption. Complete state filings concurrently:

• ☐ Multi-state charitable solicitation registration (if soliciting donations in multiple states) — check requirements in each state where online, mail, or in-person solicitations will reach residents.

Common Deficiencies That Delay or Result in Denial

• ☐ Articles of incorporation missing required purpose clause
• ☐ Articles of incorporation missing required dissolution clause
• ☐ Narrative description too vague (e.g., "we will help people")
• ☐ Activities primarily benefit private individuals rather than a charitable class
• ☐ No documentation of compensation approval process
• ☐ Compensation appears excessive without documented comparability data
• ☐ Joint ventures or partnerships with for-profit entities without adequate safeguards
• ☐ Fundraising primarily through gaming without addressing IRC § 513 limitations
• ☐ Grants to foreign organizations without adequate oversight and control procedures
• ☐ Political campaign activities described
• ☐ Substantial lobbying activities without 501(h) election discussion
• ☐ Financial projections inconsistent with described activities

Sources and References

• IRS Form 1023 Instructions (Rev. December 2024): https://www.irs.gov/instructions/i1023
• IRS Form 1023-EZ Instructions (Rev. January 2025): https://www.irs.gov/pub/irs-pdf/i1023ez.pdf
• IRS About Form 1023: https://www.irs.gov/forms-pubs/about-form-1023
• IRS 27-Month Rule Explanation: https://form1023.org/form-1023-part-viii-8-effective-date-27-month-rule
• IRS Electronic Filing (pay.gov): https://www.pay.gov
• Treas. Reg. § 1.501(c)(3)-1; Rev. Proc. 2023-5

This checklist reflects the Form 1023 as revised December 2017 with instructions updated December 2024. IRS forms and instructions are updated periodically — always verify current versions at irs.gov before filing. Consult qualified nonprofit legal counsel and a CPA with exempt organization expertise before submitting Form 1023.