Can You Use Form 1023-EZ? 34 IRS Eligibility Questions
Richard Keyt (Rick at 480-664-7478) and his son former CPA Richard C. Keyt (Ricky at 480-664-7472) are Arizona attorneys who form nonprofit corporations and prepare and file IRS form 1023, the 501(c)(3) tax exemption application. They want to form your new Arizona nonprofit corporation.
Nonprofits that want to apply for 501(c)(3) tax-exempt status on the short IRS Form 1023-EZ must first complete the IRS’s 34-question Eligibility Worksheet. The correct answer to every question is No. A Yes answer to even one question means your organization cannot use Form 1023-EZ and must file the full Form 1023 instead.
The questions cover your projected and past gross receipts, your total assets, how and where you were formed, prior IRS history, and special types of organizations such as churches, schools and hospitals. They also cover certain investments and activities, private foundation status, and activities involving federally controlled substances or digital assets. The page lists all 34 questions and explains what happens if you answer Yes. It also answers common questions, including whether an LLC or a church can use Form 1023-EZ.
34 Questions
Form 1023-EZ is the short, online-only application the IRS lets small nonprofit corporations use to become IRC §501(c)(3) tax-exempt organizations. It is faster and cheaper than the full Form 1023, but not every nonprofit is allowed to use it.
Before you file Form 1023-EZ, the IRS requires you to complete the 34-question Eligibility Worksheet in the Instructions for Form 1023-EZ. When you file, you sign the application under penalties of perjury and attest that you completed the worksheet and are eligible to use the form.
The rule is simple: the correct answer to every one of the 34 questions is NO.
If you answer YES to even one question, your organization is not eligible to file Form 1023-EZ. You must file the full Form 1023 instead.
The 34 Form 1023-EZ Eligibility Worksheet Questions
Read each question carefully. The correct answer to every question is NO.
Size Limits: Gross Receipts and Assets (Questions 1–3)
1. Do you project annual gross receipts over $50,000 in any of the next 3 years (this year and the next 2)?
2. Did your annual gross receipts exceed $50,000 in any of the past 3 years?
3. Do you have total assets with a fair market value over $250,000?
How and Where You Were Formed (Questions 4–9)
4. Were you formed under the laws of a foreign country? (U.S. territories are not foreign countries.)
5. Is your mailing address in a foreign country?
6. Are you a successor to, or controlled by, an organization whose exemption was suspended under IRC §501(p) as a terrorist organization?
7. Are you organized as something other than a corporation, unincorporated association or trust? An LLC must answer Yes.
8. Were you formed as a for-profit entity?
9. Are you a successor to a for-profit entity (took over its assets or activities, converted or merged from it, or installed the same board as a for-profit that no longer exists)?
Prior IRS History (Questions 10–11)
10. Were you, or a predecessor, previously revoked for a reason other than automatic revocation for failing to file Form 990-series returns for 3 years?
11. Are you now, or were you ever, exempt under another subsection of IRC §501(a), such as 501(c)(4) or 501(c)(7)?
Special Types of Organizations (Questions 12–20)
12. Are you a church or a convention or association of churches?
13. Are you a school, college or university?
14. Are you a hospital, a medical research organization or a hospital organization?
15. Are you an agricultural research organization?
16. Are you applying as a cooperative hospital service organization under §501(e)?
17. Are you applying as a cooperative service organization of operating educational organizations under §501(f)?
18. Are you applying as a qualified charitable risk pool under §501(n)?
19. Are you requesting classification as a supporting organization under IRC §509(a)(3)?
20. Is a substantial purpose of your activities credit counseling, such as budgeting, personal finance, financial literacy, mortgage foreclosure assistance or debt consolidation?
Investments and Activities (Questions 21–27)
21. Do you or will you invest 5% or more of your total assets in securities or funds that are not publicly traded?
22. Do you participate, or plan to participate, in partnerships where you share losses with partners that are not 501(c)(3) organizations?
23. Do you sell, or plan to sell, carbon credits or carbon offsets?
24. Are you a Health Maintenance Organization (HMO)?
25. Are you an Accountable Care Organization (ACO) or engaged in ACO activities?
26. Do you maintain, or plan to maintain, one or more donor advised funds?
27. Are you organized and operated exclusively for testing for public safety and requesting classification under §509(a)(4)?
Private Foundation Status and Reinstatement (Questions 28–32)
28. Are you requesting classification as a private operating foundation?
29. Are you a private foundation applying for reinstatement after automatic revocation and asking to be reclassified as a public charity?
30. Are you seeking retroactive reinstatement under section 5 or 6 of Rev. Proc. 2014-11 after automatic revocation?
31. Have you previously received a ruling or determination letter denying recognition of exemption?
32. Have you previously been determined to be ineligible to file Form 1023-EZ?
Controlled Substances and Digital Assets (Questions 33–34)
33. Are you conducting activities involving Schedule I or II controlled substances that are prohibited by federal law, regardless of whether they are legal under state law?
34. Are you engaged in exchanging, creating or distributing digital assets?
What Happens If You Answer Yes to Any Question?
You cannot use Form 1023-EZ. You must file the full Form 1023, which asks for a detailed narrative of your activities, financial projections, governing documents and more. See our articles IRS Form 1023-EZ: Eligibility, Instructions & Filing Guide and IRS Form 1023: Eligibility, Instructions & Filing Guide.
Do not guess. If you file Form 1023-EZ when you are not eligible, you have signed a false statement under penalties of perjury, and the IRS can later revoke the tax-exempt status your donors relied on.
Form 1023-EZ Eligibility FAQ
Can an Arizona LLC use Form 1023-EZ?
No. Question 7 says an LLC must answer Yes, which makes it ineligible. Most charities that want 501(c)(3) status form an Arizona nonprofit corporation instead.
What if my nonprofit is small now but expects to grow past $50,000 a year?
Question 1 looks at this year and the next two years. If you project gross receipts over $50,000 in any one of those years, you must answer Yes and file Form 1023.
Do I send the Eligibility Worksheet to the IRS?
No. You keep it with your records. When you file Form 1023-EZ, you attest under penalties of perjury that you completed the worksheet and are eligible.
Can a church use Form 1023-EZ?
No. Question 12 makes churches and conventions or associations of churches ineligible. A church that wants an IRS determination letter must file Form 1023.
Get Help Forming Your Arizona Nonprofit Corporation
Arizona nonprofit attorneys Richard Keyt and his son, attorney and former CPA Richard C. Keyt, have formed 550+ Arizona nonprofit corporations that became 501(c)(3) tax-exempt organizations.
Our flat fee to form an Arizona nonprofit corporation is $1,297 and includes 28 nonprofit formation services. If your organization must file the full Form 1023, we prepare it for a $3,500 flat fee. See our article called IRS Form 1023 Preparation Services.
To hire us to form your Arizona nonprofit corporation, submit our nonprofit incorporation questionnaire, call 480-664-7478 or email rk@keytlaw.com. You can also book a free office, phone or Zoom video consultation.
Questions? Book a free meeting or call or email one of our Arizona attorneys. We don't charge to talk to people.
Created October 17, 2026