IRS Form 1023: Eligibility, Instructions & Filing Guide

If you formed a nonprofit corporation and want donors to be able to deduct their gifts, you need a determination letter from the IRS that recognizes your organization as tax exempt under Internal Revenue Code §501(c)(3). Most organizations get that letter by filing IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. Small organizations may qualify for the shorter Form 1023-EZ, but many organizations can't use it, and many that can are better off filing the full Form 1023 anyway.

This article explains what Form 1023 is, who must file it, how it differs from Form 1023-EZ, what the 1023-EZ asks, how to complete each part of Form 1023, what it costs, the 27-month deadline that controls your effective date, and what happens after you hit "Submit."

Hire Us to Prepare IRS Form 1023

To learn about the services we provide when we prepare IRS Form 1023 for $3,500 see our article called IRS Form 1023 Preparation Services.

Contents

• What Is IRS Form 1023?
• Who Must File (and Who Doesn't)
• Form 1023 vs. Form 1023-EZ
• How to Learn About IRS Form 1023-EZ
• When You Must Use the Full Form 1023
• What to Have Ready Before You Start
• How to Complete Form 1023, Part by Part
• The Form 1023 Schedules
• Attachments and the Single-PDF Rule
• User Fee and How to File on Pay.gov
• The 27-Month Rule and Your Effective Date
• Public Charity or Private Foundation?
• What Happens After You File
• Common Mistakes That Delay or Sink Applications
• Arizona Nonprofit Corporation Considerations
• Staying Exempt After Approval
• Frequently Asked Questions
• How KEYTLaw Can Help

What Is IRS Form 1023?

Form 1023 is the application an organization files to ask the IRS to recognize that it is exempt from federal income tax as a charitable, religious, educational, scientific, literary, public safety testing, amateur sports or prevention-of-cruelty organization described in §501(c)(3). The IRS does not grant exemption so much as confirm it: your organization must already be organized and operated exclusively for exempt purposes, and Form 1023 is how you prove that.

When the IRS approves the application it issues a determination letter. That letter is what banks, foundations, grant makers, government agencies, corporate sponsors and donors ask to see. It tells the world three things: that you are a 501(c)(3) organization, that contributions to you are tax deductible under IRC §170, and whether you are a public charity or a private foundation under IRC §509.

Form 1023 is not a fill-in-the-blanks tax return. It is a detailed, sworn narrative of what your organization does, who runs it, how insiders are paid, where the money comes from and where it goes. The IRS uses it to decide whether you pass two tests:

• The organizational test. Your organizing document (for an Arizona nonprofit corporation, the Articles of Incorporation filed with the Arizona Corporation Commission) must limit your purposes to 501(c)(3) purposes and permanently dedicate your assets to those purposes.
• The operational test. Your actual and planned activities must further exempt purposes, your earnings cannot benefit insiders, you cannot intervene in political campaigns, and lobbying must be limited.

Who Must File (and Who Doesn't)

Under IRC §508, most organizations that want 501(c)(3) status must apply for it. Three groups are treated as exempt without filing:

• Churches, synagogues, temples, mosques and similar houses of worship.
• Integrated auxiliaries of churches and conventions or associations of churches.
• Organizations whose gross receipts are normally not more than $5,000 a year.

Even organizations that are not required to apply often file anyway. Without a determination letter, a church or small charity will have trouble opening some bank accounts, receiving foundation grants, qualifying for nonprofit postal rates, and reassuring donors that their gifts are deductible. A determination letter also gets you listed in the IRS's Tax Exempt Organization Search database, which is where many donors and grant makers check.

The organization itself must be a corporation, limited liability company, unincorporated association or trust. Sole proprietorships, partnerships and loose groups of people cannot qualify. In Arizona, the overwhelming majority of new charities are formed as Arizona nonprofit corporations.

Form 1023 vs. Form 1023-EZ

Form 1023-EZ is a three-page streamlined version of Form 1023 for small organizations. It mostly consists of checkboxes and attestations, and it does not require you to attach your articles, bylaws, a description of activities beyond 250 characters, or financial statements. Here is how the two forms compare:

Issue	Form 1023	Form 1023-EZ
IRS user fee	$600	$275
Who may file	Any organization seeking 501(c)(3) status	Only organizations that answer "No" to all 34 questions on the Form 1023-EZ Eligibility Worksheet
Size limits	None	Projected gross receipts of $50,000 or less in each of the next 3 years, actual gross receipts of $50,000 or less in each of the past 3 years, and total assets of $250,000 or less
Description of activities	Detailed narrative of past, present and planned activities	250-character mission or activity statement
Financial data	3 to 5 years of revenue and expenses plus a balance sheet	None (you attest to the size limits)
Organizing documents uploaded	Yes, plus bylaws	No (you attest that required clauses are in them)
LLCs	Eligible	Not eligible
Request an earlier effective date after 27 months	Yes, using Schedule E	No
Typical IRS scrutiny	Full review of the application by an IRS specialist	Light review, plus random pre-determination reviews

Why some eligible organizations still choose Form 1023. The 1023-EZ is cheaper and faster, but it gives you a thinner record. When a large foundation, a government grant program or a state agency later asks how you qualified, a full Form 1023 with a detailed narrative and budgets is a much stronger document than a page of checkmarks. Organizations that expect to grow past the $50,000 level quickly, that have any unusual activity, or that want the IRS to actually review their plans before they raise significant money often file the full Form 1023 even when they could file the EZ.

How to Learn About IRS Form 1023-EZ

To learn about IRS Form 1023-EZ go to our article called "IRS Form 1023-EZ: Eligibility, Instructions & Filing Guide."

When You Must Use the Full Form 1023

You cannot use Form 1023-EZ, and must file Form 1023, if any of the following is true:

• You project gross receipts above $50,000 in any of the next three years, or had gross receipts above $50,000 in any of the past three years.
• Your total assets have a fair market value above $250,000.
• You are organized as an LLC (see the IRS's Notice 2021-56 requirements for LLC applicants).
• You are a church, school, college, university, hospital or medical research organization seeking that status.
• You are a 509(a)(3) supporting organization or want to be classified as a private operating foundation.
• You were formed under the laws of a foreign country or have a foreign mailing address.
• You are formed as a for-profit entity or are a successor to a for-profit entity.
• You were previously revoked (other than an automatic revocation for failing to file returns), or you are or were exempt under another subsection of §501(c).
• You are a credit counseling organization, sponsor donor-advised funds, are a cooperative hospital or educational service organization, a qualified charitable risk pool, or an HMO or accountable care organization.
• You have been in existence more than 27 months and want your exemption to reach back before your filing date.
• You want an exception from filing Form 990-series annual returns at the time of application.

What to Have Ready Before You Start Form 1023

Form 1023 is completed online on Pay.gov. Gather these items first so you are not hunting for them in the middle of a session:

• An EIN for the organization. You cannot submit without one. Never use the EIN of a founder's business or a related organization.
• Filed Articles of Incorporation showing evidence of filing by the state (for Arizona, the Arizona Corporation Commission), with all amendments. The articles must contain an IRS-compliant purpose clause and dissolution clause.
• Bylaws adopted by the board, with any amendments. Make sure the fiscal year in the bylaws matches the tax year you report on the form.
• A conflict of interest policy. Not legally required, but the form asks whether you have one, and the IRS strongly prefers that you do. Appendix A of the Form 1023 instructions contains a sample.
• Names, titles and mailing addresses of all officers, directors and trustees, and the compensation (if any) paid to each.
• A detailed written description of your activities: what you do, who does it, where, what percentage of time and money each activity takes, how it is funded, and how it furthers your exempt purpose.
• Financial information: actual figures for completed years and good-faith budgets for future years, plus a current balance sheet.
• Copies of any agreements with insiders: leases, loans, employment contracts, management agreements or purchases from directors' businesses.
• Your website address, and a website that is consistent with what you tell the IRS. Specialists look at it.
• Form 2848 (Power of Attorney) if an attorney or CPA will represent the organization, or Form 8821 if you want the IRS to be able to talk to someone who is not representing you.

How to Complete Form 1023, Part by Part

All applicants complete Parts I through X, plus any schedules that apply. Answer every question. The IRS instructions say your answers must describe your past, present and planned activities in enough detail to show you qualify. A mission statement alone is not enough.

Part I: Identification of Applicant

Enter your legal name exactly as it appears in your articles (including amendments), mailing address, EIN, the month your tax year ends, a contact person and phone number, and your website. Line 9 lists your officers, directors and trustees. The person who signs the application must be listed within the first five entries. The user fee line is filled in automatically by Pay.gov.

Part II: Organizational Structure

Select your entity type (corporation, LLC, unincorporated association or trust), your formation date, your state of formation, whether you have adopted bylaws, and whether you are a successor to another organization. You are a successor if you took over another organization's activities, took over 25% or more of its net assets, or converted from a for-profit to a nonprofit. Successors must complete Schedule G.

The formation date for a corporation is the date the state filed and approved your articles. That date also starts the 27-month clock discussed below.

Part III: Required Provisions in Your Organizing Document

You confirm that your articles contain (1) a purpose clause limiting your purposes to those described in §501(c)(3) and (2) a dissolution clause permanently dedicating your assets to exempt purposes. If your articles are missing either clause, or contain purposes broader than 501(c)(3) allows, amend them with the state before you file. This is the most common fixable defect we see in do-it-yourself nonprofit filings.

Part IV: Your Activities

This is the heart of the application. Line 1 asks for a full narrative of your past, present and planned activities. For each activity, the IRS wants to know:

• What the activity is.
• Who conducts it (volunteers, employees, contractors).
• Where it is conducted.
• What percentage of your total time it takes (all activities should add up to 100%).
• How it is funded and what percentage of your expenses it consumes.
• How it furthers your exempt purpose.

Do not describe speculative programs you have no actual plans to start. The rest of Part IV asks for your NTEE code and yes-or-no questions (with explanations) about how you select beneficiaries, any family or business relationships between beneficiaries and insiders, political campaign activity (any "Yes" disqualifies you), lobbying, intellectual property, credit counseling, grants to other organizations and foreign organizations, foreign activities and sanctions compliance, donor-advised funds, schools, hospitals, low-income housing, scholarships and other grants to individuals, and fundraising methods including bingo and other gaming.

Part V: Compensation and Other Financial Arrangements

Part V is where the IRS looks for private inurement and excess benefit transactions. You disclose compensation paid to officers, directors and trustees and to employees and independent contractors paid more than $100,000. You explain how compensation is set (comparability data, independent board approval, documentation), whether you have adopted a conflict of interest policy, and whether you buy from, sell to, lease from, lend to or contract with insiders or businesses they control. Insider transactions are not automatically fatal, but they must be at fair market value and approved by disinterested board members. Excess benefits can trigger excise taxes under IRC §4958 and can cost you your exemption.

Part VI: Financial Data

How many years you report depends on how long you have existed:

• Less than 1 year: projections for the current year and the next 2 years (3 years total).
• More than 1 year but fewer than 5 years: actual figures for each completed year plus projections for the current year and future years (4 years total).
• 5 years or more: actual figures for your 5 most recently completed tax years.

You complete a Statement of Revenue and Expenses (contributions, membership dues, investment income, program service revenue, compensation, occupancy, professional fees, grants paid and so on) and a Balance Sheet. Your numbers must be consistent with the rest of the application. If Part IV says you will run a food pantry staffed by volunteers and Part VI shows large salaries and no food purchases, expect a letter from the IRS.

Part VII: Foundation Classification

Every 501(c)(3) organization is presumed to be a private foundation unless it shows it qualifies as a public charity. You select the classification you are requesting: a publicly supported charity under §509(a)(1) and §170(b)(1)(A)(vi), a charity supported by contributions and program revenue under §509(a)(2), a church, school, hospital or other activity-based public charity, a supporting organization under §509(a)(3), a public safety testing organization, or a private foundation. There is also a "select my classification for me" option that lets the IRS pick based on your financial data. See the public charity discussion below.

Part VIII: Effective Date

You answer whether you are filing within 27 months after the end of the month in which you were formed. If you are not, you must complete Schedule E.

Part IX: Annual Filing Requirement

You indicate whether you are claiming an exception from filing Form 990-series annual returns (for example, as an integrated auxiliary of a church or a governmental unit affiliate). Most applicants are not exempt from annual filing.

Part X: Signature and Upload Checklist

An officer, director, trustee or other official authorized to sign for the organization signs digitally under penalties of perjury, with title and date. A representative authorized only by Form 2848 cannot sign unless he or she is also an authorized official of the organization. The upload checklist confirms the documents in your single combined PDF.

The Form 1023 Schedules

Some organizations must complete one or more schedules in addition to Parts I through X:

Schedule	Who Completes It
A	Churches
B	Schools, colleges and universities (including a school operated as an activity, such as a church school). Requires a published racially nondiscriminatory policy.
C	Hospitals and medical research organizations
D	Section 509(a)(3) supporting organizations
E	Organizations filing more than 27 months after formation, and organizations seeking reinstatement after automatic revocation
F	Low-income housing organizations
G	Successors to other organizations (including for-profit predecessors)
H	Organizations providing scholarships, fellowships, educational loans or other educational grants to individuals, and private foundations requesting advance approval of individual grant procedures

Attachments and the Single-PDF Rule

Pay.gov accepts only one uploaded file. Before you submit, combine all attachments into a single PDF in this order:

• Organizing document (required). For a corporation, the articles of incorporation showing the state's certification of filing.
• Amendments to the organizing document, in chronological order.
• Bylaws or other rules of operation, and amendments.
• Form 2848 (Power of Attorney), if applicable.
• Form 8821 (Tax Information Authorization), if applicable.
• Supplemental responses for answers that do not fit in the form's text boxes, and any other supporting information.
• A request for expedited review, if you are making one.

Put the organization's name and EIN on every page of any supplemental response and identify the Part and line number each response relates to. Do not include Social Security numbers anywhere. Approved applications and all attachments become available for public inspection.

User Fee and How to File on Pay.gov

Since January 31, 2020, the IRS has required Form 1023 to be filed electronically. To file:

• Register for an account on Pay.gov.
• Search for "1023" and select Form 1023.
• Complete the form online, upload your single PDF, have the authorized official sign, and pay the user fee.

The user fee is $600, paid by bank account or credit or debit card. The application cannot be submitted without payment. The IRS sets exempt organization user fees in its annual revenue procedure (Rev. Proc. 2026-5 for 2026) and left the Form 1023 fee unchanged this year. The fee is generally not refundable, even if the IRS denies the application. The current amount is always listed on the IRS user fees page.

Pay.gov sessions can time out. Draft your narrative answers in a word processor first, then paste them in. Preview and save a PDF copy of the completed application before you submit; you will want it for your permanent records and for public inspection requests.

The 27-Month Rule and Your Effective Date

If you file Form 1023 within 27 months after the end of the month in which you were legally formed and the IRS approves it, your exemption is effective back to your formation date. That means donations received before approval are deductible and income earned before approval is exempt.

Example: an Arizona nonprofit corporation whose articles were approved by the Arizona Corporation Commission on March 10, 2026 has until the end of June 2028 (27 months after March 31, 2026) to file and still receive exemption retroactive to March 10, 2026.

If you miss the 27-month window, your exemption generally starts on the date you file. Form 1023 lets you complete Schedule E to request an earlier effective date (for example, by showing reasonable cause for the late filing). Form 1023-EZ does not, which is another reason late filers often must use the full form. During the gap, the organization may be treated as a taxable corporation and donors' gifts may not be deductible.

Public Charity or Private Foundation?

Your classification determines how your donors are treated and which rules you live under, so it deserves careful thought before you answer Part VII.

• Public charities receive broad support from the public, government grants or exempt-function revenue (ticket sales, tuition, program fees), or are churches, schools or hospitals. Donors get the most favorable deduction limits, and public charities have far fewer restrictions on their operations.
• Private foundations are typically funded by one person, one family or one company. They pay an excise tax on net investment income, must distribute a minimum amount each year, are subject to strict self-dealing rules, and donors face lower deduction limits.

A new organization requesting public charity status under §170(b)(1)(A)(vi) or §509(a)(2) does not have to prove it already meets the public support test. It needs to show it can reasonably be expected to meet the test during its first five years, which is why your budgets in Part VI should show realistic support from the general public and not just from the founder. If the founder will supply most of the money for the foreseeable future, private foundation status may be the honest answer, and a private foundation's articles must contain the special provisions required by §508(e) (or rely on state law that supplies them).

What Happens After You File

The IRS generally works applications in the order received. Processing time varies with the IRS's backlog and the complexity of your application. The IRS's Where's My Application page has recently reported that it issues 80% of Form 1023 determinations within about 191 days and 80% of Form 1023-EZ determinations within about 22 days; check that page for the current figures. You may request expedited review of a Form 1023 (a Form 1023-EZ cannot be expedited) in writing if you have a compelling reason, such as a pending grant that will be lost without a determination letter, disaster relief work, or an IRS error that delayed your application.

There are three common outcomes:

• Approval without questions. You receive a determination letter stating that you are exempt, your foundation classification and your annual filing requirement.
• A development letter. An IRS specialist writes or calls asking for more information and gives you a deadline to respond. The IRS publishes sample questions it commonly asks. Respond completely and on time; a missed deadline can close your case and forfeit your fee.
• A proposed denial. If the IRS concludes you do not qualify, it sends a letter explaining why and describing your appeal rights.

Do not stop filing annual returns while you wait. Your filing obligations begin when you are formed. If a Form 990, 990-EZ or 990-PF comes due while the application is pending, file it and check the "Application pending" box. If you are eligible for the Form 990-N e-Postcard, call the IRS at 877-829-5500 to have your account set up so you can file it.

Common Mistakes That Delay or Sink Applications

• Articles without proper purpose and dissolution clauses. Generic nonprofit articles from an online filing service often omit IRS-required language.
• Describing a mission instead of activities. "We help at-risk youth" is a mission. The IRS wants to know exactly what you will do, where, who does it, how often, and how it is paid for.
• Inconsistent answers. Narrative, budgets, compensation disclosures, bylaws and website must tell the same story.
• Benefiting specific people. A charity cannot be formed to help a named individual or family, such as one sick child or the founder's relative. It must serve a charitable class.
• Insider deals without safeguards. Renting the founder's building or hiring a director's company without independent approval and fair-market documentation is a red flag.
• Political activity. Any endorsement of or opposition to a candidate for public office is prohibited.
• Unrealistic budgets. Projections showing $500,000 in grants in year one with no history or relationships invite questions.
• Missing the 27-month deadline and then filing the 1023-EZ, which cannot request an earlier effective date.
• Uploading multiple files or illegible scans. Pay.gov takes one PDF.
• Putting Social Security numbers on the application or attachments, which become public.

Arizona Nonprofit Corporation Considerations

For Arizona charities, the order of operations is: form the Arizona nonprofit corporation with the Arizona Corporation Commission (with articles drafted to satisfy the IRS organizational test), adopt bylaws and a conflict of interest policy at an organizational meeting of the board, obtain an EIN, and then file Form 1023 or 1023-EZ. Our step-by-step guide to forming an Arizona nonprofit corporation walks through the state side of the process.

Federal exemption does not automatically handle every state tax. Arizona's income tax exemption for nonprofit organizations is in A.R.S. §43-1201, and sales by a nonprofit can still be subject to Arizona transaction privilege tax unless a specific exemption applies. If you will solicit donations in other states, check each state's charitable registration rules through the National Association of State Charity Officials.

Staying Exempt After Approval

• File an annual return every year under IRC §6033: Form 990-N if gross receipts are normally $50,000 or less, Form 990-EZ if gross receipts are under $200,000 and assets are under $500,000, otherwise Form 990 (private foundations always file Form 990-PF). Failing to file for three consecutive years results in automatic revocation of your exemption.
• Make your Form 1023, determination letter and last three annual returns available for public inspection as required by IRC §6104.
• Give donors written acknowledgments for gifts of $250 or more.
• Keep minutes of board meetings, especially decisions about compensation and insider transactions.
• Stay out of political campaigns and keep lobbying insubstantial (or make the §501(h) election on Form 5768).
• File Form 990-T if you have $1,000 or more of gross unrelated business income in a year.
• Keep your Arizona Corporation Commission annual report current so the corporation stays in good standing with the state.

Frequently Asked Questions About IRS Form 1023

How much does it cost to file Form 1023?

The IRS user fee is $600 for Form 1023 and $275 for Form 1023-EZ, paid on Pay.gov when you submit. Professional preparation fees are separate.

Can I mail a paper Form 1023?

No. Since 2020 the IRS accepts Form 1023 and Form 1023-EZ only electronically through Pay.gov.

How long does IRS approval take?

It varies with the IRS's workload and the complexity of your application. The IRS has recently reported deciding 80% of Form 1023 applications within about 191 days (roughly six months) and 80% of Form 1023-EZ applications within about 22 days. Applications that trigger IRS questions take longer. Check the IRS "Where's My Application" page for current figures.

Can we accept donations before the IRS approves our application?

Yes. If you file within 27 months of formation and are approved, the exemption is retroactive to your formation date and earlier gifts are deductible. Tell donors in writing that your application is pending and that deductibility depends on approval.

Do we need an EIN before filing Form 1023?

Yes. The application cannot be submitted without the organization's own EIN.

Is a conflict of interest policy required?

It is not legally required for exemption, but Form 1023 asks whether you have adopted one and the IRS expects most organizations to have one. Adopt it at your organizational board meeting before you file.

Can a single person form a 501(c)(3)?

Arizona allows a nonprofit corporation with a small board, but the IRS looks closely at organizations controlled by one person or one family, particularly around compensation, insider transactions and public support. An independent board makes approval and public charity status much easier.

Can a church file Form 1023-EZ?

No. A church that wants a determination letter must file the full Form 1023 with Schedule A. Churches are not required to apply, but many choose to.

Can an LLC apply for 501(c)(3) status?

Yes, but only on Form 1023, and only if the LLC meets the requirements in IRS Notice 2021-56, including that every member is itself a 501(c)(3) organization or a governmental unit. Most new charities are better served by a nonprofit corporation.

What if the IRS sends us questions?

Answer every question completely and by the deadline in the letter. If you need more time, ask the specialist before the deadline. Many applications that are ultimately approved go through at least one round of questions.

Is my Form 1023 public?

Yes. Once approved, the application, attachments and IRS correspondence are open to public inspection, and you must provide copies on request. That is why you should never include Social Security numbers.

What happens if our application is denied?

The IRS sends a letter explaining its position and your appeal rights. You may be able to fix the problem (for example, by amending your articles or restructuring an insider arrangement) and reapply, or you may qualify under a different subsection of §501(c).

How KEYTLaw Can Help

Arizona nonprofit attorney Richard Keyt has formed 550+ Arizona nonprofit corporations that became 501(c)(3) nonprofit corporations. We draft articles of incorporation that satisfy the IRS organizational test from day one, prepare bylaws and a conflict of interest policy, and prepare and file IRS Form 1023 with a detailed activities narrative and budgets that are consistent with each other and with your plans.

• Arizona nonprofit corporation formation: $1,297 flat fee. See the 28 nonprofit formation services we provide.
• IRS Form 1023 preparation: $3,500 flat fee (the IRS's $600 user fee is separate). To learn about the services we provide when we are hired to prepare IRS Form 1023 go to our article called IRS Form 1023 Preparation Services.

To hire us to form your Arizona nonprofit corporation, submit our nonprofit incorporation questionnaire. You can also book a free office, phone or Zoom video consultation. Call Richard Keyt (the father) at 480-664-7478 or email him at rk@keytlaw.com or call attorney and former CPA Richard C. Keyt (the son) at 480-664-7472 or email him at rck@keytlaw.com.

This article provides general information about federal tax law as of October 2026 and is not legal or tax advice for any particular organization. IRS forms, fees and procedures change; confirm current requirements at IRS.gov before filing. Copyright © 2026 KEYTLaw, LLC.