The IRS recently announced in IR-2017-41 that it’s making certain information from approved Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, filings available online. Although the IRS moved to using electronic Form 1023-EZ in mid-2014, this is a first in making the information easily available electronically.
The Form 1023-EZ data is available in spreadsheet format, similar to downloadable data on the IRS website as part of the Exempt Organizations Business Master File Extract. Previously, it was necessary to complete and submit Form 4506-A, Request for Public Inspection or Copy of Exempt or Political Organization IRS Form, as part of a lengthier process to receive Form 1023-EZ data on an organization.
Although public copies of exempt returns have been available for years, the IRS recently has demonstrated its commitment to increased transparency through notable steps toward improving accessibility to data for the exempt community. On June 22, 2016, the IRS announced it was making electronically filed Form 990, Return of Organization Exempt From Income Tax, data available in machine-readable format through Amazon Web Services. Just seven months later, Form 1023-EZ data also is being made available electronically. To quote IRS Commissioner John Koskinen, “The new online availability of Form 1023-EZ data is an important step forward and will allow taxpayers to more easily research information on tax-exempt organizations.”
The information from the approved Form 1023-EZ filings is similar to what organizations filing Form 990 annually provide. But, since Form 1023-EZ is e-filed by organizations subject to the reduced reporting requirements of Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or Form 990EZ, it’s more information than many smaller entities might be used to providing.
For example, Form 990-N reports only basic data on the filing organization, such as:
- Fiscal year
- Organization name
- Employer identification number
- Mailing or street address
- Name and address of the organization’s principal officer
On the other hand, Form 1023-EZ data has significantly more information on the organization and its interested persons, including:
- Names and titles of all board members and officers as of 1023-EZ filing
- Addresses of all board members and officers as of 1023-EZ filing
- Whether the organization is an association, corporation or trust
- National Taxonomy of Exempt Entities code
- If they attempt to influence legislation
- If any officers or trustees are compensated
- If grants are made to individuals
- If they grant funds or conduct activities outside the U.S.
- If they engage in financial transactions with officers or trustees
- If they gross unrelated business income greater than $1,000
- If they receive one-third of support from public or gifts
Smaller organizations should be prepared to explain the information provided on Form 1023-EZ. In addition, they should examine current operations to be certain they’re still operating as represented to the IRS on their initial filing. Although not a bad change, the increased availability of this data opens smaller organizations up to more public scrutiny. All tax-exempt organizations should continue to observe and track IRS activities, as the IRS continues to increase the accessibility of data on their activity.
Contact your BKD advisor if you have questions.