The IRS wants the public to know they aren’t trying to discriminate or prevent non-profits from getting tax-exempt status. The backlog of applications is due to limited resources. And in an effort to fast-track the applications and tame the negative rhetoric, the IRS has created a significantly stripped-down online application.
Form 1023-EZ is now available to small non-profits with an annual income of $50,000 or less and assets under $250,000.
But not everyone is happy about the changes. A coalition of lawyers, state enforcement agents, and even non-profits are critical, saying the form makes it too easy to commit fraud.
The New York Times reports that Tim Delaney, President and CEO of the National Council of Nonprofits, opposes the new form and claims the IRS is abdicating its responsibility. The National Association of State Charity Officials also stands against the new form. Nina Olson, the National Taxpayer Advocate, says that the form goes too far in the opposite direction, and that the IRS is “making a mockery” of its oversight function.
But Tamera Ripperda, Director if the IRS’s Exempt Organizations Division, assures that the agency completed a thorough risk assessment, and that approximately two-thirds of applicants are small groups that haven’t even begun operating. Once they’re approved, non-profits are required to file yearly tax returns, so the agency can see how they’re actually operating.
Ripperda says that since the EZ form’s introduction last July, 28,000 groups have used it. The agency selected about 1,000 for more in-depth review and questioning, and found no indications that people were intentionally misusing the form.
The IRS is trying to make the best use of the resources they have, but it looks like no matter what they do, they can’t avoid criticism.