In Revenue Procedure 2016-32, the IRS has announced that it is reducing the user fee for the Form 1023-EZ streamlined applications for recognition of exemption under Section 501(c)(3) from $400 to $275, effective July 1, 2016.

Form 1023-EZ, released July 2014, serves as a simplified exemption application form for organizations with annual gross receipts of $50,000 or less, assets of $250,000 or less, and other specified criteria (see Tax Alert 2014-1263{}). The user fee for Form 1023-EZ applications (as well as for various other determination letter and ruling requests) is set forth in an annual revenue procedure. Recently, Revenue Procedure 2016-8 (released January 4, 2016) announced a Form 1023-EZ user fee of $400 — compared to $850 for exemption applications not filed on Form 1023-EZ.

Revenue Procedure 2016-32 simply modifies Revenue Procedure 2016-8 to reduce the user fee for Form 1023-EZ applications from $400 to $275, effective July 1, 2016.

Implications

This fee reduction is consistent with the IRS's attempt to align user fees with its cost of providing a particular service. The reduced fee for Form 1023-EZ will lower the financial burden on smaller organizations seeking tax-exempt status.

Please contact your EY tax practitioner for further information.

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RELATED RESOURCES

— For more information about EY's Exempt Organization Tax Services group, visit us at www.ey.com/ExemptOrg.

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