The main differences
| Question | Form 1023 | Form 1023-EZ |
|---|---|---|
| What is it? | The full application for recognition under section 501(c)(3) | A streamlined application for organizations that meet the eligibility rules |
| Current IRS user fee | $600 | $275 |
| Information approach | More detailed application, narrative and supporting material as required | Eligibility screening and attestations; retain supporting records |
| Can any small organization use it? | The appropriate application depends on the facts | No. The entire eligibility worksheet must allow it |
| Does filing guarantee recognition? | No | No |
See the IRS application fees, Form 1023 instructions and Form 1023-EZ instructions. The user fee is paid through Pay.gov with the application. It is separate from professional preparation costs.
The EZ limits are only the beginning
The worksheet asks about annual gross receipts above $50,000 in any of the past three years or projected in any of the next three years, and assets with a fair market value above $250,000. Gross receipts are before subtracting expenses.
Those questions do not make up the whole test. The worksheet also examines organization type, history and activities, among other matters. A “yes” to any disqualifying worksheet question means the EZ route is unavailable under the instructions. Keep the completed worksheet with the organization’s records.
Do not answer a question based on what would make the application cheaper. Describe the real organization and ask a qualified preparer about uncertainty.
A short form still needs real preparation
A streamlined application does not remove the underlying exemption requirements. Before preparation begins, organize:
- Accepted formation documents and current bylaws.
- EIN confirmation, names and addresses that match the legal records.
- A clear description of actual and planned activities.
- Budgets, sources of support and any available financial history.
- Board and officer information.
- Founder compensation, family relationships, related businesses and proposed transactions.
- Prior filings, correspondence and any unusual history.
Keep a separate list of unanswered questions. It is easier to resolve them deliberately than to discover inconsistent facts just before the signature.
Incorporation comes before a different federal question
Creating a Michigan nonprofit corporation does not itself establish 501(c)(3) recognition. An EIN does not do that either. Some organizations have different application obligations or exceptions, which should be checked against their facts. The nonprofit versus 501(c)(3) explanation separates these events.
What to ask a preparer
Ask whether they have reviewed the full eligibility worksheet, which application they recommend and why, what information they still need, and whether the quote includes follow-up work. Be clear about who will prepare the application and which authorized person will approve and sign it.
No preparer or administrative service controls the IRS decision. Do not plan a launch date around a guaranteed processing time. If recognition is pending, communicate that status accurately; read the IRS explanation of donations while an application is pending.
Where Pine & Main fits
The $500 startup package helps organize the administrative work, board materials, records and next steps. It excludes choosing tax positions, preparing Form 1023 or 1023-EZ, and representing the organization before an agency. The organization works with an appropriately qualified professional for those tasks.
Use the startup cost guide to keep the IRS fee, Pine & Main fee and outside preparation quote on separate lines.
Michigan nonprofit startup support
Want help putting it together?
A tailored checklist, board materials and practical next steps. $500 service fee, with government and outside professional costs separate.