Critics Say IRS Short Form for Charities Opens Door to Abuse

           From The Chronicle of Philanthropy

The head of the Internal Revenue Service says the 1023-EZ form introduced this month for small groups seeking nonprofit status will help the agency reduce a huge backlog of charity applications, but some nonprofit leaders fear the short form will make it harder for the IRS to weed out bad actors, Time magazine writes.

As of July 1 organizations with income of less than $50,000 and assets of less than $250,000 can use the three-page EZ form to apply for 501(c)(3) status rather than filling out a detailed 26-page form and providing multiple supporting documents, as had been required for all charity submissions.

The change will mean tens of thousands of 501(c)(3) applications a year no longer go to the IRS exempt-organizations unit for review. John Koskinen, the IRS commissioner, told Time that “efficiencies” engendered by the new form will allow the the agency to conduct “a faster and better review” of bigger groups while attacking an existing backlog of 66,000 charity applications.

Tim Delaney, president of the Council of Nonprofits, said the new form will make it easier to get charity status “than it is to get a library card,” potentially opening the floodgates for groups with no real charitable purpose. Marcus Owens, a lawyer and former chief of the IRS nonprofits unit, predicted the change will cause “dark money”—political spending via 501(c)(4) social-welfare groups—to “begin to flow into the (c)(3) world.”

Read a Chronicle of Philanthropy article about the controversy over the EZ form for charities.

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