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Form 1023 vs. 1024: Which Form Should You Use?



Form 1023 and Form 1024 are each application forms that must be submitted to the Internal Revenue Service (IRS) to apply for tax-exempt status and recognition as a nonprofit organization.

While both forms serve a similar purpose, there are some key differences between the two.

Form 1023

Form 1023 (also known as the “Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code”) is used by organizations that seek to be recognized as tax-exempt under section 501(c)(3) of the Internal Revenue Code, which applies to charitable, religious, educational, scientific, literary, and other similar organizations.

To be eligible for tax-exempt status under this section, an organization must meet certain requirements, such as having a charitable purpose, operating exclusively for that purpose, and not engaging in prohibited activities, such as political campaigning.

Form 1024

Form 1024 (also known as the “Application for Recognition of Exemption Under Section 501(a) or Section 521 of the Internal Revenue Code”) is used by organizations that seek to be recognized as tax-exempt under a section of the Internal Revenue Code other than section 501(c)(3).

This includes organizations such as social clubs, labor unions, and business leagues. While these organizations may not be eligible for tax-exempt status under section 501(c)(3), they may still qualify under other sections, such as sections 501(c)(4), 501(c)(5), or 501(c)(6).

Differences Between Form 1023 and Form 1024

What follows are a few key differences between Form 1023 and Form 1024:

Eligibility

Form 1023 is used by organizations seeking tax-exempt status as charitable organizations.

Form 1024 is used by organizations seeking tax-exempt status under other sections of the Internal Revenue Code.

Focus

Form 1023 requires detailed information about the organization's charitable activities and purposes.

Form 1024 focuses on the organization's structure, governance, and operations.

Application Fee

Form 1023 requires an application fee of $600 ($275 for Form 1023-EZ)

Form 1024 is $600 for most organizations.

Review Time

The time needed for the Internal Revenue Service (IRS) to review Form 1023 is generally longer than for Form 1024.

It can take several months for the IRS to review and approve a Form 1023 application, while the review time for Form 1024 is typically shorter.

Because Section 501(c)(3) organizations are eligible for a wider range of tax benefits than other types of organizations, the IRS typically scrutinizes these applications more closely.

The review may include a more thorough review of the organization’s activities, governance structure, and financial statements.

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Other Required Information

In addition to the application fee, both forms require the submission of various supporting documents, such as articles of incorporation, bylaws, conflict of interest policy, and financial statements.

Make an Informed Decision

The information above is a broad overview of the differences between Forms 1023 and 1024. If you are looking to apply for tax-exempt status and not sure which form to use, contact one of our accounting professionals who can guide you in the right direction.

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Biz Tip Topic Expert: Kirsten Houghton, CPA, MBA

Kirsten Houghton, CPA, MBA

Kirsten is a Principal with SVA Certified Public Accountants and her expertise includes the nonprofit and real estate industries. In addition to providing audit, accounting, and tax services, Kirsten also provides review, compilation, and management advisory services.

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