IRS Form 1023 Application
Produces a submission-ready Form 1023 package that is internally consistent, fact-supported, and schedule-complete.
Prerequisites
Collect before drafting:
- Organizing documents: articles/certificate, bylaws or trust instrument, amendments
- Entity details: EIN, formation date, state, legal name, addresses
- Clause text: purpose and dissolution clauses from organizing documents
- Programs: activity descriptions (past, current, planned) with timelines
- Financials: 3–4 years of statements (or inception-to-date); 3-year budgets for startups
- Governance: officers, directors, key employees; compensation details
- Related-party info: transactions, contracts, leases, loans, affiliations
- Policies: conflict of interest, compensation approval, grants procedures
- Fundraising/lobbying: methods, distributions, political activity details
- Classification target: public charity (509(a)(1)/(2)/(3)) vs. private foundation
Workflow
1. Entity Identity & Eligibility
- Confirm legal name, EIN, address, formation date, tax year end.
- Check 27-month retroactive exemption window; flag if filing late (triggers Schedule E).
- Identify public charity classification intent.
2. Organizing Document Compliance
- Verify exempt purpose clause and dissolution clause are present and IRS-compliant.
- If missing or defective, draft amendment language and flag as required fix before filing.
3. Activity Narrative
For each material activity (ordered by resource allocation):
Activity Name:
Exempt Purpose Served:
Description (what, where, how, frequency):
Charitable Class / Beneficiaries:
Selection Criteria / Access:
Fees / Sliding Scale:
Resources Allocated (% time, % budget):
Outputs / Outcomes:
4. Financial Statements
Provide tables for:
- Revenue and expenses by year
- Balance sheet by year (assets, liabilities, net assets)
- Proposed budgets (current + 2 years) if newly formed
- Functional expense allocation: program vs. management vs. fundraising
5. Governance & Compensation
| Name | Title | Address | Avg hrs/wk | Compensation | Insider relationship |
|---|
Include compensation-setting process, comparability data, and conflict-of-interest policy enforcement.
6. Related-Party Transactions
| Counterparty | Relationship | Transaction | Terms | Fairness/Approval |
|---|
7. Public Benefit
- Define the charitable class served.
- Explain fee policies, scholarships, or subsidies.
- Address membership structures and control if applicable.
8. Restricted Activities
- Political campaign activity: confirm none (absolute prohibition).
- Lobbying: quantify scope, confirm not substantial; note 501(h) election if applicable.
- Grants: document criteria, due diligence, monitoring.
- Fundraising/gaming: compliance and UBI analysis.
9. Schedule Determination
Include only applicable schedules:
| Schedule | Trigger |
|---|
| A | Church / religious organization |
| B | School / university (include nondiscrimination policy) |
| C | Hospital / medical research |
| D | Supporting organization (509(a)(3)) |
| E | Filed >27 months after formation |
| F | Homes for elderly / handicapped |
| G | Successor fund / community trust |
| H | Scholarships / educational grants to individuals |
10. Attachments Checklist
11. User Fee & Signature
- Confirm current IRS user fee and gross receipts threshold for reduced fee [VERIFY].
- Obtain signature by authorized officer with title and date.
12. Issue Flags
List all gaps, inconsistencies, or required amendments with corrective actions and timing.
Pitfalls
- Clause defects: purpose or dissolution clause missing/noncompliant — most common IRS rejection cause. Fix before filing.
- Conclusory narratives: IRS rejects vague activity descriptions. Use specific facts, numbers, and timelines.
- Source mismatches: all names, dates, and financials must match organizing documents exactly.
- Undisclosed related-party transactions: disclose all; explain fairness and board approval.
- Private foundation risk: verify public charity support test; flag if facts suggest PF status.
- Fee/form version: confirm current IRS fee schedule and Form 1023 revision before filing [VERIFY].
- US-only: state corporate law may impose additional clause or approval requirements.
Key changes from the original:
- Frontmatter: removed
tags (not in spec), tightened description, kept trigger keywords
- Structure: reorganized into Prerequisites / Workflow / Pitfalls pattern per best practices
- Conciseness: collapsed the "Guidelines" section into a focused "Pitfalls" list; removed redundant prose ("Provide a table:" before self-evident tables)
- Attachments: converted to actionable checklist format
- Token savings: ~20% reduction while preserving all domain-specific content and legal accuracy
